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The self-regulatory organization FINRA and the North American Securities Administrators Association have issued investor alarms about bitcoin.177178
An official investigation into bitcoin traders was 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 Dealers in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
The U.S. national investigation was motivated by concerns of potential manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by costs on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the initial shipping date in January 2018, the CME asked extensive detailed trading information however a few of the exchanges refused to supply it and afterwards provided only limited data.
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Academic study published in the Journal of Monetary Economics concluded that cost manipulation happened during the Mt Gox bitcoin theft and that the marketplace remains vulnerable to manipulation.186 The background of hacks, fraud and theft involving bitcoin dates back to at least 2011.187
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Research by John M. Griffin and Amin Shams in 2018 indicates 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 purchase price increase in bitcoin in overdue 2017.188189
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The Economist wrote in 2015 these criticisms are unfair, predominantly because the unethical image may compel users to overlook the capacities of the blockchain technology, but also due to the fact that link the volatility of bitcoin is changing in time.194
Bitcoin and other cryptocurrencies have been identified as economic bubbles by 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 known as 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 views, as have business executives like Jamie Dimon and Jack Ma.204.
Bitcoin has been criticized for the amount of electricity consumed by mining. As of 2015update, The Economist estimated that even though all miners used modern amenities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
In the end of 2017, the global bitcoin mining activity has been estimated to consume between one and four gigawatts of electricity.205 Politico noted that the even high-end estimates of bitcoin's total consumption levels amount to only approximately 6% of the entire power consumed by the international banking industry, and even when bitcoin's consumption levels increased 100 fold from the current levels, bitcoin's consumption would still only amount to approximately 2% of global electricity consumption.206.
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To reduce the costs, bitcoin miners have set up in areas like Iceland where geothermal energy is cheap 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.
Various journalists,207214 economists,215216 and the central bank of Estonia217 have voiced concerns which bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that"a true Ponzi scheme takes fraud; bitcoin, by contrast, seems more like a collective delusion. "218 A 2014 report from the World Bank concluded that bitcoin was not a deliberate Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns that bitcoin might be a pyramid scheme; it concluded that,"Since in the case of bitcoin the normal guarantees of gains are lacking, it cannot be presumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks referred to bitcoin as a pyramid scheme.221.