58 Comments

" Oh, and the wars required to expand the global banking network. That's not trivial."

That's no small thing--That's the whole thing.--Sara Groves

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all wars are banker wars

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Is it possible to consistently trade bitcoin and not lose everything? Is it possible to trade any market and not lose everything without inside information or front-running or deep pockets or rigging the game via volume cross-ups (wash & rinse) or algorithmic scalping?

If so, what's the secret, other than buy low and sell high? Do the opposite of what the crowd is doing? Buy pull-backs? Linear regression channels? Value investing? Astrology?

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I have one trading article. Not many people beat BTC. I have by a substantial amount, and I'll write more about methods when I don't have so much pandemic work to do.

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Well BTC is down 39% YTD... although up by 1000% over 5 years. So timing is key, I guess.

Is it possible to separate trading skill from trading luck? Can a non-continuously adaptive system work consistently? I imagine you could write a very interesting book on trading - a classic! You could title it, "How to consistently predict a stochastic series."

As for the pandemic, isn't it officially over?

https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm

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I wrote most of a book on crypto trading in 2018, but stopped when I decided it was irresponsible because it's too hard to teach. Crypto is m8ch harder than regular markets without inside game.

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Is it mainly the low liquidity/high volatility that makes crypto difficult and dangerous? Or some other factor?

My problem with volatile markets is it's too easy to double your money in a week, which makes you think you know something important, and then you lose it all the next week. There are instructive videos of traders losing Big on youtube:

https://www.youtube.com/watch?v=kBYSlI7PZWY

Start at 11:00

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You don't trade Bitcoin, but rather save it. So DCA instead (dollar cost average), buy a little once a day or week or month. This way you use its volatility to your advantage and over time you get a good average (entry) price. Sure try to time the market and buy when it hits cycle lows etc, when I see it drop significantly I buy extra. Just don’t sweat over it and you’ll sleep well just stackin SATS, it’s the best savings technology ever and will ever be created.

Fantastic piece Mathew!

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DCA, time in the market, is generally good advice but there's an unexamined assumption of a long-term upward trend (the greater fool theory) in a crypto basket, which I don't trust - what's long-term, and what about central bank digital currencies?

I don't think volatility alone gives DCA an advantage other than the self-discipline effect, which isn't enough for consistent above-average returns - is anything? - because that's what we're talking about.

I'd try to stack probabilities in my favor by buying at the lower bound of a upward linear regression channel, assuming the likely fatal assumption that crypto reverts to the mean. DCA may be better than lump-sum investing but aren't both still gambling? If so, the proper strategy is crossing your fingers while betting the farm.

The few people I know who seem to consistently do well sit on cash patiently until a decent stock falls down. They then buy and again wait patiently. Buffett does this. The key is not buying a stock that continues to zero. He does not invest in crypto, but he did buy a crypto focused digital bank. Kind of like buying a shovel store during the gold rush.

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Historically it was a matter of dollar cost averaging (aka drip feeding money in over very long periods of time) & sensible diversification.

Plus one final unstated assumption: that despite ups & downs, we’re living in an era of gentle economic expansion.

Unfortunately the latter is no longer true. I believe those I call the perpetrators, in relation to the covid19 crimes, have decided to bring the ceiling in on us all.

I don’t think there’s an investment strategy in conventional marketplaces that has a decent chance of not destroying your entire investment!

I’m still in the equities market because I’ve no idea what to do with the proceeds.

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Indeed, volatility has taken over the stock market since about the year 2000. Previously you could buy and hold with some success if you eventually cashed out at a good time. Now you have to be one of the Big Money Algo traders who own the market. The stock market is thoroughly rigged, it's a scam engineered to transfer Main Street assets to Wall Street. Note that retail investors only make money when the market goes up, but traders make it both ways. Note also that systematic risk cannot be mitigated by diversification.

Here Cramer infamously talks out of school and reveals how hedge funds rig the market every single day: https://www.youtube.com/watch?v=8DJlogbrDcA

I'd advise you to get out of the equities market as fast as possible. Know that risk does not equal return, it equals risk. Then take your money and buy Porsches. Or better yet, buy as many Lexus SC430s as you can. These soon-to-be Classics are rear drive V8s, with two doors, a folding hardtop, and are extremely dependable. And only cost about $15,000.

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I’ll pass on the cars. I’d love them but there may well not be fuel for them!

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Then solar panels, power wall, and Tesla?

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I feel the exact same way...some days I wonder if I'm throwing my money into a pit 'hoping and praying' that I'll see a similar 30-year return like we saw on so many public companies from the late 80s until a couple months ago...just so my wife and I (God-willing we survive whatever future lab-created pandemics/ideologically-curated wars are in our future) can eat decent food and stay warm.

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Jun 20, 2022
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As Catherine Austin Fitts says, if it gets as bad as it could, your assets are what you can personally defend with a gun.

So at minimum you need a gun, ammo, competence, several people you trust when you’re asleep, a place that’s secure & then you can begin making a sad pile of assets 🤗

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Before I started a mining operation or choosing a location, I would look at putting the waste heat to use. It could most readily be used by a chemical or food processing plant like powdered milk/OJ evaporating towers, or even municipal heat in a cold climate. Any number of things.

I don't know much about mining, and the numbers for energy consumption are incomplete, but it looks like each liquid-cooled shipping container is consuming a steady 2.5 megawatts.

A mining server is basically an electric resistance heater that happens to do computing. That's a tremendous amount of energy, and if you want to avoid the optics of "wastage" altogether, devise a system to put that heat to use, and consider the bitcoin mining to be the cream on the top.

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A like the discussion about energy and off peak usage. In 1979 my senior design project in EE was Demand Side planning and shifting energy usage to off peak schedules. I was working on it from a foundry perspective with a giant 12 ton electric holding furnace as well as dozens of eddy current melting furnaces for bronze. Later as a consultant working back with APCO marketing I got to help analyze the data and rate structure for a lot of time of use rates and for over 15 years my home was powered on a residential time of use rate. In boiler performance testing one of our biggest challenges is operating at a low enough load to avoid having to take a unit off line. I have also spent several weeks in China working with their power plants 3-10 years ago to try and help them optimize low load generation.

I developed the comprehensive financial model for the power company and Mathew - you are right - just in the state of Alabama about 14% of the generated power is lost just moving it through the various voltage classes from the generator to the customer. Customer classes are also determined in part by their voltage service level. The higher the voltage the lower the rate.

So, a great strategy for high energy users would be buying off peak power and buying one of the Tesla Megawatt grid storage batteries and charging it up during low load and using the battery during day time. That is the opposite of solar which needs you to store during peak usage times and use during lowest load time. This is where the electric cars really help utilities when they are charged at home overnight. Crypto miners can really be friends of the utilities if they implement the battery storage strategy.

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Thanks for chiming in with your APCO experience. People need to see the reality from several angles to build trust in the reality.

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Is there hope for a future for our grandchildren?

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Yes. We have a lot of work to do, but yes.

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Are you based in Texas?

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In the substate known as DFW.

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Howdy neighbor!

Texas really is "a whole other country" with many substates, now I think about it.

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Me too ! Are you a member of TBC? I love your work on vaccines I’m forwarding this post to my husband who is in Austin at the moment. I’m still learning about all this. Love the link to Giga

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I have TBC friends. I go to a few events. Wish I had time for more.

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I’m strongly encouraging my husband to reach out if that is OK with you. I told him you were on Steve Kirsch’s team. He is very interested.

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Happy to expand my TX Bitcoin circle.

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No problem. Can hardly resist the urge to thank *you* for resisting the urge to activate your amygdala in response.

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8k in 2 weeks. What happens when the miners don't get paid? Strike?

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Hi,

Due to something like perceived harassment or possibly even being perceived as a sort of crazy person, your email was not received. Instead, it was channeled directly to a spam folder.

We do hope that you have a wonderful day and learn to meditate for some period of time prior to sending harassing or crazy-sounding emails in the future.

Yours Truly,

Grand Administrator of the Spam Folder

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Probably a suitable new role for you Matthew, as a spam folder.

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Hi,

Due to something like perceived harassment or possibly even being perceived as a sort of crazy person, your email was not received. Instead, it was channeled directly to a spam folder.

We do hope that you have a wonderful day and learn to meditate for some period of time prior to sending harassing or crazy-sounding emails in the future.

Yours Truly,

Grand Administrator of the Spam Folder

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Thanks for covering the energy use side of bitcoin. I was wondering what you thought about that ..

I need to read this again, slowly, and learn more. I trust you far more than anyone I don't know who puts out science sounding papers(!), but that said, I have heard a lot about intensive energy - and water - use of crypto. https://www.sciencedirect.com/science/article/abs/pii/S0921344921005103?dgcid=author

I think what you're saying is there are ways to do it that don't have a large footprint, or if they do, the footprint is much smaller when all factors are considered(?)

In NY there's proposed bitcoin mining at Seneca Lake, which, supposedly, would have energy footprint that includes - "Located on the shores of Seneca Lake, Greenidge operates over 17,000 Bitcoin mining machines and is expanding to over 32,500, with visible smokestacks pumping dirty fossil fuels into the air 24/7. This will lead to over 1 million tons of CO2 emissions each year, equal to that of 100,000 homes. Greenidge also sucks up to 139 million gallons of water each day from Seneca Lake and dumps it back in at up to 108 degrees. Gregory Boyer, director of SUNY's Great Lakes Research Consortium, has warned about Greenidge's potential to cause harmful algal blooms, which can be dangerous or fatal to humans and other animals in Seneca Lake, and make this water source for 100,000 people non-potable."

That sounds really, really not good. But some of the same people most against this are strongly for "vaccines", so I can't automatically assume they got the info on this right either(!)

But as far as I've heard, bitcoin has massive footprints. Keeping open mind that there's more to the story, or it doesn't have to be that way.

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Your second images sort of broke the immersion for me. The supply curve is key to understanding what follows yet the graph is unlabelled and despite reading "would turn that flat capacity line into a hump" right after, it appears pretty 'humpy' to me. I'm guessing green is produced energy and orange is consumed (sold) energy - the difference being the interesting part for a miner, so why color in above green and not between the two lines?

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You're right. I threw that down too quickly. It came from a slide where it was otherwise explained better, and in my mind it was attached to many hours of prior conversation.

Good call. I'll edit later for improvement. Thank you.

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Thanks for the Bitcoin Wars series; I'll keep on reading it with interest, but... at the moment, to me, Bitcoin is to traditional Banking/Financial system what the Woke Religion is to Christianity (I might be biased because as a back-office financial risk modeller for a large bank I am kind of like a sexton for a large cathedral). Yes, the old system has its flaws, many of them hidden, but it also played a big part in creating the wonderful world we live in (and it still is a wonderful world, compared to all previous worlds). The new system promises to make everything better, but it grew out of the old system (for comparison: the last chapter in Tom Holland's "Dominion" is entitled "Woke"), and will retain many flaws of the old system. Decentralization will indeed be key, just as it has been to Christianity (the saint, the monastery, the local church).

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I agree with most of the thesis. That the notion "this will take too much energy" is so widespread, while no one asks how much we waste today... It strikes me as mostly propaganda to protect the status quo.

I question the idea that adding solar to the larger power system improves efficiency or reliability. If that were true, regions with high rates of solar adoption should have lower rates, assuming higher eff gets passed down to the ratepayer to some extent. Has this occurred? I don't think so. CA rates have increased faster than most, along with high rates of solar adoption. Is there evidence that CAs grid is more reliable now than before?

To other readers, I'd suggest Manhattan Contrarian if you are interested in renewable/storage from the skeptic side.

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TX is the largest solar state and has seen excellent electricity prices. If prices have gone up anywhere, it's not due to solar or else discounts the solar used from home panels from the equation. Solar at scale has been produced for under 1 cent per Kwhr, which is a quarter of the typical grid/infrastructure cost/fee. That is a net reduction anywhere in the world. Even without scale, panels are cheaper and amortization can be paid off in less than a decade.

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It feels like the world is a dumpster fire! The woke are degrading humanity to being an absurd joke! It’s time to take back decency and common sense! They have overplayed their hand! We know what a woman is, we will not tolerate the perverts to harm our children! Enough is enough!

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The scheme isn't viable because it assumes there is some surplus quantity of energy available to be optimised for the purposes of making bitcoin. There isn't. It overlooks the fact that the global industrial manufacturing system - which solar/wind devices are the product of - runs on energy gradient, not energy potential and, as a consequence of basic thermodynamics, can't run real-time on sunlight. Ultra-diffuse solar/wind doesn't provide sufficient energy gradient - only breaking chemical and nuclear bonds does. Power generation will remain hydrocarbon/nuclear based. Commercial oil firms are 15 years from exhausting inventory, replacement is at a 75 year low, gas will deplete quickly once it starts to substitute out, nuclear is infested with anti-nuclear lobby poison-the-well regulation, and the design of the interest-based global finance system ensures that energy depletion will implode it through hyperinflation. The appearance of surplus is an illusion, confected by the continuous injection of vast quantities of hallucinated liquidity. There is no energy surplus to optimise - our supply is constrained, contracting, and already fully deployed in a portfolio of critical economic services such as food production which is already being high graded (witness, e.g. deteriorating road infrastructure). It's absurd to imagine we'll allocate energy for a purpose this frivolous.

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If more energy gets used by the current system...then we achieve a net benefit...

Solar is.not intended to replace all.energy production, but it does an exceptional job of inexpensive load balancing.

The frivolous energy is that which is spent on asymmetric tech like domestic surveillance, or on unnecessary wars.

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This is true, and as contraction accelerates, the pressure to load shed non-essential activity will become intense - as will warfare to secure remaining resources. But the last time we tested the carrying capacity of the planet without hydrocarbon, it was around 2 billion people. So some unknown, but probably significant, fraction of 5bn here only as long as the complex industrial agricultural and manufacturing systems we built around hydrocarbon that won't run on sunlight can be sustained. Even if we can assemble the energy resources required to do that, this application of energy will not compete, and in any event the pace of transition imposed by the locked-in decline rate will likely collapse the financial system. I'm afraid you will be optimising an energy market of zero Watts.

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Let's say government printed trillions of dollars but wanted to destroy all the non-productive money while keeping the dollars building the real [vs speculative] economy.

I'd set out capital traps that promised absurdly high returns to attract speculative/ unproductive cash, then crash that money into oblivion. Something like...IDK, maybe a completely speculative asset class like Crypto

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Establishing a bunch of low credibility, low security hype projects to deter people from Bitcoin would certainly slow adoption and confuse people.

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Was figuring these guys were working in this direction https://lancium.com/

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