The Cryptocurrency Thread 2

[RobbieB]

Good. So am I.

 

[captain3d]

Haha that gave me a laugh markola

 

[jim584672]

‘Crypto tax’ is here. India imposes 30% tax on proceeds of digital assets

[begin snip]
In a significant move that is believed to have brought cryptocurrencies and non-fungible tokens (NFTs) under a tax net, finance minister Nirmala Sitharaman on Tuesday announced a 30 per cent tax on any income from the transfer of virtual digital assets, specifying that no deductions and exemptions will be allowed.

The gifts are to be taxed on the hands of the recipient, she said, adding that there will also be a 1 per cent tax deducted at source (TDS) on the payments made for the transfer of digital assets. It was also announced that any loss made on the transaction of such digital assets cannot be set off against any other gain. [end snip]


https://www.hindustantimes.com/busi...oceeds-of-digital-assets-101643698281541.html

 

[captain3d]

It was banned. Now it is taxed.

Is that an upgrade?

 

[target2019]

My question was specific to the tokens. I believe I do understand what it is (tokenization) and it’s potential for use. Same with other aspects of our digital financial world, such a crypto, stable coins, and the fundamentals of decentralized finance.

I was questioning the specific claims made. My intent with this thread is twofold. First, along with others, to learn. Second, to try and keep the thread fact based (and useful) and the hyperbole at bay. It’s not helpful.

In that case, to answer your initial question directly, "Stock tokenization doesn't exist in the US Stock Market, and therefore solves none of our problems today." We already have batch processing of stock transactions, and when we buy or sell, the trade confirmation arrives in two days.

Just playing devil's advocate, but I think one advantage to a future trader is that the transaction would be instantaneous. A similar model is applied, in my opinion, in an NFT. Nicole Buffet created tokens based on a particular company product of hers (a single piece of her artwork). A publicly-traded company of course has a much larger tokenization challenge. You see discussion of that as hyperbole, and I agree in so far as most articles and youtube posted are hyperbole, or its reverse. I think I'm resisting hyberbole pretty well, and don't think I've used that.

I am puzzling over how mechanically you could tokenize a stock. How does the process work? How does the Transfer Agent show the new owner on the books? How does the TA get paid? What about proxy mailings and payment of dividends? Transfers of funds between parties? Seems impossible.

Just the Devil's Advocate, so feel free to ignore my thoughts.
1) and 2) I am offering that the process would work similarly to an NFT. Some tokenization would happen before an IPO. Obviously more tokens must be created as the company creates more and more value. In my smallish mind I see how this works for Nicole Buffet, but I really can't grasp it on a much larger scale, say for the tokenization of Berkshire Hathaway. The amount of computing power for a complete solution staggers the mind.
3) The books are the blockchain.
4) Proxy mailings would come through your wallet.
5) Dividend payments would be part of the blockchain.
6) Transfer of payments is already possible through the concept of a wallet.

I agree that this seems impossible at first glance, especially when applied to an existing system of regulation. and existing stock. But what if this all leads to digital nations? New companies will create their entity within that framework, and the systemic challenges erected by geographic nations is by-passed. Criminal enterprises are already in place, and provide a good example.

 

[target2019]

‘Crypto tax’ is here. India imposes 30% tax on proceeds of digital assets

[begin snip]
In a significant move that is believed to have brought cryptocurrencies and non-fungible tokens (NFTs) under a tax net, finance minister Nirmala Sitharaman on Tuesday announced a 30 per cent tax on any income from the transfer of virtual digital assets, specifying that no deductions and exemptions will be allowed.

The gifts are to be taxed on the hands of the recipient, she said, adding that there will also be a 1 per cent tax deducted at source (TDS) on the payments made for the transfer of digital assets. It was also announced that any loss made on the transaction of such digital assets cannot be set off against any other gain. [end snip]

https://www.hindustantimes.com/busi...oceeds-of-digital-assets-101643698281541.html

The US already has a tax on buying and selling of crypto assets. See https://www.irs.gov/individuals/int...ed-questions-on-virtual-currency-transactions for how tax law applies to cryptocurrency.

1) When you mine, you pay based on the value created, and pay the personal income tax rate on what was mined. 2) When cryptocurrency is exchanged you have a capital gain or loss. For most I would guess that #2 applies.

Of course our tax reporting on this is kinda on the "honor system." There is a bookkeeping challenge in trying to understand the taxation, and how to comply.

When the US finally gets around to codifying specifics, all of the intermediaries will have to issue 1099's officially.

For INDIA it is significant that 1% tax deducted at source (TDS) will apply. It guarantees that their gov't gets something for every transaction processed through an entity.

 

[captain3d]

Being taxed to transfer Bitcoin from your personal wallet A to wallet B would be very unfair. Not sure if that is what they mean. No gains made at that point.

Obviously as India is now introducing its own CBDC the tax is to suppress the other cryptos.

 

[ERD50]

RE - bitcoin miners using "cheap/free" sources of electricity:

And yet, others haven’t to date figured out how to, resulting in various kinds of stranded energy around the world.

Maybe your candle manufacturer needs to have a building, with air conditioning, for employees, who need to be paid salaries and benefits, who need roads to get to work. Most of all, this elaborate infrastructure needs to engage when the gas is flared (or the wind blows, or sun shines or the rainy season occurs) and needs to go dormant when the excess energy source either goes dormant or when its power is in high demand and consequently more expensive than other Bitcoin miners are paying around the world.

A Bitcoin miner pulls a rig up to a gas pipe, converts the unused fuel into electrical energy to power computers that solve math puzzles, and transmits the product to the nearest cell tower at today’s spot price of $38,000 per block. That is a very tough competitor to undercut to purchase the world’s unused flare gas.

What’s more, all the other miners around the world are forced to find free or cheap energy themselves if they want to compete.

Markets allocate capital with brutal efficiency. If mining fills a niche profitably that no one else can, or has to date, they are the highest and best use for that energy.

I think there are some portable units on trucks. And I think there are energy companies experimenting with it in-house vs. contractors. Here is a CNBC article from September about it all, with photos. It does mention trucks full of rigs.

https://www.cnbc.com/2021/09/04/bitcoin-miners-oil-and-gas-execs-talk-about-natural-gas-mining.html

OK, while I think this is far too much of an oversimplification ("A Bitcoin miner pulls a rig up to a gas pipe, converts the unused fuel into electrical energy to power computers"), I'd agree that with a mining operation set up in a trailer, and a suitable generator(s) on a trailer, it could be set up fairly easy - easier than some other operations that require more in the way of infrastructure/labor, etc.

But I just don't see where this is all that unique. Any computer intensive operation could do the same. I'm sure there are other operations that I'm just not familiar with that could make use of it.

I'm curious how the capital costs (computers, trailers, generators, pipeline/filtering connection, etc) compare to the electrical costs, esp the added costs to utilize a gas flare site. It still seems to me that profit has nothing to do with it, If you need $11,000 of energy, and you can get it for $1,000 at a gas flare site (made up number for conversation), you saved $10,000. Of course any savings is a plus, but I fail to see what is unique there to bitcoin mining. That actually seems more important to a low margin product. If that $11,000 in kWh only gets me $12,000 of product, the savings is a huge % profit increase. But if bitcoin mining is already so profitable, yes, it's still $10,000, but a relatively smaller % of my profit.

And if I'm making so much profit, why would I want to divert my mining resources to tapping these out-of-the way sites and have to move my equipment, get it set up, maintain the generators, etc. That's a lot of expensive equipment that is going to be a target for theft (computers and generators are probably pretty easy to sell on the black market).

Seems a miner should focus on their supposed "core strengths", and just keep those computers running 24/7. Everything else is a distraction.

-ERD50

 

[aja8888]

I just can't picture this in reality:

"A Bitcoin miner pulls a rig up to a gas pipe,

What gas pipe? Certainly not a high pressure transmission line! Someone's pipe at their gas meter?

Some people just watch too many cartoons on Saturday morning.

 

[REWahoo]

My guess is one of these:

 

[aja8888]

My guess is one of these:

Yes, make me laugh! I suppose some oil company is going to allow a stranger to enter the well site and mess with the equipment. That little ground flare wouldn't have enough volume to remove paint!

 

[Gumby]

My guess is one of these:

There are portable electric generators that run off natural gas, but that is typically the processed residential use natural gas, not the wellhead gas out in the field. Wellhead gas first goes through a processing plant where it is dried (hydrocarbon gas liquids are removed and used to make other products), contaminants and non-hydrocarbon gases (including carbon dioxide, nitrogen and hydrogen sulfide) are removed, methane is removed, and the remaining clean and dry natural gas is compressed. Only then does it begin the trip through the pipelines and eventually to an electric powerplant or to your house. So you'd need special processing equipment to do all that before it could be safely used in a regular portable natural gas electric generator. Not so easy, I would think.

 

[aja8888]

There are portable electric generators that run off natural gas, but that is typically the processed residential use natural gas, not the wellhead gas out in the field. Wellhead gas first goes through a processing plant where it is dried (hydrocarbon gas liquids are removed and used to make other products), contaminants and non-hydrocarbon gases (including carbon dioxide, nitrogen and hydrogen sulfide) are removed, methane is removed, and the remaining clean and dry natural gas is compressed. Only then does it begin the trip through the pipelines and eventually to an electric powerplant or to your house. So you'd need special processing equipment to do all that before it could be safely used in a regular portable natural gas electric generator. Not so easy, I would think.

To add more detail, depending on the production off the formation, wellhead gas may be dried on the well pad using a glycol dehydrator or other equipment if necessary to maintain quality for sales or transmission pipelines. Solids removal takes place at the wellhead field separator. Field compression at the wellhead or centralized near by may be installed, if needed, to raise line pressure high enough to enter a high pressure sales or transmission pipeline. Then off for final processing and sales.

 

[REWahoo]

There are portable electric generators that run off natural gas, but that is typically the processed residential use natural gas, not the wellhead gas out in the field. Wellhead gas first goes through a processing plant where it is dried (hydrocarbon gas liquids are removed and used to make other products), contaminants and non-hydrocarbon gases (including carbon dioxide, nitrogen and hydrogen sulfide) are removed, methane is removed, and the remaining clean and dry natural gas is compressed. Only then does it begin the trip through the pipelines and eventually to an electric powerplant or to your house. So you'd need special processing equipment to do all that before it could be safely used in a regular portable natural gas electric generator. Not so easy, I would think.

Agreed, wellhead gas is not readily useable as a fuel to generate electricity.

My posting of the flare photo was in response to what I thought Markola might have been referring to with his "A Bitcoin miner pulls a rig up to a gas pipe," statement, not that it was actually something bitcoin miners could realistically use.

 

[Gumby]

Agreed, wellhead gas is not readily useable as a fuel to generate electricity.

My posting of the flare photo was in response to what I thought Markola might have been referring to with his "A Bitcoin miner pulls a rig up to a gas pipe," statement, not that it was actually something bitcoin miners could realistically use.

I assumed that you and I do agree and that was the point of your picture. I just thought it would be interesting to point out just some of the complexities that were glossed over in that "rig to a gas pipe' statement.

 

[captain3d]

It is against the rules to post a link to long youtube videos so I will just include the title...

Line Goes Up – The Problem With NFTs

This video not only tears into the 'nonsense' of NFTs but all crypto in general. It does it in a methodical way with plenty of genuine info along the way. Obviously it comes from a particular point of view that is extremely negative about crypto but presents in a solid and thoughtful way.

It is a good reality check for anyone who owns Crypto as a way to double check their confidence in what they are doing and answers many of the questions that come up here. Also surprising to see such a long video having 4 million views.

 

[joesxm3]

OK. So I guess it is proven that all of the bitcoin mining companies that say they use flare gas are lying.

Time to switch the attack to the unreliability of smart contracts now that the wormhole bridge application has just had their smart contract application exploited to create over $250,000,000 of wrapped Ethereum tokens without providing the actual Ethereum to back the wrapped tokens.

 

[Gumby]

OK. So I guess it is proven that all of the bitcoin mining companies that say they use flare gas are lying....

I don't know. Maybe they have found a way to address all the processing issues that have been raised above or maybe they found a way to make generation units run on unprocessed wellhead flare gas. What do they have to gain by lying?

 

[joesxm3]

It is against the rules to post a link to long youtube videos so I will just include the title...

Line Goes Up – The Problem With NFTs

This video not only tears into the 'nonsense' of NFTs but all crypto in general. It does it in a methodical way with plenty of genuine info along the way. Obviously it comes from a particular point of view that is extremely negative about crypto but presents in a solid and thoughtful way.

It is a good reality check for anyone who owns Crypto as a way to double check their confidence in what they are doing and answers many of the questions that come up here. Also surprising to see such a long video having 4 million views.

Well the first hour was interesting and he presents well, but fact checking all of his assertions would take a lifetime.

Who is this guy? He seems pretty smart and seems well grounded in facts and history.

I thought his claim that the NFT craze was a scam to drive up the price of the Ethereum tokens used to traffic the NFTs was plausible. Buying a stupid ape picture for $200,000 makes sense if the price of ETH goes from $2000 to $4000 and you have thousands or hundreds of ETH.

The other interesting point was the need for liquidity in order to dump at the top. During the two run ups since I became interested I was always thinking that someone must be selling if all those people are buying.

Gives one pause to think about it.

Once he started showing all the really stupid projects like NFTITS, I couldn't stomach any more and punched out.

From the one discord I read, it does seem that most of the posters are young broke kids or immature sounding people looking to get rich.

 

[ERD50]

I don't know. Maybe they have found a way to address all the processing issues that have been raised above or maybe they found a way to make generation units run on unprocessed wellhead flare gas. What do they have to gain by lying?

I'm curious about this as well. All the processing of the raw gas before sending to the pipeline that you mentioned in post #387 matches my general knowledge of the subject. But I wonder how much of this is needed if you just want to use it at the source?

I imagine the drying is to prevent condensation in the pipeline, and the possibility of corrosion and of it freezing (most likely near the end user - my gas lines are above ground at the entry point). After all, I can run my car on a rainy day at 100% humidity, and suffer no ill effects (might even blow out some carbon!).

Some of the other purification might be needed to meet guidelines so that it is considered a standardized commodity product bought and sold at standard spot prices.

Hydrogen sulfide is corrosive. That could be a big deal for a pipeline that is intended to be in place for 50 years or so, maybe not a big deal for a generator used at the source?

I'm still skeptical that this is any big deal in favor of bitcoin big picture-wise, but I'd be interested in how this is playing out, and to what extent.

-ERD50

 

[REWahoo]

I'm curious about this as well. All the processing of the raw gas before sending to the pipeline that you mentioned in post #387 matches my general knowledge of the subject. But I wonder how much of this is needed if you just want to use it at the source?
-ERD50

Looks like the oil and gas folks have figured it out based on a need for electrical power in remote drilling locations, but is it cost effective if you are in a location where you can buy power off the grid? The price on some of these larger generators is over half a million $.

Thanks to technological improvements in natural gas generator engines and electronics, today's Oil and Gas companies are taking advantage of huge cost savings on fuel by utilizing natural gas generators that burn raw gas as it comes out of the wellhead. Instead of burning-off this natural gas, having it essentially going to waste and contributing emissions that harm the environment, it is being used to power the generators that in turn power their oil well pump jacks, man-camps, and other buildings.

https://www.globalpwr.com/industrial-power-solutions/field-gas-flaring/

 

[joesxm3]

Here is one company that among other projects is tapping flare gas.

https://www.crusoeenergy.com/digital-flare-mitigation

 

[ERD50]

Here is one company that among other projects is tapping flare gas.

https://www.crusoeenergy.com/digital-flare-mitigation

Pricing TBD.

What does it cost?

During the early access phase we are working directly with customers for a pricing that is best for their needs. Our goal is to provide high performance computing at low costs and are confident in the unique value Crusoe Cloud can provide. Please inquire here if you would like to learn more.

-ERD50

 

[ERD50]

Looks like the oil and gas folks have figured it out based on a need for electrical power in remote drilling locations, but is it cost effective if you are in a location where you can buy power off the grid? The price on some of these larger generators is over half a million $.



https://www.globalpwr.com/industrial-power-solutions/field-gas-flaring/

Now that makes a lot more sense to me - the gas/oil producers need power at the well site, it would cost money to bring power to their site, so they use the flare gas for power.

Similar to how saw mills use the waste sawdust to power their equipment.

As you say, if you can just buy grid power, does all of this extra effort make sense?

-ERD50

 

[NW-Bound]

It is against the rules to post a link to long youtube videos so I will just include the title...

Line Goes Up – The Problem With NFTs

This video not only tears into the 'nonsense' of NFTs but all crypto in general. It does it in a methodical way with plenty of genuine info along the way. Obviously it comes from a particular point of view that is extremely negative about crypto but presents in a solid and thoughtful way.

It is a good reality check for anyone who owns Crypto as a way to double check their confidence in what they are doing and answers many of the questions that come up here. Also surprising to see such a long video having 4 million views.

I just watched the 2 hr 18 min video in its entirety.

I never owned any crypto, and never looked into the mechanics of owning a digital wallet. I read and knew about the original Bitcoin definition and its blockchain idea. This video told me more about how it has worked in practice, and about the derivatives such as Ethereum block chain, NFTs, NFTits, the DAO. The YouTuber describes how the block chain technology fails to deliver on its original promises yet creates new problems for the token owners. I learned how people could make money, or tried to, by playing online computer games. I learned the term "rug pull". I learned how digital wallets could be robbed.

It's well-spent time watching for me.