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'' The U.S. Securities and Exchange Commission has also issued warnings. A May 2014"Investor Alert" warned that investments involving bitcoin might have elevated rates of fraud, and that investors might be solicited on interpersonal networking websites.175 An earlier"Investor Alert" warned about the usage of bitcoin in Ponzi schemes.176
The self-regulatory organization FINRA and the North American Securities Administrators Association have both issued investor alarms about bitcoin.177178
An official investigation into bitcoin traders has been reported in May 2018. The U.S. Justice Department launched an investigation into potential price manipulation, including the techniques of spoofing and scrub transactions.180181182 Traders in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
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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 prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first shipping date in January 2018, the CME asked extensive detailed trading information however several of the exchanges refused to provide 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 study published in the Journal of Monetary Economics concluded that price manipulation occurred during the Mt Gox bitcoin theft and that the market remains vulnerable to manipulation.186 The background of hacks, fraud and fraud involving bitcoin dates back to at least 2011.187
Research by John M. Griffin and Amin Shams in 2018 indicates that trading related to increases in the amount of the Tether cryptocurrency and associated trading at the Bitfinex exchange account for roughly half of the purchase price increase in bitcoin in late 2017.188189
J.L. van der Velde, CEO of both Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has , engaged in any kind 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
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The Bank for International Settlements summarized several criticisms of bitcoin in Chapter V of their 2018 annual report. The criticisms include the lack of stability in bitcoin's price, the high energy consumption, high and variable transactions costs, the poor discover this info here 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 unethical image may compel users to forget the capabilities 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 at least eight Nobel Memorial Prize in Economic Sciences laureates, including Robert Shiller,195 Joseph Stiglitz,196 review 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 the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors such as Warren Buffett,201202 and George Soros203 have said similar opinions, as have business executives like 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 used modern amenities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).133
At the end of 2017, the worldwide bitcoin mining activity was estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end official statement estimates of bitcoin's total consumption levels amount to only about 6 percent of the total energy consumed by the international banking sector, and even if bitcoin's consumption levels increased 100 fold from the current degrees, bitcoin's consumption would still only amount to about 2% of global power consumption.206.
To lower the expenses, bitcoin miners have set up in areas like Iceland where geothermal energy is economical 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 prices.206208209210 Miners are attracted to suppliers such as 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.