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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 Traders in the U.S., the U.K, South Korea, and possibly other countries are being investigated. Brett Redfearn, head of the U.S.
The U.S. national investigation was motivated by concerns of possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January 2018, the CME asked extensive detailed trading information but several of those exchanges refused to provide it and afterwards provided only limited data.
State and provincial securities regulators, coordinated throughout the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
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Academic research published in the Journal of Monetary Economics concluded that price manipulation happened during the Mt Gox bitcoin theft and the market remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to 2011.187
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Research by John M. Griffin and Amin Shams in 2018 indicates 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 purchase price increase in bitcoin in overdue 2017.188189
J.L. van der Velde, CEO of Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has , engaged in any sort of market or price 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 summarized several criticisms of bitcoin in Chapter V of the 2018 annual report. The criticisms include the absence of stability in bitcoin's cost, the high energy consumption, high and variable transactions costs, the poor security and fraud in cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.191192193.
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The Economist wrote in 2015 these criticisms are unfair, predominantly because the shady image may induce users to forget the capabilities 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 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 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 like Jamie Dimon and Jack Ma.204.
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 amenities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).133
In the end of 2017, the worldwide bitcoin mining activity has been estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end quotes of bitcoin's overall consumption levels amount to only approximately 6 percent of the entire energy consumed by the international banking industry, and Get More Info even when bitcoin's consumption levels increased 100 fold from the current degrees, bitcoin's consumption would still only amount to approximately 2% of international electricity consumption.206.
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To reduce the costs, bitcoin miners have set up in places like Iceland where renewable energy is cheap and cooling Arctic atmosphere is liberated.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity costs.206208209210 Miners are drawn to suppliers like Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, a lot of bitcoin mining is done in China, where electricity is subsidized by the government.212213.
A variety of journalists,207214 a fantastic read economists,215216 and the central bank of Estonia217 have voiced concerns that 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 navigate to this website 2014 report from the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns which bitcoin may be a pyramid scheme; it concluded that,"Since in the case of bitcoin the typical promises of gains are lacking, it cannot be presumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.221.