The Inside Story-Crypto’s Currency TRANSCRIPT
TRANSCRIPT
The Inside Story: Crypto’s Currency
Episode 56 – September 8, 2022
Show Open:
Unidentified Narrator: Invisible money mined out of thin air. So, what is crypto currency? And how does it work? Why has crypto’s market value been a series of peaks and valleys? Plus, environmentalists warn crypto’s creation destroys the planet. Now – The Inside Story: Crypto’s currency.
MICHELLE QUINN, VOA Silicon Valley Bureau Chief: Hi. I’m Michelle Quinn, VOA Silicon Valley Bureau Chief, here overlooking San Francisco Bay, with the Golden Gate Bridge behind me.
Across the Bay, San Francisco’s skyline is populated with the world’s technology giants.
The City that birthed tech giants like Google and Microsoft is also home to burgeoning crypto currency companies like CoinBase among others.
Like the tech giants that surround them, the crypto companies hope to change the world.
So, we’re going to take you inside cryptocurrency — how it’s mined, how it’s used, how it gains and loses value, and the impact crypto mining is having on the environment.
Recent fluctuation in values fluctuate has raised concern among consumers about crypto’s risks. But many investors are enthusiastic about the potential digital currency offers.
MICHELLE QUINN: James Wisdom, a Chicago art instructor and tattoo artist, regularly goes to his local grocery store to buy Bitcoin, also known by its trading symbol, BTC.
James Wisdom, Bitcoin Investor: Being able to go to Coinme conveniently and to buy BTC, especially where I get my groceries is, I think, the future of capitalism.
MICHELLE QUINN: Bitcoin, Ethereum and Tether. The digital currency craze has swept the world. Countries are hitching their futures to it. Ads pitch crypto as an investment for the brave and bold.
While cryptocurrencies are not usually used to buy things that has not curtailed their appeal. For some, it taps into egalitarian ideals.
Sen. Ted Cruz, Republican: It gives access to global finances, to buying and selling to transferring value instantaneously, no matter where you are. That’s remarkable. And then there is the advantage of freedom. There’s nobody in charge. That terrifies government decision-makers.
MICHELLE QUINN: Crypto has inspired many first-time investors, especially those skeptical of traditional investing. Cleve Mesidor is with the Blockchain Foundation, an educational nonprofit.
Cleve Mesidor, Blockchain Foundation: For newbies, I tell them, ‘You should not speculate. You need to have skin in the game.’ Decide not to buy Starbucks for a week. Whatever that amount is, that’s what you should start your investment in. Then learn.
MICHELLE QUINN: Steve Leke told his parents to invest in crypto when he was 10 years old.
Steve Leke, Investor: Yeah, still pretty young, but I love to read about business and what’s going on in the tech world.
MICHELLE QUINN: His parents didn’t take his advice. But Steve’s uncle was buying crypto, so he did too. Riding the crypto roller coaster wasn’t easy.
Steve Leke, Investor: It was super hard because every day I find myself checking it, found myself looking where I’m at. And the mental toll was a lot.
MICHELLE QUINN: Now 17 and heading to college, Leke sold his holdings before the drop that has already erased more than $700 billion in crypto values.
Steve Leke, Investor: I do think that cryptocurrency is very good because of the conversation about decentralization, and that kind of stuff has been very helpful when it comes to having a better understanding of not only the economy but also politics.
MICHELLE QUINN: Government regulators are raising alarms about scams and investors who have lost millions.
Aaron Klein, Brookings Institution: There are real reasons to be concerned that there are elements in the crypto sphere that are designed expressly to take advantage of consumers.
MICHELLE QUINN: Wisdom appreciates that the automated teller where he buys Bitcoin limits purchases to $2,900 a day.
James Wisdom, Bitcoin Investor: You could easily overdo it.
MICHELLE QUINN: He stays involved in online crypto communities that are bullish about investing.
James Wisdom, Bitcoin investor: I believe. You know what I mean? I believe. I’m going to hold on to what I have now.
MICHELLE QUINN: Only time will tell if that strategy works.
MICHELLE QUINN: For many, using digital currency represents a shift in how you think about your finances, from daily transactions to long term savings and investments.
To try to break down the business and the barriers, I talked to Christine Parlour from the University of California Berkley about the challenges of making crypto currency user friendly.
Christine Parlour, University of California Berkley: Cryptocurrencies are just digital ways of transferring value and information. That’s sort of the way to think about them. The whole crypto and the currency part is just almost like a marketing ploy. These are not currencies.
MICHELLE QUINN: But is there an easy way to think about it like what I can do with it or think about it?
Christine Parlour, University of California Berkley: One way to think about them, and it’s kind of a little bit simplistic because these can be complicated, and they can cover a wide variety of things is to think about airline miles. So airline miles or something that the airlines give you that are valuable. Well, they could be digitized. And if they could be traded and transferred in a very easy way, then they kind of look a little bit like some of the cryptocurrencies out there. They’re a claim to something. They represent something and they can be moved around very easily from person to person.
One of the ways in which cryptocurrencies are being used is essentially being used as a payment method. So we think of payments as essentially being sort of just a you know, we just pay for stuff we just don’t really think about the backstory, what’s behind it, how much it costs. Things like credit cards, even if you don’t run up the debt, actually are super expensive. Why? Because the merchants are paying between 2, 10 percent, whatever, to the credit card companies and ultimately, those come back into the prices that you pay.
So, one of the innovations that we’re seeing in cryptocurrencies this whole class of things called stable coins are basically designed as a way of very, very cheap payment rails. They’re also designed to transfer money internationally at a really low cost. A lot of people send remittances, so they go and they work in a foreign country, and they send money back to family grandmother or whatever. These are really, really, expensive. remittance rails, and we’re talking about essentially attacks on people who don’t have a lot of money. So, one of the innovations potential innovations in crypto is just to reduce the cost of transferring value through these things called stable coins.
MICHELLE QUINN: A lot of people have invested and have lost in the past, particularly the past four months. How do you look at that in terms of what it means for people or also what it means for the trajectory of cryptocurrency?
Christine Parlour, University of California Berkley: So the technology is not going anywhere. So, this is not it’s not something that’s just going to explode and poof and we move on to something else. it’s here to stay, one. Two, if you think about most of the ventures that cryptocurrencies are based on so typically cryptocurrency is issued in the context of some little enterprise out there. These are typically quite small. So the types of returns that you should expect and the success rates that you should expect a much more similar to things like venture capital. And we know that venture capital returns, there are a couple of really, really, big hits. Wow, I invested in Google, but they’re kazillion companies that just go belly up. And so, cryptocurrencies have really that kind of risk return profile. So that’s a very, very specific you know, that’s how you should sort of think about them as opposed to say, equities, which are based by cash based on cash flows.
MICHELLE QUINN: What do you think about the ability of cryptocurrency to bring more people into the financial, have financial tools?
Christine Parlour, University of California Berkley: So, the line between cryptocurrency and general digital innovation is a little bit kind of fuzzy. If you think about, say, for example, the success of E cash in Bangladesh, it has been absolutely astounding. This is a digital essentially a phone-based way of transferring value. It was backed by essentially the central bank. The adoption has just been absolutely exponential. And many, many people who previously it was too expensive for them to enterinto the traditional banking system. Now could do it essentially through smartphones or phones, not smartphones. And so we see more and more examples of this using technology to let people have access to very, very needed financial services.
EXPLAINER
Kant Trivedi, COO Blockchain USA: Unidentified Narrator: So this is our facility here in Niagara Falls, New York. We’re converting this facility from what was an industrial building. To a data center to mine bitcoins.
At the time this factory was being used to actually strip down for scrap metal. Prior to that this was actually a power generation plant where they were using coal and fossil fuels to generate unfortunately dirty power at the time.
Blockfusion is a blockchain infrastructure company that uses renewable energy
At the facility we actually mine Bitcoin. So traditionally, people would think about mining Bitcoin or like mining a resource, right? Very expensive equipment guys with hard hats underneath the earth trying to get resources.
In this particular case, we’re mining Bitcoin and while there we are leveraging a expert expensive hardware to do so. The resource is really about how quickly you can actually solve a particular algorithm, mathematic equation on the blockchain to be able to go and obtain more Bitcoin.
And now I’m going to take you into our Bitcoin mining facility where you’ll see the hardware actually processing and mining for Bitcoin.
This is our control room, just before you actually go into the mining facility itself. So I’m about to put some headphones on just because it’s extremely loud in the mining facility.
So I’m going to show you the miners themselves. These are not individual mining, you’ll see the actual computers themselves and then I’ll take you into the exhaustion.
You’ll see a we’ll be in the hot and the cold out so the hot hour it expels all the hot air and the cold out which has a cold air goes through the actual computers themselves in the fans tackle the exhaust. One of the things that I wanted to talk about was each one of these computers do not work individually. They actually work together.
They hold together the resources and the processing power like a supercomputer to be able to do the algorithms to actually be able to mine one Bitcoin.
The total miners that we have here at the facility is about 2600 We’re actually anticipate that by the time we build out the entire facility will be somewhere between 12,500 to 15,000 units this facility here in Niagara Falls.
We are five miles away from the Robert Moses hydro plant, absolutely critical for us when we chose this location that if we were going to consume energy, we want to make sure that it was renewable.
So, as we’re looking at building this facility out into a data center, that was a critical factor in our decision making.
So, the Robert Moses hydroelectric plant is the fourth largest hydroelectric plant in America. We’re in Zone A our property is located in Zone A which is about five miles from the actual dam itself and the plant so we’re in an ideal location to actually have most most if not all of our energy from that.
One of the things that we do at the facility is firstly, when there’s actually peak usage for power, so that’s where if the grid themselves for more power back will actually shut down our operations are curtailing back to actually provide that power back to the local community as required.
MICHELLE QUINN: Crypto’s emergence as a viable industry is has many of America’s states vying for a chunk of it, hoping it produces jobs for its citizens.
Central Texas is home to the largest bitcoin mining facility in North America.
And while it has produced jobs, critics warn of volatility ahead.
Our Deana Mitchell takes us to Rockdale, Texas.
Steve Pruett, Rockdale citizen: My dad worked there for 30 years. I worked at the generating plant that was across the street that supplied the power.
DEANA MITCHELL, VOA Correspondent: Like many residents of this small Texas town, Steve Pruett and his family were hit hard with the closing of the aluminum smelting factory in 2008 and more recently, the power plant. More than 1,000 jobs were lost.
But a new industry has arrived in town: crypto mining.
Rockdale is now home to two bitcoin mining data centers.
Towns across Texas are seeing mining operations set up, especially after China outlawed crypto mining. Interest in the volatile cryptocurrency market has soared in recent years, even as many have lost money trading it.
Rockdale welcomes the crypto miners.
John King, Rockdale Mayor: We’re open for business, come on in. If you’ve got some supporting business or anything else, we’re here and we’ll work with you.
DEANA MITCHELL: Bitcoin mining is the process in which computers race to solve complicated math problems to verify transactions on the blockchain and earn bitcoin in return.
But the surge of crypto mining plants around the U.S. is raising a host of environmental and financial concerns.
Whinstone, based in this town, is the biggest bitcoin mining operation in North America. Chad Everett Harris, a Whinstone executive, says there are several reasons he came here.
Chad Everett Harris, Whinstone: Texas’ deregulated market, the government itself encourages it, they offer incentives and programs and job training and then the workforce here is just incredible.
DEANA MITCHELL: Many locals here admit they aren’t too sure what crypto mining is.
Gary Smith, Rockdale resident: I don’t completely understand it 100 percent, and I know a lot of people’s the same way.
DEANA MITCHELL: But there are jobs beyond construction. The mayor said his son, who owned a pizza shop, now manages the repair facility for Bitdeer, a bitcoin mining firm that operated in China.
Some hope crypto mining will tide the town over until other industries can get going.
Steve Pruett, Rockdale resident: Until you get another replacement for this hardcore real manufacturing, like an aluminum company smelter, you’re never going to see anything close to return to the days that we had enjoyed here for 60 some odd years.
DEANA MITCHELL: The mining operators have worked to be good neighbors.
Jim Gibson, Rockdale economic development director: They’ve donated a very large community Christmas tree. They’ve made donations to the fire department. They’ve made donations to the police department for a new drug dog.
DEANA MITCHELL: And being known as a bitcoin mining capital has helped the town market itself.
John King, Rockdale mayor: We have been able to put Rockdale in front of a lot of people because of the interest in bitcoin.
DEANA MITCHELL: Gibson says his phone is ringing with crypto miners interested in setting up shop in town, including those from China.
Jim Gibson, Rockdale economic development director: We would love for there to be more here. The problem that we get in with that is electricity availability and land and time.
DEANA MITCHELL: In Rockdale, officials estimate it would take up to 24 months to get another mining facility built and running. Too slow for bitcoin miners, especially those relocating from overseas. And energy is an issue. Before a recent heatwave, Whinstone released this video message.
Chad Everett Harris, Whinstone: This facility here will — we will turn our power off. And during that time, that power that we are not using, can be used in the grid itself, so that it can support 200 or 300,000 homes in and around our community.
DEANA MITCHELL: All the crypto activity in town, and in the news, inspired Gibson to take the plunge himself.
Jim Gibson, Rockdale economic development director: I bought a cryptocurrency. I won’t say which one. And it has not performed well. I still have it. I’m not selling it. Not till it comes back up.
DEANA MITCHELL: Meanwhile, Rockdale’s bitcoin mining data centers continue to hum 24 hours a day, seven days a week.
Deana Mitchell for VOA News, Rockdale, Texas
MICHELLE QUINN: The future of cryptocurrency and its impact on the environment is starting to raise concerns around the globe.
As some nations began to reduce the use of cryptocurrency due to the risk of surging carbon emissions outputs, the United States continues to lead the charge in crypto mining.
VOA’s Matt Dibble has the story of how U.S. lawmakers are managing the industry’s rapid growth coupled with the strain on energy supply and impact on the climate.
MATT DIBBLE, VOA Correspondent: Cryptocurrency requires an enormous amount of electricity, which today mainly comes from burning fossil fuels.
The rapidly growing industry is often cited as a threat to fighting climate change.
But some crypto miners are prioritizing green energy.
Soluna Computing’s John Belizaire says Bitcoin mining can even help overcome economic obstacles to building more solar and wind installations.
John Belizaire, Soluna Computing CEO: A lot of that renewable energy is wasted. Most people don’t know, but up to about 30 percent of the energy never makes it to the grid.
MATT DIBBLE: It’s called curtailment.
Wind farms sometimes generate more electricity than needed – an unused surplus that makes renewable energy less profitable.
That’s where Bitcoin mining comes in, says Belizaire.
John Belizaire, Soluna Computing CEO: We build flexible data centers right at the location of the power plant, that absorbs that wasted energy and converts it into computing that can be ramped up or ramped down very quickly.
MATT DIBBLE: This data center under construction at a windfarm in west Texas will use curtailed energy for cryptocurrency and other processing work. Efficient building design means no air conditioning.
Soluna’s data center in the state of Kentucky operates only when there is abundant power including from nearby hydroelectric plants.
John Belizaire, Soluna Computing CEO: There’s lots of places around the world where this wasted energy issue is a real challenge.
And so by bringing this new fresh revenue to the marketplace we can see more power plants come online.
MATT DIBBLE: Like the wind, Bitcoin’s value fluctuates wildly.
For now, crypto mining is providing some fresh revenue for renewable energy in a mutually beneficial relationship.
Matt Dibble for VOA News.
MICHELLE QUINN: In Africa, the nation of Nigeria is seeing a surge in its information technology sector. Research is showing despite the growing interest, there is a huge disparity in the number of men to women entering the IT field
VOA’s Timothy Obiezu has the story from Abuja on how educating women and girls on blockchain technologies and cryptocurrency is sparking gender equality.
TIMOTHY OBIEZU, Reporting for VOA: Sixty year-old Elizabeth Onaji arrives a weekly cryptocurrency training for women in Nigeria’s capital, Abuja.
She enrolled for the training in June of this year she says to help advance her knowledge about the blockchain technology.
Elizabeth Onaji, Crypto Woman: I believe this is a worldwide project or business. Nigeria should not be the odd one out, we should also key into the global trend.
TIMOTHY OBIEZU: Blockchain enthusiast, Janet Kaatyo runs the classes.
She began free blockchain education for women in 2017 and says hundreds of Nigerian women are benefiting from her crypto training scheme.
Janet Kaatyo, Crypto Educator: I’m always interested in teaching women so that they can also be part of what is happening in the technology space and then you come to see, a lot of women, mothers are interested are already taking this blockchain technology and making life out of it, some are housewives, some are even working
TIMOTHY OBIEZU: But like many sectors, Nigeria’s technology sector also has a poor female representation, less than a fifth, despite recording huge growths in the last decade.
Kaatyo’s efforts are aimed at addressing this problem. Nigeria is Africa’s biggest blockchain market.
At the training this week, she partnered with nonprofit T’challa Foundation and introduced the women to an indigenous African cryptocurrency, T’challa, which launched in November.
Messiah Ogbuagu, Co-founder T’challa Foundation: T’challa is a hero that is coming out of Africa and to save Africa so what we’re trying to say is that it’s time for Africa to have a voice in the blockchain space and also for Africa to have a voice when it comes to cryptocurrencies. So this project was borne out of that desire to give us something to hold on to call our own.
TIMOTHY OBIEZU: Howev er T’challa Foundation: When you speak to people about cryptocurrency, they’ll try to remind you that the government said it’s not good for us, it’s a big barrier and people tend to follow that.
TIMOTHY OBIEZU: In February, Nigerian authorities warned citizens against cryptocurrencies and later in October, launched a digital currency known as the e-Naira.
But despite the risks and odds, women like Elizabeth and Kaatyo will be promoting cryptocurrencies and giving access to more many others.
Timothy Obiezu, for VOA News Abuja Nigeria.
MICHELLE QUINN: As the buzz grows around crypto and NFT’s, so does the amount of advice that’s out there.
Our Deana Mitchell went to Austin, the capital of Texas, to take us inside one of the country’s largest conferences for cryptocurrency and blockchain.
DEANA MITCHELL, VOA Correspondent: After 20 years on Wall Street, Akash Patel now works for an investment firm based in India, which he says trades between $100 and $200 million a day in crypto currency. The promise of crypto, he says, is to offset the risks inherent with government-controlled currencies.
Akash Patel, AlphaGrep Vice President: If you’re in some place like Argentina or if you’re in an African country, how do you protect yourself against your own government making bad decisions? And that’s why you decide to invest in something like Bitcoin or Ethereum.
DEANA MITCHELL: Around the world, investors big and small are talking about crypto currency, which works through computers and without a central authority. While the value of cryptocurrencies has dropped drastically in recent months, enthusiasts say the momentum for crypto is only going to grow.
At a recent gathering of crypto fans, Adam Charles was meeting with Trekk, a YouTube star he promotes who specializes in information videos about crypto.
Adam Charles, Marketer: 99% of the world’s population learns how to download a wallet and buy their first crypto currency off of YouTube, so we gotta make sure it’s safe and also fun. Cause if it ain’t fun, they ain’t gonna to watch it.
DEANA MITCHELL: Olivia Janisch, a crypto investor who works in brand strategy in Los Angeles, says she tells people to enter the crypto market based on their own comfort with risk.
Olivia Janisch, Crypto Investor: Just read, listen to podcasts, educate yourselves, figure out what your comfort level with the risk is.
DEANA MITCHELL: How will this burgeoning industry change with this new regulation? Only time will tell, but for these crypto boosters, the future is bright.
For VOA News, Deana Mitchell, Austin, Texas.
MICHELLE QUINN: That’s all for now from San Francisco. For everyone behind the scenes who produce this show, I am Michelle Quinn.
Follow me on Twitter at Michelle Quinn. And follow VOA News on Instagram and Facebook. Online —stay up to date at VOANews.com
Thanks for being with us. See you next week for The Inside Story.
Source: Voice of America