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The self-regulatory organization FINRA and the North American Securities Administrators Association have issued investor alarms about bitcoin.177178
An official investigation into bitcoin dealers was reported in May 2018. The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and scrub transactions.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 is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first shipping date in January 2018, the CME requested extensive detailed trading information but several of the exchanges refused to provide it and afterwards provided only limited information.
Academic research published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and the marketplace remains vulnerable to manipulation.186 The history of hacks, fraud and fraud involving bitcoin dates back to at least 2011.187
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Research by John M. Griffin and Amin Shams in 2018 suggests that trading associated with increases in the amount of the Tether cryptocurrency and related trading in the Bitfinex exchange account for about half of the price increase in bitcoin in late 2017.188189
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J.L. van der Velde, CEO of both Bitfinex and Tether, denied the claims of price manipulation:"Bitfinex nor Tether is, or has ever, engaged in any sort of market or cost manipulation. Tether issuances cannot be used to prop up the amount 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 lack of equilibrium in bitcoin's cost, the high energy consumption, high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and the influence of miners.191192193.
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The Economist wrote in 2015 that these criticisms are unfair, predominantly because the unethical image may compel users to overlook the capacities of the blockchain technology, but also on account of 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 called 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 if all miners used modern amenities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).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 quotes of bitcoin's overall consumption levels amount to only approximately 6% of the total power consumed by the international banking industry, and even when bitcoin's consumption helpful resources levels increased 100 fold from today's degrees, bitcoin's consumption would still only amount to approximately 2% of global power consumption.206.
To reduce the costs, bitcoin miners have set up in areas 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 decrease electricity prices.206208209210 Miners are attracted to providers such as 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 has been 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, said that"a real Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion. "218 A 2014 report from the World Bank concluded that more 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 normal promises of gains are lacking, it cannot be assumed that bitcoin is a pyramid scheme" In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.221.