Crypto Crooks

After we sold our radio station in Houston in 2000, because I was also head of the Texas Auto Writers, a good friend at General Motors offered me a job doing public relations and writing copy. It was a good job in the headquarters in Irving near DFW.

Of course, with my typical foresight, I didn't realize that GM was swirling down the porcelain fixture and in a couple of years, I began looking for the exit. But while there, I still wanted to live in the country and not in a Dallas suburb. Being near Dallas was bad enough. We found a cool place on a few acres just outside of a picturesque town named Granbury.

But, the inevitable struck GM, that being bankruptcy, and the ax began swinging to the point that even my boss, a GM lifer, was offered a buyout. I escaped back into broadcasting, but always remembered that lovely town and the nice folks we knew there.

But now, Granbury is in crisis. and the crisis has a name. Bitcoin.

But before I get to Granbury, a few words about Bitcoin or any of the other so-called "cryptocurrencies." Though the word "currency" is in the name, they aren't and never have been. They are made up, a fantasy, have no intrinsic value, aren't backed by anything and require complete suspension of belief to invest in. In short, like I keep yelling at people in Walmart that "pajamas aren't pants!," Bitcoin isn't money!

The whole scam was invented by a person or group of people who are unknown. That's right, unlike Fed Chairman Jay Powell, you have no idea who created this thing. It is the perfect Libertarian creation since no government, bank or other entity is involved. It is essentially computer code that is traded back and forth and then shares ultimately sold for actual money at some point when the last sucker bought your stake. I know, I thought Ponzi schemes were illegal, too.

It was created back in 2009, when the world's actual banks were eating their young after greed set fire to their businesses. Given their financial malfeasance, it's easy to see how some sort of independent means of exchange was attractive. But, and it's a big but, even our little dollar bills, Francs, Lira or Euros are backed by the full faith and credit of actual governments with actual taxes and treasuries. And, yes the values of various currencies can fluctuate, but the swings of crypto value are monumental. The Brookings Institution said...

Earlier this year, (2021), the price of one Bitcoin surged to over $60,000, an eightfold increase in 12 months. Then it fell to half that value in just a few weeks. Values of other cryptocurrencies such as Dogecoin have risen and fallen even more sharply, often based just on Elon Musk’s tweets. Even after the recent fall in their prices, the total market value of all cryptocurrencies now exceeds $1.5 trillion, a staggering amount for virtual objects that are nothing more than computer code.

Bitcoin enabled transactions using only digital identities, granting users some degree of anonymity. This made Bitcoin the preferred currency for illicit activities, including recent ransomware attacks. It powered the shadowy darknet of illegal online commerce much like PayPal helped the rise of eBay by making payments easier.

But now we know, that anonymity isn't all it was cracked up to be since authorities have tracked down ransomware hijackers who demanded payment in Bitcoin. So now, it's just a speculative investment. But unlike buying shares of Anaconda Copper, hoping the market for copper will rise, this is like Monopoly money. It's like those silly digital trading cards of famous works of art or, this...

They are worth nothing and exist only on your computer. We might as well use baseball trading cards for money, though if I had a Mantle or Mays rookie card, I wouldn't complain even without the gum.

Fortunately banks and other real institutions have stayed on the sidelines, so it's mainly nerdy suckers who will be hit when this house of cards inevitably tumbles. Or like Sam Bankman-Fried, the crypto billionaire owner of FTX which went belly up ruining many investors, you could end up in jail. Bankman-Fried actually knew nothing much about crypto except it was an easy way to fleece the rubes out there. He was a stockbroker.

Parenthetically, back in the 1920's, one of Hemingway's good friends, and a character in The Sun also Rises was Harold Loeb, the scion of one of the most prominent families in New York. His mother was a Guggenheim and his father owned a big brokerage house. Loeb recounted that as a young man, his father came to his room, sat him down and warned him, "Don't go near Wall Street, son. Build something, do something. Don't become a stockbroker. We are just parasites."

But for some reason that an engineer can explain, the generation of these cryptocurrencies requires huge gobs of computing power. And I mean huge. The comically named Electric Reliability Council of Texas, the gang of Keystone Kops who "manage" the power supply in our state say that these facilities will impact the electric grid during hot Texas summers and the occasional killer winter storm. The U.S. Energy Information Administration (EIA) estimates that it accounts for 0.6–2.3% of the country's electricity use annually right now, and it's going to get worse. 

Globally, crypto "mining" uses as much electricity as the Netherlands, and all that energy use has serious climate implications. Beyond that, studies indicate it could be raising the price you pay for electricity. Let me amend that, will be or is already increasing those prices.

And in Granbury, it's having health implications. Crypto tokens are generated by having a computer solve complicated puzzles. That requires a lot of computing power, generally done by specialized computers running calculations 24 hours a day. You see, all those computers generate an immense amount of heat, that calls for an immense amount of cooling. That means lots of big fans.

Those fans at the crypto mining operation outside Granbury are loud and generate a constant low level drone that can be heard for miles. Time Magazine reported...

A mother said her 8-year-old daughter was losing her hearing and fluids were leaking from her ears. Several women said they experienced fainting spells, including while driving on the highway. Others said they were wracked by debilitating vertigo and nausea, waking up in the middle of the night mid-vomit. 

None of them knew what, exactly, was causing these symptoms. But they all shared a singular grievance: a dull aural hum had crept into their lives, which growled or roared depending on the time of day, rattling their windows and rendering them unable to sleep. The hum, local law enforcement had learned, was emanating from a Bitcoin mining facility that had recently moved into the area—and was exceeding legal noise ordinances on a daily basis.

Over the course of several months in 2024, TIME spoke to more than 40 people in the Granbury area who reported a medical ailment that they believe is connected to the arrival of the Bitcoin mine: hypertension, heart palpitations, chest pain, vertigo, tinnitus, migraines, panic attacks. At least 10 people went to urgent care or the emergency room with these symptoms.

Ok, you say, guys like Bankman-Fried may fleece some crypto nerds into playing with pretend money, but why should I care if some suckers don't do their homework? OK, here's some homework for you. Politicians have gotten involved, and some of the tech billionaires have discovered the way to a Senator's heart goes through his wallet.

Former President Trump recently spoke to a big crypto conference and promised that unlike the other guys, he will fight any further regulation of the crypto business. Here is an email I got from Senator Ted Cruz (R-Cancun)...

MEDIA ADVISORY: Sen. Ted Cruz to Host Event with Texas Blockchain Council

DENTON — On Monday, August 12, Senator Ted Cruz will hold an event at Core Scientific's Mining Facility in Denton, Texas, in partnership with the Texas Blockchain Council. The council will make a major announcement regarding Sen. Cruz's re-election campaign. 

Following remarks from Sen. Cruz, Lee Bratcher, President and Founder of the Texas Blockchain Council, and Adam Sullivan, CEO of Core Scientific, Inc., the media will have the opportunity to ask questions.

WHO:
Sen. Ted Cruz (R-TX)
Lee Bratcher, President and Founder of the Texas Blockchain Council
Adam Sullivan, CEO of Core Scientific, Inc.

WHEN: Monday, August 12

WHERE: Core Scientific Mining Facility in Denton, TX — Address provided upon RSVP

Wow, they won't even tell you where it is until you RSVP. There are 34 of these large Bitcoin "mines" in the country and 10 of them are in Texas. There have been hearings in Austin on the effects of these facilities on the Texas power grid. After one of them Lt. Gov. Dan Patrick declared, “it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.”

I'd like to stipulate for the record, it's the first thing I've ever agreed with Patrick about. Though he's right, I can't help feel the need for a quick wash up.

But for some reason the GOP is more enamored of this scam than Democrats, though don't be mistaken, the Dems will take the money as well. But remember, it's real money they are all taking in contributions, not the crypto itself. If you have to convince somebody that something is money, it almost certainly isn’t. Here's a test. Go down to a Chevy dealer and try to buy a Corvette with Bitcoin. If you do perchance find one, send me his name quick.

Even Trump once called it a scam, but has now changed his tune. He promised the gathered billionaires he'd make the US the crypto capital of the planet. Sen. Cynthia Lummis (R-Wyo.) has proposed that the federal government purchase around 5 percent of the world’s bitcoin supply to build a strategic reserve such as the ones the United States has for oil and gold. I know her and thought she was smarter than that. From the Washington Post...

Fairshake, a pro-crypto super PAC, has raised more than $200 million. The Winklevoss twins — big crypto investors who launched the Gemini crypto exchange — have contributed millions of dollars. Venture capitalists Marc Andreessen and Ben Horowitz, perhaps the biggest investors in crypto firms, have offered support to pro-Trump PACs. Silicon Valley entrepreneur Peter Thiel helped launch the political career of Sen. JD Vance (Ohio).

Thiel is one of the more interesting MAGA supporters as he is very publicly and proudly gay. The Securities and Exchange Commission is trying to erect some guardrails on the trading of this play money, regulating them like securities. Therefore, Mr. Trump has called for the head of the SEC to be fired.

Some states are now openly considering using crypto currency for their state social safety net and retirement programs. The Jacobin Website put it thus...

Crypto is a naked instrument of financial speculation and fraud, and a highly lucrative one. Far from removing politics from money and decentralizing power at the expense of oligarchic influence, crypto has become a vector of power and influence, not just for financial market participants — from professional traders and portfolio managers to the legions of insufferable crypto bros who flaunt their gains on the streets of Miami and Los Angeles — but for powerful actors in the tech industry wishing to gain a purchase on political decision-making.

The "right to mine Bitcoin" is even in the Republican platform, no matter what the SEC and Elizabeth Warren say.

If you want a case study, consider El Salvador. Nayib Bukele, the "cool dictator" announced in 2021 that the country would make Bitcoin it's official currency. They invested $85 million in the fantasy.

The value of bitcoin began decreasing in November 2021, and had fallen by about 45% of its value by January 2022. It is estimated that the Salvadoran national reserves had lost $22 million as a result of this.

All of this is to say, beware. All of you conservatives who think Bill Gates will be the emcee for the Apocalypse, might want to keep an eye on Big Tech goobers on your side as well. Meanwhile, I have a digital Mickey Mantle rookie card I can sell you.