Redditors Accuse Amex of Sponsoring Anti-Crypto Tweets, But Proof Inconclusive

Cointelegraph investigates Redditors’ allegations that American Express has sponsored crypto-skeptical content on Twitter.

Reddit users have alleged that American Express (Amex) has sponsored crypto-skeptical content on Twitter, according to a popular forum thread opened Tuesday, Oct. 16.

The tweet in question was allegedly circulated through Bloomberg’s Twitter network “TicToc” on Oct. 11, and was reposted as a screenshot to Redditor u/Alexsayzz’s thread titled “Anti-crypto propaganda… promoted by American Express,” which has had 4,100 upvotes and drawn 437 comments as of press time.

As the screenshot reproduced below indicates, the tweet appears to have the hallmarks of a promoted post, and is recorded as having 42,000 views at the time the screenshot was taken.

Alleged AMEx-sponsored tweet posted to Bloomberg’s “TicToc” Twitter feed. Source: Reddit thread, user: u/Alexsayzz

The allegedly sponsored tweet contains a multimedia article — referring to “estimates” from Bloomberg’s energy industry research team, Bloomberg NEF — that contends the crypto industry “is using more energy than all the world’s electric vehicles.”

The tweet plays into the notion that the high amounts of energy needed to power the mining of cryptocurrencies such as Bitcoin (BTC) is the coin’s “achilles heel” — a long-standing, if frequently contested, argument.

Titled “Crypto’s Hidden Costs,” the piece covers the controversial energy-intensive Bitcoin (BTC) mining process. It frames two interviews with figures from the blockchain space, who give their opposing views as to the benefits of using clean energy to fuel crypto mining.

The tweet’s alleged promotion by a major card payments industry player such as Amex has been lambasted as “propaganda” by the thread’s contributors, who view Amex’s position as being in direct competition with the emerging cryptocurrency sector, and therefore as having an arguably vested interest in promoting crypto-skeptical content.

Cointelegraph’s investigation into the Reddit allegations did not lead to the allegedly Amex-sponsored content itself. A tweet containing the same multimedia article is still to be found on the TicToc feed here, dated Oct. 10, but without the “promoted by American Express” included.

However, an anonymous source at Twitter has confirmed in private correspondence with Cointelegraph that the tweet in question was indeed promoted for some period, although they could not identify the sponsor.

In order to confirm whether or not the tweet was indeed Amex-promoted content, Cointelegraph used a tool Twitter provides that enables users to retrieve tweets that have been promoted by a specific account. However, entering either TicToc or Amex fails to retrieve the relevant tweet.

As of press time, Amex has not responded to Cointelegraph’s request for comment.

While the alleged sponsor of the tweet cannot be confirmed via the platform itself by Cointelegraph’s methods by press time, it remains possible that the tweet in question may have been deleted, or that Twitter’s transparency tool for promoted content may be unreliable and fail to comprehensively retrieve all tweets.  

Another possibility is that the Redditor’s image was fabricated to create the false impression that Amex has been involved in the promotion of anti-crypto material, in an attempt to quash competition from the emerging sector.

In June, the temporary failure of Visa’s transaction service in Europe — a competitor for MasterCard — highlighted the 99.98 percent functionality of Bitcoin’s decentralized network since its inception on Jan. 3, 2009.

Cryptocurrencies and advertising have sparked controversy in the past, notably with tech giants’ bans on crypto-related advertising. Google, Facebook and Twitter have all in the past banned crypto ads, although Facebook has since reversed its ad ban for pre-approved crypto firms, while still maintaining a ban on Initial Coin Offering (ICO) advertisement; Google made a similar move several weeks ago.

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Iceland’s Industry to Shift From Crypto Mining to ‘Pure Blockchain Business,’ Insiders Say

Chairman of an Icelandic data center provider claims that the local crypto industry is going to shift from crypto mining to “pure blockchain business.”

Iceland’s crypto industry is expected to move away from crypto mining and shift to “pure blockchain businesses.” This is according to forecasts made by a number of local industry insiders who talked to the news site Red Herring September 23.

Halldór Jörgensson, chairman of Reykjavik-based Borealis Data Center, told Red Herring that demand from local crypto and blockchain facilities is “shifting more towards the pure blockchain business,” rather than focusing on Bitcoin mining.

According to Jörgensson, the frenzy around Bitcoin (BTC) mining has declined to a level that is “not as crazy as it was a year ago,” when the cryptocurrency has hit its all-time price high. Despite that, the chairman has suggested that the Bitcoin mining “wave” has contributed to the faster growth of local energy and data industries, whose well-developed infrastructures are now expected to provide a boost to blockchain-related businesses.

Iceland has become one of the leaders in crypto mining due to its naturally cold climate, as well as the abundance of cost-efficient renewable energy sources – mainly geothermal and hydroelectric. The country is home to one of the world’s 5 largest crypto mining farms, whose operator Genesis Mining is reportedly the single largest consumer of electricity in Iceland.

In February, Johann Snorri Sigurbergsson, the business development manager of a local energy supplier HS Orka, predicted that the volume of crypto mining in Iceland will likely double in 2018.

HS Orka’s CEO Asgeir Margeirsson claimed in July that the industry of crypto mining has pushed “the fourth revolution,” while the director of the Icelandic Institute for Intelligent Machines stated that Bitcoin miners are “central to the industrial revolution that is still under way.”

However, HS Orka’s Sigurbergsson also argued that Bitcoin “probably won’t be here far into the future,” claiming that the data centers that are currently used by miners will eventually become new technology incubators.

Earlier this week, blockchain technology group Bitfury announced the launch of its new-generation BTC mining hardware, with plans to use the new machines in its mining centers in Canada, Norway, Iceland and Georgia.

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Major Banks, Industry Players to Launch Blockchain-Based Commodities Platform

A joint Swiss-based venture made up of banks and industry players will oversee a new blockchain-based platform for financing commodity trading.

A group of major global banks, trading firms, and a leading energy company have launched a joint venture that will oversee a new blockchain-based platform for financing the trading of commodities, Reuters reports September 19.

The Swiss-based venture, dubbed komgo SA, has been established by a host of international financing, trading, and production institutions that include ABN AMRO, BNP Paribas, Citi, Credit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS, and Societe Generale.

The venture will digitalize trade and commodities finance processes through a blockchain-based open platform, and has been developed in partnership with the Ethereum-focused blockchain infrastructure and solutions group ConsenSys.

The core development team supporting komgo is responsible for two reportedly successful blockchain based proofs-of-concept (PoC) that have been tested for energy and soft commodities trading, dubbed “Easy Trading Connect 1” and “Easy Trading Connect 2.”

According to a press release also published today from Dutch bank ABN AMRO:

“The first [komgo product] will standardize and facilitate the know-your-customer [KYC] process. The second […] will be a digital letter of credit, allowing commodity houses or other platforms to submit digital trade data and documents to the komgo customer banks of their choice.”

Reuters reports that komgo, which is set to go live later this year, will initially be used for the energy industry, specifically for trades that involve crude cargoes in the North Sea.

As of next year, the platform reportedly aims to widen to agriculture and metals. Vakt, a blockchain-powered oil trading platform that shares many of its shareholders with komgo, is said to be working alongside the new venture.

In April, a subsidiary of one of China’s four major state-owned oil companies successfully completed a shipment of gasoline from China to Singapore that used blockchain tech end-to-end across “all the key participants in the commodity trading process.”

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Bitcoin’s Energy Consumption in Summer: Rise or Fall?

Bitcoin’s rising energy consumption doesn’t rise quite so fast in the summer.

It’s no secret that Bitcoin (BTC) mining is an expensive business, and in more ways than one. Not only has it become less profitable since July 2016’s halving of mining rewards to 12.5 BTC, but competition among miners and an increasing hashrate have resulted in ever-higher energy consumption, with all the damage to the environment that implies.

Yet, as energy-intensive as Bitcoin mining is, a question still remains: Is there a seasonal variation in the cryptocurrency’s energy consumption? Even if consumption is rising on the whole, does something different happen during the summer months?

Well, data hasn’t been collected on Bitcoin‘s electricity consumption for long enough to provide a truly authoritative answer to this question, yet what data there is suggests that the summer brings a slight, but noticeable weakening to the rise in BTC’s energy consumption. This is most likely because, globally, energy prices increase during the summer months, putting a strain on the profitability of Bitcoin mining.

Steady growth

When it comes to the question of Bitcoin’s energy consumption, the first thing that needs to be stated is that direct data on consumption hasn’t been made available by the big mining companies. Still, a number of indirect estimations have been produced over the years — based on such metrics as profits, network difficulty and hardware efficiency — and these all show that consumption has been increasing consistently.

Key Network Statistics

Back in June 2014, the first rigorous study on BTC energy consumption was published by Karl J. O’Dwyer and David Malone of the National University of Ireland Maynooth. It estimated Bitcoin’s annual energy cost to be something between 0.1–10GW (accounting for the uncertainty as to which mining equipment was being used), although the authors settled — though without fully explaining why — on 3GW, which was equivalent to Ireland’s yearly consumption level at the time.

Since then, the most widely cited data has come from the Bitcoin Energy Consumption Index (BECI). Produced by analyst Alex de Vries, the BECI settled on a higher figure than that of O’Dwyer and Malone’s model, and it has continued to reveal steady, day-to-day increases in BTC consumption ever since it started collecting data in February 2017. In December, it put annual consumption at 32TW/h per year — equal to 3.65GW. By contrast, its latest figure — for Sept. 12 — indicates that the Bitcoin network is now eating up 73TW/h — or around 8.8GW – each year. However, in a standalone, peer-reviewed paper from May, de Vries put annual consumption at 2.55GW (22.4TW/h).

As the table below illustrates, de Vries’ data shows that there have been very few dips during this overall rise. The strong increases continued even during the first half of 2018, when the BTC price saw a considerable correction from its December high of $19,900. For instance, when the price fell by 46.2 percent over three months to the Feb. 17 price of $10,707, BTC’s energy consumption increased by 42.6 percent over the same period — from 34.96TW/h to 49.85TW/h. And when BTC’s value dropped by 9.87 percent between April and the end of June (to $6,366), its energy consumption rose by 20.9 percent (to 71.1TW/h).

Bitcoin Energy Consumption Index

This goes to show that, despite the recent ups and downs, BTC’s price was high enough to continue driving increased competition among Bitcoin miners, who added capacity to the network in a bid to claim freshly minted coins for themselves. This has had the overall effect of pushing energy consumption ever upward, undermining the sense that there’s any seasonal variation.

Marc Bevand — an entrepreneur who has produced his own calculations on BTC energy consumption — largely agrees with this impression.

“We don’t notice seasonal variations because the network has been growing quite fast, so any — presumably small — seasonal variation is lost in the large amounts of hashrate capacity — and thus energy consumption — being added every month. For example, a year ago, the hashrate was at seven exahash/sec and has grown to 45 exahash/sec today.”

However, despite the overall impression that there has been one continuous increase in consumption, some subtle variations are observable in the data that de Vries has collected as part of the Bitcoin Energy Consumption Index.

For one, if you calculate the growth in consumption between the 2017 summer months and compare it to the three previous months, you’ll see a slackening in the overall rate of increase. For Feb. 10 to May 10 (Feb. 10, 2017 being the first date for which data is available), consumption increased by 33.1 percent:

  • February 10 – 9.6TW/h
  • May 10 – 12.8TW/h

But between June 1 and August 31 (meteorological summer), consumption increased by only 21.9 percent:

  • June 1 –13.42TW/h
  • August 31 – 16.37TW/h

BTC Energy Consumption VS BTC Price 2017

What’s interesting about this is that Bitcoin’s price increased by 96 percent between June 1 and August 31, 2017:

  • June 1, 2017 – $2,405
  • August 31, 2017 – $4,714

By comparison, the price increase between the winter months of Feb. 10 and May 10 was ‘only’ 79 percent:

  • February 10 – $978
  • April 21 – $1,759

Put simply, BTC’s price grew faster over these three summer months of 2017, yet its energy cost grew more slowly.

Why? And what about the summer of 2018?

Well, in the three months between June 1 and Aug. 31, BTC energy consumption increased by only 5 percent:

  • June 1 – 69.6TW/h
  • August 31 – 73.1TW/h

Over the same period, BTC’s value sank by 6.3 percent. The thing is, its value dropped by a hefty 27 percent between March and May, during which time energy consumption actually increased by 31.6 percent. And between Dec. 1 and February 28, consumption increased by an impressive 69 percent, while the overall BTC value grew by only 7.8% between these three months (although they were big spikes over smaller time frames within this quarter).

BTC Energy Consumption VS BTC Price 2018

As with the year before, 2018’s movements underline two things: a) that the growth in energy consumption slows down to an appreciable degree in the summer months, and that b) this slowdown can’t be correlated with price movements, particularly with regard to 2017’s figures. In 2017, energy consumption slowed down while price rises accelerated; in 2018, even though the price had sunk on Aug. 31 relative to its position on June 1, it was still 49 percent higher than it had been on Aug. 31, 2017. Such an annual difference should, in theory, provide a greater incentive for miners to mine Bitcoin and to increase their mining capacities, yet we nonetheless see that they eased up on their growth during the summer months.

Summer = higher electricity prices

The fact that BTC’s price doesn’t fully account for its energy consumption raises a conundrum. However, it’s one that’s solved via reference to the other biggest factor in Bitcoin’s use of electricity, which is the price of electricity itself. On the global level, electricity is generally more expensive in the summer, when there is greater demand for it, both from people turning on their air conditioners and from businesses — including mining farms — needing more energy for cooling.

For example, the United States Energy Information Administration — a branch of the U.S. Department of Energy — found in a 2013 review that energy consumption in the U.S. peaks in the summer for residential, commercial and industrial customers, with the variation ranging from 18 billion KW/h to 67 billion KW/h (compared to non-peak times). Similarly, in France and Germany, demand for energy during hot weather in June 2017 caused consumption to rise by 2GW and 4GW respectively. Meanwhile, China — home to some of the largest mining facilities in the world — has been facing the possibility of power shortages this summer, “as the nation’s distribution networks struggle to cope with soaring temperatures and the fastest power consumption growth in seven years.”

RMIT University’s Centre for Urban Research explained in a 2017 report on electricity pricing in Australia:

“During hot weather, the electricity sector aims to reduce peak electricity demand via ‘price signals’ — higher prices for electricity used at times when many households use air conditioning to cool their homes.”

As a single example, the U.S. Energy Information Administration notes in a January bulletin that wholesale electricity prices peaked at $55/MWh in California during August 2017, when they had been only $36/MWh in January of that year — amounting to a 52.7 percent increase.

It’s therefore clear that electricity demand and pricing tends to increase in summer, particularly on a global level — and particularly in China, where mining is most prevalent. By extension, this would explain why the increase in Bitcoin’s energy consumption also tends to level off slightly during the summer, since miners are reacting to increasing costs — and decreasing profitability — by temporarily reducing their capacity, at least in areas affected by hot summers.

This finding is backed up by the select few individuals who actually devote themselves to tracking Bitcoin’s energy consumption. Speaking to Cointelegraph, Ian Wright, the founder of Power Compare, confirmed that there isn’t really any significant or pronounced seasonality in Bitcoin’s energy consumption. However, what little seasonality exists is driven by the cost of electricity.

“If there is a seasonality effect, it would come down to electricity prices. So, for example, prices may come down in some areas with a lot of installed solar capacity when the sun is shining. Or it may go up in other areas that are hot, as more people turn on AC and increase demand.”

Marc Bevand, who doesn’t really see any significant variations in energy consumption, nonetheless also acknowledges that consumption levels are affected by profits.

“The energy consumption is driven mostly by increases of the price of Bitcoin. If miners make more profits, they will invest more capital in mining farms.”

While he doesn’t explicitly mention electricity here, this assessment is still consistent with the idea that seasonal electricity prices can affect consumption levels, since these prices will inevitably have an impact on profits.

This idea is also backed up by a May paper authored by CoinShares Research, in which Christopher Bendiksen and Samuel Gibbons investigated trends in the cost of mining Bitcoin. In particular, their research confirmed that mining companies are significantly influenced by seasonality:

“We also note that miner migration and/or price hikes occur during the dry season in China.”

Even though this paper didn’t describe any mining network reducing capacity, the fact that networks have a tendency to migrate whenever they can would suggest that, when they can’t migrate to an area with cheaper electricity, they may simply scale back. As the authors conclude:

“Some miners may have felt the squeeze during the market bottom, particularly if they were latecomers in terms of the modernity of their mining gear and/or operate in areas with comparatively higher electricity costs.”

Renewables

While what is above demonstrates that BTC energy consumption is lightly seasonal — in that the increase in capacity slips a little during the summer — there are two caveats worth addressing. The first, which is the less serious, is that the figures produced by Alex de Vries aren’t unanimously accepted by all those who track Bitcoin’s energy consumption. For instance, entrepreneur Marc Bevand constructed his own model for calculating BTC’s energy cost, finding that it was anything between 2.85TWh and 6.78TWh per year. This is considerably lower than de Vries’ first estimation of 9.6TW/h (for February 2017), which then grew to 32TWh for December, and then to 73TW/h for this August. It’s also lower than the estimation put forward by SetOcean co-founder Oscar LaFarga, who put the annual consumption at around 18.25TW/h.

Other commentators have put their estimations even higher than de Vries. However, even with this variation, de Vries recently noted that he used the BECI’s methodology to write a peer-reviewed paper — although it produced a lower estimate than that of BECI for overall production. He also notes that a Morgan Stanley report criticized Bevan’s approach, which allegedly underestimates the cost of mining networks for cooling, which alone can consume up to 30 percent or 40 percent of a network’s revenue. As such, this analysis has stuck with de Vries’ figures. What’s more, even if they are well into the upper range of possibility, the consistency of the methodology used for the BECI means that this would have little impact on the attempt to specifically follow increases and decreases in BTC’s energy consumption over time.

The second caveat, which is more significant, is that BTC’s modest seasonality may be weakened even further as the industry matures. Ian Wright says:

“[…] the price of Bitcoin relative to electricity prices is increasingly the main driver of consumption and is also driving a shift away from high-cost areas to places with lower prices.”

Marc Bevan describes a similar process:

“Miners also design their mining farms to run 24/7/365, so seasonal weather patterns don’t interrupt their mining operations.”

Here, Wright and Bevan are referring in part to the establishment of new mining centers in cooler nations such as Iceland, where Bitcoin mining is on course this year to burn more energy than all of the nation’s homes combined. Big mining companies, such as Bitmain, are increasingly flocking to areas with cheaper renewable energy and colder climates, such as Canada.

In the process, they’ll dilute the vague seasonality currently visible in energy consumption charts, enabling consumption to rise consistently for as long as Bitcoin’s price remains high and it retains its onerous proof-of-work (PoW) algorithm. And by doing this, mining firms will also help to reduce the impact Bitcoin is having on the environment. That said, an energy expert at the University of Pittsburgh recently observed that such firms are already making significant use of green energy sources, and that Bitcoin’s overall consumption is still negligible compared to that of the banking industry.

But until Bitcoin moves almost completely to renewables, its energy consumption will continue to exhibit some slight seasonality, easing its foot off the gas during the summer months just as the rest of world is doing the opposite. While this subtle decline might seem like a bad thing from the Bitcoin community’s perspective, it doesn’t appear to have any negative consequences in practice — except for maybe an increase in average confirmation time for transactions in the summer of 2017, something which hasn’t been a problem in 2018 due to the rolling out of the SegWit upgrade. In other words, Bitcoin’s capacity is growing very steadily, making it easier than ever before to send a transaction to its network and have it accepted.

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Chinese Holding Firm to Convert US Defense Department Data Center Into Crypto Mining Farm

A Chinese holding company is in negotiations to convert a U.S. Defense Department data center into a crypto mining farm.

Chinese holding company Wuhan General Group (China), Inc. has entered negotiations to transform a U.S. Defense Department facility into a crypto mining farm, according to a press release published September 11.

Per the press release, in case of a successful outcome to the negotiation, the company will receive the first order of rigs in late October, with more to come in the following months. In converting the facility, Wuhan General Group is reportedly planning to benefit from low electricity rates in the U.S., a cool climate, and high-speed Internet, which is crucial for mining operations.

The 55,000 square foot data center with more than 3MW of power can reportedly accommodate up to 1,300 mining machines, with 12,000 to be added after its upgrade to a 30MW facility in 2019. Per the company’s estimation, the mining farm would produce around $3.5 million based with the initial 1,300 mining machines per month. Ramy Kamaneh, CEO of Wuhan General Group, said:

“We had planned to build this operation three months ago, but with the bearish cryptocurrency market, we took a step back to reassess our strategy. The decision to wait for market stability was a good one, especially considering many cryptocurrency machines are no longer profitable in the current market. We acted in the best interests of the Company and its shareholders and firmly believe that the market has bottomed and a bullish market is starting again.”

In May, Australian startup IoT Blockchain and mining hardware distributor Royalti Blockchain Group revealed their joint plan to turn a disused power station into a “Blockchain Applications Complex,” while a Bitcoin (BTC) mining operation would span two hectares. The nearby Hunter Energy Power Station will reportedly provide cut-price power for the project.

Some U.S. states are known for low energy costs, which make them a destination for mining companies. In July, New York state regulators approved a new electricity rate scheme for cryptocurrency miners that would allow them to negotiate contracts. The Massena municipal utility introduced a new rate structure for crypto miners, considering contracts on a case-by-case basis, which would protect other utility customers from increased rates.

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IBM Partners With Veridium Labs To Let Companies Track Carbon Footprint Via Blockchain

IBM and Veridium Labs have partnered to tokenize carbon credits to help companies measure carbon emissions and trade credits.

IBM announced a partnership with Veridium Labs to tokenize carbon credits that will allow companies to track their carbon footprint with blockchain today, May 15, in press release shared with Cointelegraph.

CEO and Veridium cofounder Todd Lemons said that the use of blockchain to measure carbon emissions through the supply chain will address the issues of global warming:

“Veridium’s collaboration with IBM not only transforms the carbon markets, but also creates an economically sustainable funding source for conservation through a results-based payments model – a good first step towards the new ‘regenerative economy.’”

The Veridium-issued digital tokens, which will be available on the Stellar blockchain, will be backed by environmental assets like the Triple Gold REDD+ credits from InfiniteEARTH.

Jared E. Klee, the IBM Blockchain Offering Manager for IBM’s token initiatives, told Cointelegraph that IBM thinks blockchain tech can be used to “make the world a better place”:

“IBM is continuing its commitment to environmental stewardship through its engagement with Veridium. The Veridium token issuance may not only present a powerful solution for environmental offsets, but open up new funding opportunities for critical initiatives such as Infinite-Earth’s rainforest reserve. IBM believes innovative technologies like blockchain can make the world a better place.”

IBM had previously partnered with a group of international banks to pilot blockchain transactions for supply chain management, as well as releasing a “Blockchain Starter Plan” in Beta for facilitating blockchain use for businesses of any scale.

Blockchain use for reducing environmental impacts of various industries has been tested around the world. Blockchain company Productivist announced earlier in May that their peer-to-peer network mapping manufacturing capacities globally could reduce a project’s carbon footprint by making it easier for companies to find local manufacturers. In February of this year, Cointelegraph reported that LO3 Energy had developed the blockchain-powered Brooklyn Microgrid to allow producers of solar energy to sell excess green energy to other users on the platform.

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