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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 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 Dealers in the U.S., the U.K, South Korea, and possibly 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 costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the first shipping date in January 2018, the CME requested extensive detailed trading information however several of the exchanges refused to provide it and afterwards provided only limited data.
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Academic study published in the Journal of Monetary Economics concluded that cost manipulation occurred during the Mt Gox bitcoin theft and the market remains vulnerable to manipulation.186 The history of hacks, fraud and theft involving bitcoin dates back to at least 2011.187
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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 in the Bitfinex exchange account for roughly half of the price increase in bitcoin in late 2017.188189
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The Economist wrote in 2015 that these criticisms are unfair, predominantly since the shady image may compel users to forget the capabilities of their 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 and Richard Thaler.19713 Noted Keyensian economist Paul Krugman wrote in his New York Times column criticizing bitcoin, calling it a click to find out more 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 stated similar opinions, as have business executives like Jamie Dimon and Jack Ma.204.
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 facilities, the combined power consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).133
At 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 total consumption levels amount to only about 6% of the entire power consumed by the international banking sector, and even if bitcoin's consumption levels increased 100 fold from the current levels, bitcoin's consumption would still only amount to approximately 2% of global electricity consumption.206.
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To reduce the costs, bitcoin miners have put up in areas like Iceland where renewable energy is economical and cooling Arctic atmosphere is free.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to decrease electricity costs.206208209210 Miners are drawn to providers such as Hydro Quebec who have energy surpluses.211 According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity has been subsidized by the government.212213.
A variety of 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, said that"a true Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion. "218 A 2014 report by 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 assumed that bitcoin is a pyramid scheme" In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.221.