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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 might have high rates of fraud, and that investors might be solicited on social media websites.175 An earlier"Investor Alert" warned about the use of bitcoin in Ponzi schemes.176
The self-regulatory organization FINRA and the North American Securities Administrators Association have issued investor alarms about bitcoin.177178
An official investigation into bitcoin dealers 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 Traders in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
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The U.S. federal investigation was motivated by concerns of possible 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.
State and provincial securities regulators, coordinated throughout the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
Academic study published in the Journal of Monetary Economics concluded that price manipulation occurred during the Mt Gox bitcoin theft and the market remains vulnerable to manipulation.186 The history of hacks, fraud and fraud involving bitcoin dates back to 2011.187
Research by John M. Griffin and Amin Shams in 2018 suggests that trading associated with increases in the amount of the Tether cryptocurrency and related trading in the Bitfinex exchange account for about half of the price increase in bitcoin in late 2017.188189
J.L. van der Velde, CEO of Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has ever, 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 the 2018 annual report. The criticisms include the absence of stability in bitcoin's price, the high energy consumption, link high and variable transactions costs, the poor security and fraud at cryptocurrency exchanges, vulnerability to debasement (from forking), and also the influence of miners.191192193.
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The Economist wrote in 2015 these criticisms are unfair, predominantly since the unethical image may induce 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 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 said similar opinions, as have business executives such as Jamie Dimon and Jack Ma.204.
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Bitcoin has been criticized for the amount of electricity consumed by useful content 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 per year).133
In the end of 2017, the worldwide bitcoin mining activity has been estimated to use this link consume between one and four gigawatts of electricity.205 Politico noted that the even high-end quotes of bitcoin's overall consumption levels amount to only approximately 6 percent of the total energy consumed by the international 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 global electricity consumption.206.
To lower the expenses, bitcoin miners have put up in places like Iceland where geothermal 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 reduce electricity costs.206208209210 Miners are attracted to suppliers such as Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, much of bitcoin mining is done in China, where electricity is subsidized by the government.212213.