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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 traders has been 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. federal 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 first delivery date in January 2018, the CME asked extensive detailed trading information however a few of the exchanges refused to provide it and later provided only limited information.
Academic study published in the Journal of Monetary Economics concluded that cost manipulation happened during the Mt Gox bitcoin theft and the marketplace remains vulnerable to manipulation.186 The history of hacks, fraud and fraud involving bitcoin dates back to at least 2011.187
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 at the Bitfinex exchange account for roughly half of the purchase price increase in bitcoin in overdue 2017.188189
J.L. van der Velde, CEO of Bitfinex and Tether, denied that the claims of price manipulation:"Bitfinex nor Tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the amount of bitcoin or any other coin/token on Bitfinex. "190
The Bank for International Settlements outlined several criticisms of bitcoin in Chapter V of the 2018 annual report. The criticisms include the lack of stability in bitcoin's price, the high energy consumption, high and variable transactions costs, the bad security and fraud at cryptocurrency exchanges, vulnerability to this website debasement (from forking), and also the influence of miners.191192193.
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 called 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.
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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 facilities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours annually ).133
At the end of 2017, the global bitcoin mining activity has been estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end quotes of bitcoin's total consumption levels amount to only about 6% view it now of the total power consumed by the international banking sector, and even when bitcoin's consumption levels increased 100 fold from the current degrees, bitcoin's consumption would still only amount to approximately 2% of global power consumption.206.
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To lower the expenses, bitcoin miners have put up in places like Iceland where renewable energy is economical 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 prices.206208209210 Miners are attracted to suppliers like Hydro Quebec who 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 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 deliberate Ponzi scheme.219:7 The Swiss Federal Council220:21 examined the concerns which bitcoin might be a pyramid scheme; it concluded that,"Since in the example 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.