## Tuesday, February 23, 2021 ... //

### Yellen, Lagarde vs Bitcoin

Two weeks ago, the president of the European Central Bank (ECB) Christine Lagarde said that Bitcoin was unlikely to be held by central banks, it is used for funny business. At about the same time, Elon Musk added the word "Bitcoin" to his Twitter profile. The Bitcoin price added some 15% in hours as a result – as millions of dimwits interpreted the comment as an order to BUY BUY BUY.

In the process of merging the two most notorious one-trillion bubbles of the contemporary crazy financial world, the uncompetitive carmaker Tesla bought $1.5 billion worth of Bitcoin and said that it would accept it as compensation. The supporters of Tesla and Bitcoin bubbles are highly overlapping sets of hopeless idiots. Thinking positively about one of these bubbles is quite a sign of the person's stupidity – but celebrating the hybridization of these two bubbles (in which all the risks amplify each other and the absence of any beef is illuminated from both sides) is probably yet another level. Of course, Tesla hasn't ever produced any real profit from cars so the Tesla profit from the appreciation of BTC surpassed all the conceivable profits of the carmakers that have something to do with cars. ;-) Imagine how fudged up the people have to be if they see nothing wrong about such "money" and such "carmakers". Do you really prefer a world where "producers" actually make their billions by manipulating millions of simpletons by ordering them BUY BUY BUY instead of producing useful, competitive products? If your IQ happens to be below 70 but you were capable of learning to read, anyway, let me remind you that the fair Bitcoin price has always been and still is$0.00. Among Bitcoin cultists, this number $0.00 isn't applied too accurately, they are paying about$50,000 (and the peak was $58,354 a day or two days ago). In early 2019, the price at which the cult was trading the$0.00 Bitcoin was $3,100 (a local low). The 16-fold increase in these 2 years basically means that the number of dimwits who have been persuaded that it is clever to invest into this bubble grew by a factor of 16. Each of them evaluates the Bitcoin price inaccurately and the inaccuracy per person grew from the$3,100 discrepancy to $50,000, by the same factor of 16. That's why we could say that the total amount of stupidity contained in the Bitcoin cult actually grew with the second power of 16, by a factor of 256. I think that the people in this cult do believe that by collecting a sufficient number of dimwits and inflating the bubble to a huge enough size, they change the truth and$0.00 will be equal to $50,000 or something (just like when Bill Gates says that 2+2=4 is just a racist invention and other answers may be made more correct when minority SJWs are fighting hard enough). Sorry, idiots, it won't. The Bitcoin is still worth$0.00 and you are just a larger pile of more hardcore morons than what you were before.

Half a day ago, the likely U.S. counterpart of Lagarde under Biden, Janet Yellen, said some negative things about Bitcoin. Bitcoin is extremely inefficient for transactions and as a result, it is only good enough for large enough criminal transactions that greatly benefit from the Bitcoin's semi-anonymity. Lots of the Bitcoin cult dimwits heard these elementary facts for the first time which is why the price collapsed from the high above $58,000 below$50,000 in half a day. The absolute value of the impact was pretty much the same as Musk's except that Musk only needed to spend a few seconds by modifying his Twitter profile, Yellen had to speak for minutes. And it's still possible that BTC dropped mostly because Elon Musk tweeted "BTC and ETH seem high now". He may have had a short position right before that tweet, like always, the fact that this guy isn't in jail yet is an extremely damning testimony about the state of the U.S. rule of law. Charles Ponzi didn't do 1% of Musk's crimes! Look how Ponzi was punished.

The adjective "extremely inefficient" is quite an understatement. How do these numbers work with the current price? Well, look at the recent blocks according to btc.com. The defining mechanisms of the Bitcoin guarantee that in average, a block is mined each 10 minutes (600 seconds). About 3,000 transactions are listed (BTC is transferred from a wallet to another) in the block. It means that the Bitcoin has the capacity to process about 5 transactions per second, vastly lower than 1,700 transactions processed each second by Visa.

For certifying these new 3,000 transactions each 10 minutes, a miner takes BTC 6.25, the flat fee for finding a block (which was originally BTC 50 and is being halved roughly during each Olympic games), plus about BTC 1 for fees (a sum of fees from the 3,000 transactions). In total, that is almost BTC 8 i.e. $400,000. You may remember that only 15% of these rewards are directly linked to the transaction fees but the whole amount is really necessary for the mining to run today, at the sufficient level of safety. Well, because the miners get$400,000 for a block cerifying 3,000 transactions, the average transaction is really connected with the payment of more than $100 to the miners. If you wanted to pay coffee with Bitcoin, the coffee would be$100 more expensive. Individually, the senders of the Bitcoin only pay 15% of that, roughly $10 per transaction ($16 is currently needed to be in the next block but these numbers are changing all the time, according to the length of the queue of unprocessed transactions). But collectively, the owners of the existing Bitcoin must pay the BTC 6.25 fees to the miners, anyway. That's like issuing new stocks which they need to do, and issuing new stocks makes the existing shareholders poorer. So collectively, it is right to count the whole BTC 7.5 per block as the cost that the existing Bitcoin users collectively have to pay each 10 seconds. After all, a big part of this expense is genuinely wasted for electricity.

The miners get almost BTC 8 or $400,000 per block which is$2.4 million per hour or $57.6 million per day or$21 billion per year for their mining job. Right now, the mining is safely profitable for most of the big miners again. But in average, depending on the immediate difficulty of the mining which is self-adjusting, about 1/2 of the miners' rewards could be the electricity. If the profit margins are much higher than 100%, new miners are being born. So some $10 billion a year is wasted for the electricity – for certifying a number of transactions that is just 3 per second, some 500 times smaller than Visa's 1,700 per second. This$10 billion a year is comparable to the revenues of ČEZ, the by far dominant Czech producer of electricity. So indeed, the Bitcoin mining is consuming as much as the whole Czech Republic while it is only enough to certify 1/500 of the transactions that Visa certifies without any substantial wasting of electricity. Those 5 transactions per second which Bitcoin can do could be enough to serve Czechia's financial transactions; but we would need to double the consumption of electricity just to be able to pay!

For a decade, the growing of the Bitcoin bubble has been a childish activity pursued by retarded children (sometimes children who were much older than 18 years, and I just find it amazing that guys who can sometimes look intelligent, like Timcast, don't see how incredibly stupid their participation at this bubble is). The total value of the "coins" was much smaller than the money circulating in the financial markets (and that's why the central banks could adopt the attitude "we don't need to care"). But it is not really the case. The bubble has grown into a systemic threat – the total value of the money may become comparable to the value of the financial markets after another similar bull run – and the central banks, starting with ECB and the Federal Reserve, will almost certainly have to be assertive in taming (and, ideally, perforating) this dangerous bubble, otherwise they would be co-responsible for the very harmful consequences.