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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 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 Traders 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. federal investigation was prompted 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 but several of those exchanges refused to supply it and later provided only limited information.
Academic study published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and that 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 suggests that trading related to increases in the amount of the Tether cryptocurrency and related trading in the Bitfinex exchange account for roughly half of the purchase 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 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
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 cost, the high energy consumption, high and variable transactions costs, the bad security you can find out more 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 since 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 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 of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan important link 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 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 has been estimated to consume between one and four gigawatts of electricity.205 Politico noted that the even high-end estimates of bitcoin's total consumption levels amount to only approximately 6 percent of the total energy consumed by the international banking industry, 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 put up in places like Iceland where geothermal energy is see this site cheap and cooling Arctic atmosphere is free.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 who have energy surpluses.211 According to a University of Cambridge study, a lot of bitcoin mining is done in China, where power is subsidized by the government.212213.
Various journalists,207214 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 2014 report from the World Bank concluded that bitcoin was not a willful 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 guarantees of gains are lacking, it cannot be presumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks called bitcoin as a pyramid scheme.221.