On a Rooftop in Germany
We met Alejandro during a meetup in Essen and took the opportunity to interview him about a couple of pressing issues. Is mining a threat to the environment? Will the new international regulatory framework be hurtful to the industry?
Since he is part of the management at Poolin, one of the biggest mining pools in the world, Alejandro gave us valuable insights to these most demanding questions.
Personal Views and Believes
What is Bitcoin to you?
It is a decentralized currency giving power and freedom to humanity as a whole.
This seems to be the case, but what is your personal story with Bitcoin?
I was always looking for something that is going to change society. I also believe that the financial system is not the best in terms of fairness and economic equality. Bitcoin allows anyone to participate. Nobody can push you out and lock the door. It is for everyone and that is the beauty of it.
For me personally it was one of the best decisions in my life. I quit everything and went into Bitcoin 2013, because I believe very strongly in the freedom aspects of this technology. And I never looked back ever since, it has been a great ride.
For most Bitcoin maximalists it is probably completely out of question. Still, what is your view on the existing Bitcoin forks?
I think those forks are totally fine. A lot of people are a little bit extreme in their views, so I would call myself a “moderate”. This is one of the biggest advantages over other technologies. If you think that you have a better solution to a problem or your idea is simply better, you can take the code and fork it. And then it’s up to you to convince all the developers, miners and users.
What do you think about other consensus models? Ethereum is about to change and is going for a proof of stake solution.
I think that other consensus models have not yet been proven to the same extent that proof of work has been proven. The security features of proof of work are simple and elegant and it has been shown that it worked flawlessly for the last 10 years. Proof of stake has been used for smaller coins. It works, but I don’t think it has been proven on a major scale and we have to see how it might play out for bigger projects shifting to POS.
Another thing I’m very critical about is the wealth distribution. Proof of stake basically perpetuates the same problems that we already have in society. If you have a lot of coins, then you will get even more. That defeats the purpose of cryptocurrencies and their monetary systems.
Proof of work on the other hand is always egalitarian. You might develop a new chip or software that allows you to compete and you gain an advantage. With proof of stake there is no such thing. So, I’m not a big fan of POS.
Centralization and the Environment
But there are a lot of critics saying that Bitcoin and other proof of work coins are facing big problems with centralization. Meaning that mining is centralized by a couple of big pools.
That is ridiculous! People need to understand that all it takes for a miner to join a pool is about 5 minutes of work. A miner can join a pool, but he is also free to leave. The pools are getting bigger, but they depend on all the miners who could easily direct the hash rate somewhere else.
So, the miners are decentralized and they are all over the world. Therefore, it doesn’t really matter that a mining pool is a centralized service.
Another issue that has been discussed especially in Germany is the impact on the environment. The German leftist party “Die Linke” even suggested to ban mining, because of the high energy consumption. All the while Greta Thunberg is traveling the world and calls for a paradigm shift which has quite an impact on western societies.
Are there any efforts from the mining pools and farms to keep mining “as green as possible”?
Well, that is a great question, but there are a couple of things that need to be put into perspective. People always focus on the energy consumption of mining, but they don’t compare it to the impact that other technologies have. Think about all the consumer products that are idle in standby mode most of the time, consuming energy without being useful at all. That consumes a lot more energy than the Bitcoin network itself.
But there is still a lot of energy used on Bitcoin.
Yes, but take a close look at the traditional banking system. All the buildings, the IT, the banking networks, the employees that have to commute to go to work. Even the paper for the bills. All of these things take their toll on the environment and it consumes a lot of energy.
Additionally, miners are always looking for the cheapest electricity price. And it just so happens that there are already a lot of mining farms running on hydro energy, because it is cheaper. So, most businesses are highly interested in green energy, if it is available in their region. They will go for these solutions. It is in their best interest.
And to conclude the question, Bitcoin is a freedom driven technology that is a benefit to humanity and I think that justifies the energy that is used to run the network.
FATF Recommendations and the Regulation
Another political topic are the regulations that have been brought on the table by the FATF recommendations. UK is trying to exceed those regulations and is even aiming for open source software that has anything to do with cryptocurrencies.
How will this affect the mining industry as a whole?
This is not very well thought out. There is no effective way to control open source technology. If they find an effective way to do it, I’ll be very interested to see what they are going to do about it. I think that this is a foolish endeavor, they will not succeed.
But they also could forbid mining. Not that they have plans to do so, but with more and more regulations that could be a possible outcome in the coming years.
Yes, it could. But if mining is forbidden in one region, then miners will simply move to other jurisdictions. This is also why Bitcoin provides such a strong use case. If any government is trying to stop it, they can only do it in their borders. Ultimately mining is a business. And as long as people can make a living, I would expect them to continue their businesses and possibly go somewhere else.
Did it happen?
We had two incidents in the last weeks. A spike in the Bitcoin hash rate and a burning mining farm in China. Can you provide some insights to our readers?
Yes, I saw both stories on twitter. A lot of people were concerned about the hash rate, but that was on the daily chart. Always look for the bigger picture and the longer timeframes, those spikes can happen, but don’t pay too much attention to it. There is a lot of variance in those daily charts.
And the burning mining farm? Did it happen? Some people claim that the footage is from 2014.
I’m not sure. These things can occur, but I think that this is just a business caught on fire, like it happens hundreds of times per day worldwide. I don’t think that this is a big problem for the network. If its true, it sucks for the guys running the farm and I feel sorry for them.
Back to your own business. You are working in management for one of the bigger mining pools. Still, there are so many pools already out there. What is the advantage of Poolin?
There are three factors to why we grow so quickly and maintain our position. First of all, we are trying to bring professionalism to the table. Number two, we have multiple tools that allow miner to have even more profitability. And last but not least we have a great customer support and expanding internationally.
We are building new teams in Berlin and we possibly looking to open an office in the US. So, we are offering our services all over the globe and that’s what sets us apart
About Robert Steinadler
Robert is the editor-in-chief of the German online magazine Bitcoin Kurier. He started his own journey with Bitcoin as a miner and is especially interested into privacy coins. The Bitcoin Kurier delivers news, articles, interviews and educational content to readers in Germany, Austria and Switzerland.
“Our goal is to spread not only knowledge about cryptocurrencies, but also awareness about privacy and security issues that demand the attention of the public eye.”
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