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The self-regulatory organization FINRA and the North American Securities Administrators Association have both issued investor alerts about bitcoin.177178
An official investigation into bitcoin dealers has been reported in May 2018. The U.S. Justice Department launched an investigation into potential price manipulation, including the techniques of spoofing and wash trades.180181182 Dealers in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
The U.S. national investigation was motivated by concerns of potential manipulation during futures settlement dates. The final settlement price of CME bitcoin futures contract is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the initial shipping date in January 2018, the CME asked extensive detailed trading information however a few of those exchanges refused to supply it and later provided only limited data.
State and provincial securities authorities, coordinated throughout the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
Academic research published in the Journal of Monetary Economics concluded that cost manipulation happened during the Mt Gox bitcoin theft and that the marketplace remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to 2011.187
Research by John M. Griffin and Amin Shams in 2018 suggests that trading related to increases in the amount of the Tether cryptocurrency and related trading at the Bitfinex exchange account for roughly half of the price increase in bitcoin in overdue 2017.188189
J.L. van der Velde, CEO of Bitfinex and Tether, denied the claims of price manipulation:"Bitfinex nor Tether is, or has , engaged in any kind of market or cost manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex. "190
The Bank for International Settlements outlined several criticisms of bitcoin in Chapter V of the 2018 annual report. The criticisms include the absence of equilibrium in bitcoin's price, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and also the influence of miners.191192193.
The Economist wrote in 2015 these criticisms are unfair, predominantly because the unethical image may compel users to forget the capacities of the blockchain technology, but also due to the fact that the volatility of bitcoin is changing in time.194
Bitcoin and other cryptocurrencies have been identified as economic bubbles by at least eight Nobel Memorial Prize in Economic Sciences laureates, including Robert Shiller,195 Joseph Stiglitz,196 and Richard Thaler.19713 Noted Keyensian economist Paul Krugman wrote in his New York Times column criticizing bitcoin, calling it a bubble and a fraud;198 and professor Nouriel Roubini of New York University known as bitcoin that the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors like Warren Buffett,201202 and George Soros203 have stated similar views, as have business executives such as Jamie Dimon and Jack Ma.204.
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Bitcoin has been criticized for the amount of electricity consumed by mining. As of 2015update, The Economist estimated that even though all miners utilized modern facilities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
At the end of 2017, the global bitcoin mining activity was estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end estimates of bitcoin's total consumption levels amount to only about 6 percent of the total energy consumed by the international banking industry, and even if bitcoin's consumption levels increased 100 fold this link from today's levels, bitcoin's consumption would still only amount to about 2% of international electricity consumption.206.
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To lower the expenses, bitcoin miners have set up Is Cloud Mining Profitable in areas like Iceland where geothermal energy is economical and cooling Arctic air is free.207 Bitcoin miners are known to utilize hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity prices.206208209210 Miners are drawn to providers like Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity is subsidized by the government.212213.
A variety of journalists,207214 economists,215216 and the central bank of Estonia217 have voiced concerns which bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that"a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion. "218 A 2014 report by the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns that bitcoin may be a pyramid scheme; it concluded that,"Since in the example of bitcoin the normal guarantees of profits are lacking, it cannot be presumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks called bitcoin as a pyramid scheme.221.