Should governments mine Bitcoin?

There’s this story from Tampa, Florida. A state government employee used government computers to mine for Bitcoin and other cryptocurrencies for his personal enrichment. It appears that he used taxpayer money to purchase graphic processing units to do so, and ran up his agency’s electric bill by over $800.

He’s now been arrested for the scam. Reason Magazine makes the obvious point that the department he works for, the Department of Citrus, is a much bigger scam that costs the taxpayers a lot more money than one rogue employee.

But here’s a bigger question. All levels of government, from federal down to county and city, presumably have computers, and countless government offices must surely have a decent amount of unused computing capacity sitting around. Shouldn’t they be required to assess that unused capacity and then, when it’s profitable to do so, put it to use mining Bitcoin and other cryptocurrencies? Whatever they create could then be sold at market value and the money used to pay government bills and the savings passed on in the form of lower taxes. Since it’s the taxpayers who pay for all government computers in the first place, isn’t it a ripoff if our computers aren’t put to use saving us money?

You seem to believe that running a Bitcoin screensaver = free money, when in fact it wastes energy and wears out your hardware faster.

ETA beyond that, governments can print their own money, so they have no sudden need to generate Bitcoins.

I’m not saying the numbers do work out (I’m skeptical to say the least), but presumably there’s some value of a bitcoin where the riches would in fact pay for the use of the hardware. It wouldn’t need to be free money, just money that sells for more than it costs to produce (again, not saying it would).

I’m playing with various Bitcoin calculators and not finding any way that an ordinary cheapo office PC would be able to mine anywhere near enough Bitcoin to pay its own power bill. So requiring departments to assess their ability to do this sounds like a way to waste even more time, since the answer is almost always going to be no.

Mining Bitcoin is a huge waste of energy in an age when we are supposed to be more energy responsible, not less. Adding to the pool of Bitcoin miners just exacerbates the problem because, by design, the greater the total resource devoted to mining the harder mining becomes. The OP’s proposal is both economically and morally wrong.

Maybe government should first engage in flipping houses and multi-level marketing… programs. THAT’S where the easy money is.

Oh, and daytrading.

Reason magazine may be the most inaccurately-named magazine in history. They may disagree with the point of the Florida Department of Citrus, but that’s because they’re libertarians who disagree fundamentally about the role of government in public life.

Also, and this is gonna be a shock to a lot of people, you have inaccurately represented your cite. Nowhere in that cite does Reason Magazine call the DoC a “scam.” You’ve taken their bad argument and made it even worse.

Economically speaking, “should governments mine Bitcoin” is the same question as “should governments buy Bitcoin.”

The cost of mining a Bitcoin is pretty much the same as buying one, which is, of course, precisely what economics and logic would suggest should happen. An entity with massive underused computing power could in theory shave some cost off the process, but in practice I doubt you’d save much:

  1. I sincerely doubt there is really that much appropriate computer power lying around. Effective Bitcoin mining setups aren’t just random CPUs.
  2. You’d need to pay someone to find all that unused CPU power and organize it.
  3. Now you need to pay to keep it that way, and
  4. The input of electricity is inevitably a massive added cost, and it’s a huge portion of Bitcoin mining costs - it’s also a geographically specific cost.

Even if you can shave, say 10% off the price an ordinary shmoe pays, ten percent off what? Bitcoin has lost more than half its peak value. It would appear the real money to be lost or won in Bitcoin is not in mining it, but in speculation, and there you might as well cut to the chase and just buy or short it.

I amend my earlier statement… what government really needs to do is find the next bubble and get in early. Like, I hear stuff about the upcoming Agriculture Department report on frozen concentrated orange juice. I bet the Department of Citrus would know how to do that.

Yes, yes it is :cool:

If the OP were right and the government could, in fact, make a profit mining bitcoins, how is that different than the government just printing more dollars?

Well, I know absolutely nothing about cybercurrencies.*
But your comment has made me curious : if the government could “print” (i.e. mine) bitcoins in huge numbers, wouldn’t that defeat the purpose of a cyber currency? If so, it would seem logical for the government to invest a LOT of effort mining them, and gain control of the market.

I thought that the main point was to create a currency which is beyond the control of any government.But if the government with its huge resources would invest vast amounts in a “manahatten project” of bitcoin mining, could they become the main source of bitcoins, just like they are the source of dollars?

Or am I totally wrong?

*and, as a layman, I’m staying far away from them.
For the reason that the comedian John Oliver said: it combines everything you don’t understand about international finance, with everything you don’t understand about computers.

Isn’t this a plot device from an old Eddie Murphy movie? …

Anywho … we don’t want government seeking profit … that’s puts them in competition with business … how does one compete against someone with nuclear weapons? …

In the US (and all other countries I’m aware of) only the Federal government can print money so an internal government (lie a state, provence, etc.) might get into Bitcoining. But it likely wouldn’t pay for all the reasons given

That ship has sailed long ago. Many cities have municipal owned parking structures competing with ones owned by businesses.

All government currency already sells for more than it costs to produce, whether you’re looking at coins, banknotes or electronic counterparts. You don’t imagine it all depends on the precise quantity of gold actually mined, do you?

No, that ship did not sail long ago. There are very active debates on where the line should be drawn in terms of the government providing various services, versus what should be left to the private sector.

This debate even involves things like prison labor: for a very long time, Federal prisoners made an awful lot of the furniture used in government offices. It gave the prisoners something productive to do, and they got a very small paycheck. Commercial furniture makers revolted against this, leading to a back-and-forth on whether it was better not to undermine private businesses, or better to have orderly prisons.

Any assertion that the line between public policy and private profit has been settled one way or another is really wrong.

I’m going to bump this because it’s the only answer that matters.

To the OP, most (all?) office PC hardware lacks sufficient grunt to mine bitcoin at anything nearing a profitable level. The short answer is, “No, governments shouldn’t mine bitcoin, because they’re not equipped to do so.” That’s why the employee in the original story had to buy his own video cards.

You could then say, Why don’t they fit each and every idle computer with a video card capable of mining bitcoin at a profitable level? And the answer is that the whole scheme is utterly dependent on the current market price of a bitcoin. Bitcoin recently surged in price and has been steadily declining for the last few months. It’s only within this fleeting surge (and until it drops below a certain point) that mining bitcoin with consumer grade video cards has been profitable. If government ran out and bought a bunch of video cards, they’d run the risk that the price would tank and they’d be left with a bunch of expensive, useless hardware.

What if the NSA assigned a couple of its supercomputers to bitcoin mining? Or NASA? How efficient would they be?

It depends on a lot of details that are over my head, most mining farms are ASIC based, custom designed for mining, and a I don’t think a general purpose supercomputer could compete with them in terms of efficiency. I think they could easily be profitable, but unlike most office workstations, I doubt they’re ever sitting idle.