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The self-regulatory organization FINRA and the North American Securities Administrators Association have both issued investor alerts about bitcoin.177178
An official investigation into bitcoin dealers was reported in May 2018. The U.S. Justice Department launched an investigation into possible price manipulation, including the techniques of spoofing and wash trades.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 possible manipulation during futures settlement dates. The final settlement price of CME bitcoin futures is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the initial shipping date in January 2018, the CME asked extensive detailed trading information but several of those exchanges refused to provide it and afterwards provided only limited information.
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Academic research published in the Journal of Monetary Economics concluded that price manipulation happened during the Mt Gox bitcoin theft and the market 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 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 purchase price increase in bitcoin in late 2017.188189
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The Economist wrote find more in 2015 these criticisms are unfair, predominantly because the shady image may compel users to forget the capacities of the 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 known as bitcoin that the"mother of all bubbles. "199 Central bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors like 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 if all miners used modern amenities, the combined power consumption our website would be 166.7 megawatts (1.46 terawatt-hours annually ).133
At the end of 2017, the global bitcoin mining activity was estimated to consume between one and four gigawatts of electricity.205 Politico noted that the even high-end quotes of bitcoin's total consumption levels amount to only approximately 6% 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.
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To reduce the costs, bitcoin miners have put up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to decrease electricity costs.206208209210 Miners are drawn to providers such as Hydro Quebec who have energy surpluses.211 According to a University of Cambridge study, a lot 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 that bitcoin is a Ponzi scheme. In 2013, Eric Posner, a law professor at the University of Chicago, stated that"a real 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 willful Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns which bitcoin may be a pyramid scheme; it concluded that,"Since in the example of bitcoin the normal guarantees of profits are lacking, it cannot be presumed that bitcoin is a pyramid scheme." In July 2017, billionaire Howard Marks called bitcoin as a pyramid scheme.221.