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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 may have elevated rates of fraud, and that investors might be solicited on interpersonal networking sites.175 An earlier"Investor Alert" warned about the use of bitcoin in Ponzi schemes.176
The European Banking Authority issued a warning in 2013 focusing on the absence of regulation of bitcoin, the chance which exchanges could be hacked, the volatility of bitcoin's cost, and general fraud.148
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 dealers was reported in May 2018. The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.180181182 Dealers in the U.S., the U.K, South Korea, and possibly 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 is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first delivery date in January 2018, the CME asked extensive detailed trading information however several of the exchanges refused to supply it and later provided only limited data.
State and provincial securities authorities, coordinated through 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 occurred during the Mt Gox bitcoin theft and that the marketplace remains vulnerable to manipulation.186 The history of hacks, fraud and fraud involving bitcoin dates back to at least 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 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 cost 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 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 that these criticisms are unfair, predominantly since the unethical image may induce users to forget the capabilities of their 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 called bitcoin that the"mother check my reference 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 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 if all miners utilized modern amenities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
In the end of 2017, the global bitcoin mining activity was estimated to consume between one and four gigawatts of electricity.205 Politico noted that the even high-end estimates of bitcoin's overall consumption levels basics amount to only about 6% of the total power consumed by the global banking industry, and even when bitcoin's consumption levels increased 100 fold from today's degrees, bitcoin's consumption would still only amount to approximately 2% of international electricity consumption.206.
To reduce the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic atmosphere is liberated.207 Bitcoin miners are known to utilize hydroelectric power in Tibet, Quebec, Washington (state), and Austria to decrease electricity prices.206208209210 Continued Miners are drawn to providers 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.