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Bitcoin is an energy crisis. Or not.

Bitcoin

Good morning! This Friday, why everybody's arguing about Bitcoin's energy usage, what's left to answer in Epic v. Apple, New Relic's new CEO and how Big Tech's reputation crashed during the pandemic.

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The Big Story

Is Bitcoin an energy problem?

Why did Elon Musk change his mind? That's been the question on everyone's mind the last 24 hours, after Musk tweeted that Tesla would no longer allow people to buy cars with Bitcoin because the company is "concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions."

  • The move brought out all the familiar tropes. There were the double-down HODLers, making the case that Bitcoin will save the world from everything. And there were the told-you-sos, welcoming Musk to the Bitcoin-is-bad party. With not much in between.

There are few neutral third parties in cryptocurrency. People who own it have a vested interest in making it sound sexy, exciting, revolutionary, and above all else lucrative, because the only way the price goes up is if other people want in. And anyone who feels threatened by the rise of crypto — banks, governments, people who don't want their enemies getting rich — has a near-equal incentive to try and rain on the parade.

That's why the energy question is so contentious. "Is crypto an environmental catastrophe?" is one of the biggest, most important questions about cryptocurrency.

  • The current data shows overwhelmingly that Bitcoin is a massive energy suck. Even the earliest Bitcoin users were concerned about its impact.
  • But as Digiconomist's Alex de Vries told me, "It's very inconvenient if you have to admit that Bitcoin is an environmentally dangerous thing, if you're holding it."

How do you argue for Bitcoin's positive environmental impact? You have to make the case for the future. And maybe squint a little.

  • One argument frequently made is that Bitcoin is "a massive subsidy for renewable energy," as Tyler Winklevoss tweeted this week. Square and Ark (which both have substantial crypto ties) published a study to that effect. The idea is basically that renewable energy is cheaper, miners will go where there's cheap energy and that creates a virtuous cycle.
  • The counterpoint: As networks get bigger and more competitive, and mining hardware gets more advanced, there's actually much more incentive to use fuel that's available 24/7 and doesn't depend on the sun or wind. Also known as coal.
  • A lot depends on how you measure, too. In terms of total energy use, Bitcoin's not so bad compared to other systems! Consider energy use per transaction, and it's horrible. But Bitcoin transactions are bigger! But they process really slowly! And round and round the arguments go.

One way this debate might end is if there's a shift in how blockchains work. Almost everyone seems to agree that proof-of-stake systems (here's a good explainer) are a huge leap forward in efficiency compared to the regular proof-of-work approach.

  • Ethereum is already working on making the switch, which de Vries said could mean "more than a 99.9% decrease in energy usage."
  • The technical solutions are there, he said, "but with blockchains there's nobody who can say, 'OK, as of tomorrow we're going to run this software.'" Only miners can change Bitcoin, and the miners are still believers.

Musk is also still a believer, by the way. Tesla's not selling the billions of dollars worth of bitcoins it bought this year, and Musk said the company intends to use it for transactions "as soon as mining transitions to more sustainable energy." He's also looking at other cryptocurrencies that could be used for the same purpose. I'd bet on the second part coming true well before the first.

Epic v. Apple

Two down, some to go

Week two of Epic v. Apple: Less bonkers, more bananas. (Literally, more bananas.) The week was filled with expert testimony on app stores, antitrust markets and yes, Peely the Banana.

But let's recap quickly: There are four things to take away from testimony so far, Protocol's Nick Statt and Ben Brody reported:

  • Whether Fortnite is a game or something more is a crucial point. Epic is hoping for a ruling that covers the entire iOS app ecosystem. Apple is hoping for a narrower scope that positions the App Store as just one player in a much larger digital game market full of plenty of other competitors.
  • The open web could split the court's decision. Apple's anti-steering provisions — which prevent apps from telling users where else they can make purchases — came up a lot. A ban on those provisions would technically be a win for Epic, but it wouldn't really upend the App Store.
  • Game console comparisons cause plenty of courtroom drama. Apple wants the market to include all games everywhere; Epic wants to prove that Apple is unique. To boost its point, Apple even tried to undermine testimony from Lori Wright, an Xbox exec who said Microsoft sells its consoles at a loss.
  • Nobody seems to agree on what the App Store is. Like we've been saying all week, there's a lot of deep introspection happening here. Epic says the App Store is a place to shop for apps. Apple says that the payment processing, privacy and security of the store and the iOS platform itself are all inseparable. Which one Judge Yvonne Gonzalez Rogers believes could go a long way toward deciding this case.

People Are Talking

After the most recent antitrust hearing, Apple's Kyle Andeer pushed back hard on Tile, Match and Spotify:

  • "The developers who testified at the hearing were among some of the largest and most successful on the App Store, and their testimony was focused more on grievances related to business disputes with Apple than on competition concerns with the App Store."

Masa Son isn't worried about Big Tech killing startup innovation:

  • "Those big companies, of course, have to behave within the reasonable range, but they are reasonable companies, in my view. The start-up companies have their own opportunities — lots of opportunities — without making complaints."

Coinbase had a huge first public quarter, but warned that the market is getting crowded fast:

  • "Competition is increasing as new market entrants join the cryptoeconomy every month. Our competitors are supporting certain crypto assets that are experiencing large trading volume and growth in market capitalization that we do not currently support, as well as offering new products and services that we do not offer."

A MESSAGE FROM DOCUSIGN

Without an integrated solution that connects processes and workflows, customer experience suffers and productivity is lost. In a recent webinar, DocuSign and Forrester leaders discussed why an organization-wide, strategic approach to digital transformation is essential to achieving impactful business process automation.

Learn more

Making Moves

On Protocol | Enterprise: Bill Staples is the new CEO of New Relic, as Lew Cirne steps down and becomes executive chairman of the board.

Substack acquired People & Company, which will help it build out its community efforts.

Jeff Blackburn's returning to Amazon, as SVP of a new "Global Media & Entertainment" group. He'll look after Prime Video, Amazon Studios, Amazon Music, Audible, podcasts, gaming and Twitch.

Amazon's also hiring 75,000 warehouse and logistics workers in the U.S. and Canada, and giving them a $100 signing bonus if they're vaccinated for COVID-19. And it's hiring 10,000 people in the U.K., across operations, corporate and AWS.

In Other News

  • Amazon, Microsoft, Google, Facebook and Netflix's reputation dropped in the past year, according to an Axios/Harris 100 poll. Google's reputation dropped the most of any big tech company, while Apple and Twitter's reputation increased.
  • Colonial Pipeline paid almost $5 million to its hackers soon after the attack, Bloomberg reported, but then continued restoring its system from its own backups as the hackers' decrypting tool was too slow. Meanwhile, Ireland's health service network is down after a ransomware attack.
  • On Protocol | Policy: Some lawmakers are angry about tech's non-compete agreements. Sens. Chris Murphy and Todd Young's Workforce Mobility Act wants to restrict the use of non-competes to "necessary" situations.
  • South Korea's investing $451 billion in semiconductors in the next decade, with the aim of becoming the world's biggest chipmaker. Samsung alone accounts for $151 billion of that spending. Meanwhile, TSMC's talks with European officials about building a plant there reportedly went "very poorly."
  • On Protocol: Discord is testing paid tickets for live events, and has big plans to conquer the music industry.
  • Binance is under investigation by the DOJ and IRS, Bloomberg reported, though it's unclear what specifically the regulators are looking into.
  • On Protocol | China: Made-in-China products are among the world's most popular — but they don't acknowledge their origin. Many Chinese brands downplay their Chinese origin to avoid stereotypes as they build independent, overseas-focused sites.

One More Thing

Get your hot desk ready

I bet you $10 that the single most controversial thing about post-pandemic office life is the concept of hot desking. In this brave new world, you don't have a desk; you just grab whichever one is available, like you're a college student flopping down in the library. Yesterday, Snowflake became the latest tech company to say hot desking is a big part of its plan going forward, and there are already many others.

As your friendly neighborhood messy person, I hate this idea. But more to the point, just like the shift to remote work made webcams hard to come by, the leave-no-trace office is going to require a big bag, some kind of organizer, a lot of extra cables, a laptop with long battery life (which means it's Apple Store visit time), and a really good set of noise-cancelling headphones because who knows when you're going to be sitting next to Phone Screaming Richard? Point is, your weekend project is to get a huge bag, and build yourself an office that fits in it.

A MESSAGE FROM DOCUSIGN

Without an integrated solution that connects processes and workflows, customer experience suffers and productivity is lost. In a recent webinar, DocuSign and Forrester leaders discussed why an organization-wide, strategic approach to digital transformation is essential to achieving impactful business process automation.

Learn more

Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your weekend; see you Sunday.

Correction: An earlier version of this story misstated South Korea's semiconductor investment. This story was updated on May 14, 2021.

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