Crypto Mining is Doing a Speed Run of Capitalism in Front of Our Eyes
This week I spoke with Dr. Filipe Calvao (@filipecalvao), a socio-cultural anthropologist and professor of Anthropology and Sociology at the Graduate Institute of International Development Studies in Geneva and trained gemologist with ethnographic research in diamond mines in Africa. He is the author of two different papers published comparing crypto mining with physical mining : “Crypto-miners: Digital labor and the power of blockchain technology” and “Digital extraction: Blockchain tr...
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Hello, everyone. You're listening to the Blockchain Socialist Podcast. And for today's interview, I have doctor Philippe Calvaux. He is a sociocultural anthropologist and professor of anthropology and sociology at the Graduate Institute of International Development Studies in Geneva, Switzerland, and trained gemologists with ethnographic research in diamond mines in Africa. He recently published two really interesting papers. One titled Crypto Miners, Digital Labor, and the Power of Blockchain Technology, and another one, Digital Extraction, Blockchain Traceability in Mineral Supply Chains. Hi, Philippe. How are you doing?
Hi, blockchain socialist. It's good to be with you today. Thanks so much for the invitation.
Yeah, of course.
Thanks. The generous introduction. I, I'm very happy that you, that you got to, take a look at my recent publication. So I'm excited to be here today.
Oh, yeah. I was really excited when I came across your work because it was pretty interesting. I mean, getting the perspective of someone who, has done some work on real mines, to then begin looking at sort of crypto mining, which and mining in general has been a pretty big, hot topic for for people on the left in regards to the use of blockchain, of course. But maybe to get us started, could you explain a bit what got you interested in blockchain in the first bay in the first place based on your research interests?
Sure. Happy to. I mean, I think you mentioned it already. I mean, part of the reason is because I was doing work on mining. But I think there's maybe two ways of answering your question. One has to do with natural curiosity. Right? I had just returned from Angola where I did a lot of, I spent quite a bit of time doing ethnographic research in sort of different kinds of diamond mines. And I went back to The US and I heard about this blockchain story and people were starting to talk about Bitcoins. And I got curious, and I decided to, to go through the process of, okay, how can I actually buy Bitcoins? What do I have to do? And this was back in 2011. So it was a while ago at the very beginning of the technology and at the time, I I mean, people may think that buying Bitcoins is still complicated today. At the time I had to actually physically mail a money order to an online Bitcoin supporter. Maybe some of your listeners, might recognize, the name. The guy was called Morpheus. He was kind of a, it's kind of a mythical figure at the very sort of the foundation of, of the Bitcoin world.
What, what years was this? 2011. Wow. That's that is very early. Yeah. Yeah.
And then he, he would credit, a Mount Gox account, with the the money order that I sent him. I'm not even gonna say what was the price of Bitcoins at that point. But but the funny thing is that at the time, the following day, he credit, I I only realized this much later going back through my own records. He credit the money at Mt. Cox. It's no longer active. Maybe you've heard of it or some of your listeners might. I feel like a dinosaur just talking to you right now. But at the time this was the largest and at the time, also the most respectable Bitcoin exchange until it fell through in 2013. And the day after he credited my account, Mt. Gox registered the first big flash crash. And the crash, it's known today as the kind of first big Bitcoin heist. It followed them with a massive leak of Mt. Cox's accounts, database. Later on in 2013, there was another case of a price manipulation by a bot powered, trading. And, and and, it was a weird, instance, but one actor basically hyped the conversion rate of Bitcoins from, at the time, $150 to about a thousand dollars. I mean, this just goes to show at the time that I wanted to test, the level of anonymity. I was interested in questions of access. How easy was it to actually buy Bitcoins? How anonymous was it? And what could it be used for? Right. So that was my original interest part of curiosity. The other reason why I was interested and this is partially my academic interest on blockchain was because I was, as I said, coming back from, from Angola and hearing about this mining and sort of this new expanded extracted frontier of digital mining made it all the more interesting to me. And one thing led to the other and I began being interested in this kind of, the human and social contribution to actually powering the blockchain ecosystem. And in so doing kind of materializing, the project of decentralization and this intimidation. So it was that twofold interest on the one hand sort of the natural curiosity trying to understand the process of acquiring using Bitcoins, but also a more theoretical interest on questions of labor. What is this kind of labor power used for, both in terms of producing an actual commodity, which is we can talk about that later, what is it for? But also this kind of labor market as a kind of network space, where people mobilize their own energies, their own equipment, their own means of production. And that was why I became interested in the Bitcoin and blockchain technology more broadly. Maybe this was a very long answer, but,
No. No. I loved it. That was really interesting. Maybe next, could you sort of detail out, to to make the comparison a bit more concrete? Like, what is the usual what is the history behind mining in Africa and elsewhere? And how does it usually sort of progress, especially in its tendency towards, you know, as as capitalism does its thing and capital sort of accumulates in in one person or in one, organization, like, how does that transform a particular mining region and its operations? Because I imagine because you drew some pretty interesting parallels with the centralization of mining Bitcoin as well.
Right. That was, kind of like what what I why I became interested also in sort of writing about blockchain and and crypto mining, because I I started noticing a kind of an historical pattern. I'm not saying that history repeats itself. I wouldn't suggest that this is the only trajectory possible. But I noticed, that what was happening with crypto mining and crypto miners actually replicated what I what I had studied from an historical perspective, both in terms of the diamond and the gold rush of the late nineteenth century in South Africa for diamonds and for gold as well. And you can, you heard probably echoes of that also in the, the Californian gold rush. And at the time, you know, as the very idea of a gold rush or diamond rush, suggests, you you kind of have what was at the time known as, this diggers democracy. The idea that you can claim a stake by way of mining, claiming a stake of ownership over a particular parcel of land, for example. But just as much as this kind of first wave of different kinds of rushers, mining rushers, gold or diamond started to settle in, you have quite quickly, right afterwards, a process of both capital concentration and increasing technical and engineering complexity. And this led to, historically to forms of both, forms of of labor recruitment, labor intensive labor recruitment and capital intensive, mining operations. So you had, in response to this kind of diggers democracy, you had, an attempt by industrial conglomerates, I think, De Beers, for example, which started at this point, ways of enforcing, having to enforce a regime of control, concentration by, taking control over these mining fields. And I see something like that happening, today. I mean, if you look at what, what is the cost of, of both, the equipment necessary for the kinds of expenditure of computational power and energy, what what this has made is, the cost of access, to mining operations in the crypto world became too high for small scale miners, if you will. Sort of the equivalent of the artisanal miners, in actual mining economies. So there's been a flood of capital intensive industrial miners who have a much higher computing power and that in the process end up pushing aside these small scale, what I call small scale miners, out of this, the system of incentives in place. Right? So there is this kind of, of of power hungry, equipment arms race, that makes both the mining equipment too expensive for individual miners and the equipment too, obsolete too fast. And that has generated, this process of excluding perhaps more, individual or small small scale miners. Now this is not to say that this is the only trajectory possible. There's a lot happening in the mining industry. I don't think it's it's particularly relevant to your listeners, but I think we're at the point and this is happening all across Africa, where mining companies, large transnational mining companies are actually starting to integrate artisanal miners in their own operations. I think that's an interesting development but it's one that tends to shift the responsibility and the risks of extraction away from these mining corporations and onto the miners themselves. So I think this is a problem to keep in mind, because as I was saying earlier, there's not one single trajectory. These are dynamic processes. But, but I think we should probably look into history to see, what can happen to this, this particular economy. And the kinds of, developments that I don't think are particularly welcome, particularly in terms of these, these kinds of capital intensive, industrial miners, who who have the means to, throw away or exclude, people who would would otherwise be interested in participating in the mining process.
That's interesting. It almost sounds like, almost like gig work for miners in a way, how they're trying to that that sort of shift. It seems they've taken inspiration from, my gig work platforms almost, but to shift that risk away from them and onto,
onto you. Absolutely. That's, that's a great analogy because, in reality, these folks, say you're, I've noticed this in the DRC in the Democratic Republic Of Congo where I did some research with some colleagues. You go from a moment where you own what you produce, and then you become a de facto company employee, but without being paid a fair share of your work. Be it in terms of salary, wage, or what have you. So there's that's it's a problem what I call sort of the corporate outsourcing of responsibility.
So I guess in knowing that about how this tends to happen in, you know, a normal mining situation, to me, it seems that Bitcoin mining has essentially done a speed run of what happens under capitalism, and its trend towards centralization, sort of against what most crypto libertarians would believe. Would you agree with that type of assessments?
I think it's, I think it's a fair point. And I think, over over recent years, we've we've noticed that this economy of crypto mining has been moving away, as I suggest in my work, away from the kinds of individual accessible and fairly affordable, mining towards these large conglomerate industrial like, corporate, and largely unaccountable mining conglomerates. So in in a way it's kind of an historical twist because you kind of go back to this image of a coal powered, energy hungry mines that echo the very dystopian image of what was a bygone industrial era. So I think I think that's absolutely true. And the problem of mining centralization, shows itself in various ways. I think the emergence of these, you know, the application specific integrated circuit tends to reduce the profitability of what was, you know, your ability to mine cryptocurrencies from your laptop, for example. And it sends that power, you know, move passes that power onto the actual manufacturers. And that's a problem. I think where this computational power is located is also a problem and who controls it, offers a series of problems too, namely in terms of centralizing, this, this cryptocurrency system ecosystem. I mean, a lot of it is hearsay. There's a lot of speculation. There's not a whole lot of, good solid studies, but, China, for example, or, or mines in China control anywhere between 65 to 75% of Bitcoin mining operations. And that is a problem. Not a problem in terms of, of the kinds of capabilities that they that they that are possible that way. It's obviously, not a problem in terms of the computational power that's generated, but it can become a problem if if that kind of Bitcoin hash rate, is, turned against the blockchain itself. Right? Sort of what is known as the 51% attack. So that's that's a big problem. I think that's one the risk of centralization at various levels, both in terms of the equipment manufacturers, where this computational power is located and who controls it. I think it's a serious problem. The other problem has to do with speculation. When I first began doing serious research on cryptocurrencies, not necessarily back in 2011 and full disclosure, don't think that I keep, Bitcoins from that period. I wish I had. I have zero Bitcoins at this point. I decided not to be involved, from a consumer side, holding any kind of cryptocurrencies. Out of my own decision, I think I can write with much more, freedom of consciousness without necessarily, having a stake, in the game, if you will. That's right. But when I when I first began researching cryptocurrencies, at the time, the total, this was about 1,600 cryptocurrencies, in circulation, that was about worth about $400,000,000,000 at the time. Bitcoins in 2017 were worth only $27,000,000,000. Today, bitcoin and ethereum together, have reached about $1,500,000,000,000. So this is we're talking about a non negligible amount of money. And just to give your listeners an idea, if you have bought 1 bitcoin in 2015 or if you had invested $1,000 in bitcoins in 2015. So not that far ago, this was five or six years ago, it would be roughly worth a $184,000 today. So this kind of speculative, mad speculation, I think it it raises problems, namely when it comes to, you know, adoption and not only that but the increasing muddled waters or the mistake between blockchain technology on the one hand and all its promise with bitcoins and other kinds of altcoins. In popular imagination, they tend to be mixed and lumped together. And I think that's also a problem. So I would say that, you're absolutely right. It kind of mirrors what we see, in some of the developments with capitalism. But I think I would basically, you know, frame it around the problem of speculation and centralization.
Yeah. Yeah. I'd really I'd be really interested to hearing more or if you could explain this, some of the ideas that you explored, around digital labor. So thinking of, like, the mining that's being done on these machines as a form of digital labor and how that relates to, your work.
Sure. I think there's there's different ways of answering that question. I think the the similarities between mining and Bitcoin mining are not original. Sakamoto, whoever he or she or they may be made it explicit in the founding document of Bitcoin. When he talks about the process that's analogous to gold miners expending resources, adding gold to circulation when in the Bitcoin, as he puts it, instead of being sort of mining for gold, it's CPU time and electricity that is expanded. So I think there's a lot of interesting parallels between mining for you know metals or minerals and digital mining and these are not just allegorical, right? I think there is something to be said about, about these kinds of connections, particularly in the current moment of the kind of intensified moment of, of, of, of extraction and what that might mean for the future of digital mining. So I think, I think what is perhaps interesting is as I was describing earlier, sort of this historical transformation of increasing technological and engineering difficulty. I think you have something similar happening with blockchain technology and Bitcoin mining or crypto mining in general in that, the technological advancement is the fact that it's actually difficult to generate coins. Right? So I think that's an interesting, an interesting way of, of, of thinking about the, the analogy. And I think in the case of digital mining, these, these miners, tend to basically discover new coins, AKA sort of a gold nugget, if you will, by basically solving very complex mathematical problems. But in the process, they contribute to the strength of, of this very system by verifying these transactions. So that's one way of answering your question. I think the other way of answering your question, and I think this is where the world of both forms of mining come together is the extent to which the mining industry, the extractive industries, the real extractive industries, the mind industry has taken a serious interest, in all kinds of uses of blockchain technology, mostly for traceability purposes. And in some ways they've actually taken the lead or the forefront of adopting, blockchain technology. And I'm sure we can talk a bit more about that, later on, both in terms of the problems, but also the potential of that kind of, use of blockchain technology for trace purposes.
I'm curious then, because mining, which is really just proof of work consensus mechanism, isn't really the only type of, consensus mechanism you can do, on a blockchain. Does your thoughts around digital labor as it pertains to, like, blockchain technologies and, like, other cryptocurrencies, if they use a different consensus mechanism, is it the same type of labor? Because with, for example, proof of stake, as you probably know, it's you stake or you deposit a certain amount, and then, based on that deposit, if you, agree with everyone else, then you're good. If you don't agree with everyone else, then you might lose a little bit. So it's a little bit different, form of or I don't even know if it would be called really a form of labor. It's really like, it it seems more akin to making money off of your money, which is sort of what you do, if you give your money to, like, I don't know, any any type of investment in some way. Hey, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit. If you're enjoying the interview or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out and join the newest patrons like t buddeman and Jean Marc. Any amount really helps since making this stuff isn't free in terms of money or time. And as a patron, you will get a shout out on an episode like I just did and access to Patreon exclusive content like q and a episodes where you can submit and vote on questions you'd like me to answer, and I'll give my thoughts in roughly twenty minutes. Of course, I'll still be making free content like this interview to help spread the message that blockchain does not need to be used to further entrench capitalist exploitation, and we put our efforts into it. So if that message resonates with you, I hope you'll consider helping out. Let's get back to the interview with doctor Philippe Calvaux.
Sure. I think, that's a great question. And I think it's maybe worthwhile reminding your listeners of the two main protocols for enforcing and ensuring consensus across this, crypto ecosystem, both the proof of work and the proof of stake. I mean, they all have different challenges. They all raise important questions for the future of blockchain technology and its forms of governance. Right. And I think, we are at the point where defining which solution is better to power, blockchains, has become, has given rise to a lot of interesting conversations, a lot of interesting debates, mostly focused on the kinds of security of the network, this kinds of scalability of blockchain, applications, and most importantly the kind of energy consumed to maintain it. Right. I think at this point, just for the record, most cryptocurrencies use non mineable proof of stake protocols. But, the two main cryptocurrencies bitcoin and ethereum both by market capitalization and the kinds of promise of its blockchain networks are still based on proof of work protocols. So these basically reward miners who solve very complex algorithms and they validate transactions by getting coins basically. So proof of work in a nutshell, it's a kind of a consensus mechanism that requires miners or nodes to find nonce and solve a mathematical problem before adding a new block to the chain. So this is probably one of the most famous mechanisms adopted by the Bitcoin system. And the main problem here is that it's eminently wasteful, right? It entails the consumption expenditure of both time, energy and and and electricity to control, mining power. Proof of stake on the other hand is kind of a consensus mechanism where mining power is determined by the ownership of coins. So unlike the proof of work, it's presented as kind of energy efficient as it does not seem to require the full strength of computational power to generate new coins. The problem here is that the solution to power proof of stake cryptocurrencies and proof of stake blockchains depends very much on who are the early investors and who are the holders of tokens or currency. And it depends on these folks to maintain control over the network. And this can give rise, to what kind of a Pluto Pluto Pluto Christie, where basically the power over the network, is tied to the size of your wallet. Right? And that is a big problem. So I I still, go back to proof of work, as, thinking about it as the work of inscribing, registering, the work of organizing mining operations. We can talk about that in a moment. And I find this to be, rooted and embedded in different kinds of social relations. So for me, the value of digital mining is not necessarily the end product, but mainly the kinds of meaningful productive action that's entailed in it. So by mining, the labor that goes into the object produced, be it validation or inscription or registration of operations, becomes part of who you are as a miner. And this has been my experience, talking to people who have been involved, in mining operations, at an individual level, not necessarily those in large mining operations. They feel they take ownership of the blockchain project. And I think that's an important, an important, to recognize that is somewhat important. There's debates now about whether Ethereum is moving from proof of work to proof of stake. That seems to be the case. I don't think that's gonna end necessarily this kind of work of mining. I think they will be introducing validators. And, and as long as the barrier of entry to set up a validator is, still accessible, it can actually lead to more participants taking part, in the network both to secure it and to power it. So I think that's not necessarily a bad development. We'll have to see, how this, how this will will pan out. I, sorry, blockchain socialist. I, I thought you were asking me earlier about sort of the metaphors about mining and digital labor.
Yeah. Yeah. I well, I wanted to I was wondering if, like, this proof because to me, I think proof of work and mining I think you can definitely make a parallel with actual labor. Like, a really, interesting comments that I saw once on Reddit of some Bitcoin or cryptocurrency, thread was someone saying, you know, you do proof of work every day, when you go to work. Like, you're you're going you're proving that you did work to your boss, and then and then your boss gets pays you, and that's, like, your your block reward, so to say. Which is it was an interesting metaphor the way that they they sort of have to use blockchain to sort of make analogies to make sense of their own lives. But I'll just say, like, with proof of stake, the digital labor part, I'm not sure if it it exists as well. There isn't like a clear line to, to labor specifically.
I think that's absolutely true. And I think that's, the the incredible feature of of this kind of proof of work. You know you basically commit the strength of your computing computing power to a blockchain. And in the process it becomes a useful kind of task, useful kind of production, right? Making secure, you prevent, you know, threat of reversing the consensual record of transactions. So I think there's a lot to be said about that. And and here I tend to sort of draw analogies, with actual mining work, because I think part of the challenge of explaining, what blockchain technology is, is that we tend to fall on and particularly those that are more involved in this ecosystem tend to fall on sort of very esoteric language and you drop jargon, you use really complex terms and it doesn't have to be that way. Right? So for me, you know, one way of describing proof of work system and the idea of of of of proof of work as as taking place once a value is found or puzzle is solved is to compare it to finding a a gold nugget, or rough diamond in nature. Right? So you could extend the the analogies there both to understand what is hash, to understand what's mining more generally. So I I I think in my work, I use the notion of hash that could be compared to gravel in mining operations. This kind of concentrate of stones that need to be both excavated and then refined or worked through. Right? So I think there's something similar, to that, even if we're talking about data, and the composite sequence of beads rather than an aggregate of minerals. So I think, I think part of, what for me becomes interesting to think about proof of work and proof of work protocol is, is the basic question of what counts as labor, when it comes to thinking about blockchain technology. Much like in real world, in our society, a lot of what counts as labor tends to be either naturalized, we just assume that it is or, or is somewhat invisible. You don't recognize certain forms of labor, either because they're not taken to be productive or they, because they, they are, they happen in certain spheres of, of your life that are not recognized as such. So I think it allows us to think a bit more about what work is both in terms of an output of what we produce, what motivates us to produce, but also in terms of, of what is, work as a kind of an expenditure of both energy and resources, effective and physical. Right? So for me, in my work as an anthropologist, I tend to think of work as something that's socially meaningful, activity. Right? And the, the interesting or the value of work lies not necessarily in what we end up producing the commodity or the finished good, but as a kind of mode of productive, action, a meaning making activity. And and I think that's the important part of proof of work and those who are involved in proof of work, is is that it's not necessarily something that's intended for production or consumption, but actually entails the transformation of whoever is producing the worker itself. Right? So it's activity of work that's valuable, not just the end product. So for me, I I draw the comparison there between that kind of, form of work and digital mining as a form of labor.
Yeah. So then get getting to, this type of meaning makings, I think, is maybe, maybe important to my next question because in your research, as you mentioned before, you did some ethnographic work, in blockchain communities of which there are plenty in Switzerland with the famous Crypto Valley in Zug, where, I think taxes are, like, almost nonexistent. But I I'm curious for you. What was it like speaking to those people who were, you know, die hard, crypto people who, like, you know, they they or people who wanted to, donate their their computational power from their computers to be part of the network. Like, what what what did you find out of that research? What was that like?
It was it's been so super interesting. I mean it's still ongoing research and I think being based in Switzerland, in Geneva in particular, lends itself for very interesting kinds of exchanges and interactions with people who are in one way or another involved either from the development side of things or from the adoption and the potential, finding ways of making, blockchain applications for either humanitarian purposes or that have some kind of social value to it. I mean, you mentioned Crypto Valley. I mean, the there's, obviously is a strong connection both to the kind of Ethereum Foundation based in Zug as well. But being based in Geneva, there is a very significant component that deals more with the humanitarian side of things. So a lot of, UN agencies, for example, that, that have taken interest, in blockchain development. And I'm particularly attuned to folks who are, developing those kinds of mostly pilot projects. I can give you a series of examples. I mean, the UNDP that's the United nations development program has been sort of developing a, an attempt at a blockchain technology to make land registry more reliable. For example, UNHCR, which is the United Nations, agency for refugees have been sort of developing for quite some time now, a kind of a blockchain project for a decentralized identity kind of registry, meant to be interoperable. And many others. I mean, the worldwide funds, has also been, has recently announced a blockchain platform to track food sustainability. So there's a lot of interesting conversations happening, both here in Geneva and broader, more broadly in Switzerland, where you have a politically very receptive environment for adopting blockchain technology. Think, for example, about, e voting, which has been tried at a fairly small scale in Zoop, for example, using blockchain enabled forms of e voting. So there's a lot of interesting potential, a lot of interesting conversations and definitely a lot of critical mass of people who in one way or another are involved, in blockchain technology. So being able to follow those people both in terms of, of those who still remain hopeful and those who've become somewhat more skeptical, has been, an interesting part of my, of my research. Does that answer your question?
Yeah. I guess I guess I'm maybe I'm more curious about, like, the personal aspects of, of these type of people. Like, because you mentioned what was interesting is that, like, they did find meaning in in taking part in the network. So it was sort of like, at least to me, there's a little bit of solidarity involved. You know, choose choosing to, to give your your time and effort to, you know, to to secure the Bitcoin network, for example. Like, if you do it if you do a personal mining at at the moment, you're probably unprofitable, actually, in most cases. But some people still want to do it because there's this, like, sense of solidarity with the Bitcoin,
network, I guess. Yeah. It's it's so true. I mean, I think there's two ways of answering that question. I mean, people who are not necessarily involved in the mining aspect, but who still want to volunteer and donate their time to think about, you know, ways of developing, interesting applications based on the blockchain, protocol, and technology. And I, in that sense, my recognition is that those folks really learn to appreciate that there was something new dawning on the horizon. What that was, was instilled in many respects not entirely clear, but there there was there was a sense of, of, of hope, of of, there was something new happening and we needed to be paying attention to it. And this, you know, it's not necessarily new today, per se, but I think it's something that people tended to to recognize. The other kind of, interaction I had was with people who were directly implicated and involved, in, in, in crypto mining. And then you have a bit of everything. Right? You have both people who are trying to obviously, you know, score some money, because it was still profitable at least in the very beginning. And I'm talking mostly of, on Bitcoin mining. But there was most of all, as you were suggesting, a sense that, people were actually contributing, to something deemed extremely valuable. And that was sort of the idea that we are collectively powering, this blockchain technology. That it was out of our sheer effort, individual, but organized, collective pool of energy and, and resources and time that made blockchain technology possible in the first place. So the idea that there was a very radical project of moving away from all kinds of intermediaries, to make sure that these transactions were reliable, trustworthy, unmediated, decentralized, secure and open. And that's an extremely radical project if you think about it. And I think there was, something that I, I, I took notice of a lot of people who were involved in crypto mining. And that's why I find this move, away from, this level of democratic participation, defined in the kind of collective product of labor, that becomes, most problematic with this move towards centralized mining operations. And I mean, in some cases, people have different reasons for being involved in mining. I mean, I talked to some people who basically said, you know, it's a good way of heating your apartment because, this equipment, becomes so hot that you don't even need to have, heating equipment. You can just have your mining rig, on and that's enough to, heat your apartment. Right?
Maybe, on this thread because I think, I'm curious to hear more, what you think about this is, I guess, if you have any thoughts on the emancipatory potential of blockchain, because there is I mean, there there is a bit of this, I think we can see, like, a little bit of, like, meaning making and solidarity type of, intended actions by people who want to take part in this larger network. Although a lot of them I mean, they're maybe their, their their full reasoning isn't, like, fully fleshed out or, like, they don't really know exactly why or what they're, doing, completely. But I think there's something there's, like, there's, like, a there's there's a diamond in the rough there. Maybe you're talking about diamonds. You know? There's, like, there's something there that maybe we can pull out from,
that the left may find interesting. So I was curious if you thought about that. Sure. I definitely have some thoughts on that. And I think going back to our conversation about proof of work, I think proving one's work is one step towards a kind of a shared digital commons. Right? And I think that's, that's an important idea that we should never forget, particularly in this kind of, imaginary of a decentralized and unmediated system, where you can actually exercise a form of ethical collective, collective labor. I mean, this may sound a bit wishy washy, and I think it is to some extent, which by which I mean the following. Let's not forget that the crypto system and blockchain technology is in many ways a reflection of the world we live in, right. And it it inevitably reproduces the kinds of inequalities, the notions of, you know, profits over purpose, where, you know, the many are governed by the few. And I and I see reflections of that also in the blockchain world, for the lack of a better word. So I think it's it's important to to not look at blockchain technology as kind of this, paradise of freedom, liberty and, democracy, where there are no inequalities, where everyone is equal, I think in as much as we need to fight for different kinds of economics and social justice in the real world, I think we should do the same in the blockchain ecosystem. So having said this, I mean not all blockchains are the same. I think it's it's important to keep in mind that they can be very different. But I do believe that as the principle of a kind of a distributed ledger kept across the world, right, That it invokes, the imagination of a form of unmediated democracy. Like any kind of democracy, it has specific challenges. It poses specific democratic governance risks. But I think it's, it's definitely something that, that we should aspire to as an ideal, as a project. And like any democratic project, it needs to be exercised, right? So I think, I think it really depends on how you look at, different kinds of blockchain projects. We talked a bit about, you know, traceability projects, for example, in the mining industry, the idea that you can track different kinds of assets. Right? And I think that holds potential but at the same time, we fall short of actually rethinking, or or or reimagining a different kind of political economy of extraction, for example. And I think Blockchain holds that radical promise to reimagine the world we live in. But like any kind of, of political process, it needs to be, exercised. It needs to be, fought for. I still think just to conclude that we're just scratching the surface of the kinds of emancipatory potential of of of blockchains. I think it has been proven to be, a useful tool for as an open source distributed and potentially anonymous kind of, ledger. I think it, the forms in which labor it can be pulled by creating a new form of digital common where, for example, you mobilize the proceeds of the work for different kinds of causes is definitely something, to to keep in mind. I think the idea of having unmediated transactions, holds immense, immense potential. I think in specific localities of the world, namely those who are undergoing hyper inflation, economies. Blockchain technology allows different possibilities for people to actually get by. So, I think again, we're just scratching the surface a and ready to use kind of paradise, but instead something that we need to fight for, I think it holds immense potential.
Yeah. I I really like that. That's I definitely agree. Sometimes people like, when I interact with them online largely, they sort of assume that my position is, you know, blockchain will give us world communism or something like that. I mean, that's sort of like a silly a silly thing to think, anyone would think, I think. But that it sort of to think of it as an already clearly imperfect space, but with a lot of room, and space for, the left to enact certain types of actions, and to mold it in a in its own political vision. But so one of the things that you've also written about, in in your work is about the attempts of mining companies to use technology like blockchain to make their supply chains transparent. However, you seem to be really doubtful in that they actually create new forms of control, in fact. So maybe could you explain how this is the case when someone from the outside I mean, they may they would think that this shouldn't be possible because, you know, blockchain is completely transparent. Reyes, how how does in the context of of industrial mining here, like, how does adding blockchain into their supply chain maybe actually increase their, amount of control?
Sure. I think it's a great question. And I think, I think you're absolutely right. Some people might not completely understand where I'm coming from. So it's just a quick note. I think there's nothing wrong with the principle of using and deploying blockchain technology for traceability purposes. And I think that's part of like where certain kinds of consumer anxieties come in. You, you want to know where your product came from. You want to know, you want to make sure that whatever you're consuming that actually respects and follows certain kinds of, say ethical standards or labor standards. And I think that's important, right? I do think the way that it's been happening, contradict what were in many ways to your regional aspirations of blockchain technology, both in terms of centralization and forms of mediation. And I think in my work, I've been looking at some both pilot projects and full fledged projects of developing Blockchain technology for these kinds of traceability. It actually fosters new forms of control and exclusion and intermediation. And And there's different reasons for why that might might be the case, both in terms of unequal access to this technology. The fact that the resources needed to operate them are not, they're not equally distributed by everyone, but also by governance design. So just a quick word on this idea of governance design because I think it's probably one of the one of the main issues I have with these with these, the kinds of technology, corporate developments of of Blockchain technology. Because these corporate attempts to create, hybrid or private blockchains, what this means is that you basically have a privately operated blockchain. And this may sound a bit contradictory to your listeners, but it's a case where the maintenance of consensus where anything related to how governance and control mechanisms are enforced is placed solely in the hands of private companies or major banks or anyone who holds a stake in it. And I think this is a serious problem because it may may lead to the removal of those who are actually outside the purview of these institutions, right? Or who do not have access to these closed private blockchains. And there's been a number of examples of different kinds of traceability or blockchain, projects for traceability purposes. I think we can talk a bit about what those problems are. I think for the most part, they are geared towards what could be called sort of digital experts or large scale corporate institutions, who do not necessarily pay attention to the challenges, political and technology, in tech technological of accessing, these technologies of, of, the kinds of access barriers or forms of overcoming control, over these digital platforms. So I think that's definitely, one important, problem. And even if they have advantages, right, and I think the fact that these tend to be less energy consuming, blockchains, the truth of the matter is that control over access and the the dissemination of data ends up centralizing these private blockchains. So even if they are designed to be somewhat inclusive of these non corporate or non industrial actors, I think the forms of whereby you have to register, the kinds of background check for potential users, the lack of incentives that we recognize in the proof of work protocol, the lack of incentives for different actors to participate raises serious questions on the, the purview of these, these initiatives. So I think that's, that's one of the main problems that may actually reinforce the undemocratic control over these, blockchain projects and something that I'm particularly, particularly attuned to and worried in general. So it, if you will, it kind of mirrors, or runs the risk of mirroring, forms of political economic exclusion that you already see happening in the real world, right? We talked about artisanal miners earlier. So I think this is one potential risk of excluding what we can call the digital miners or the crypto miners. Right? And, yeah. So that's, that's one of the problems. And I think another one of the problems I think I mentioned this earlier is this, perpetuating the image of a resource as an asset, right? A natural resource as an asset that can be easily registered in the blockchain. And I think these are not stable or homogeneous biophysical entities that can be somewhat uniquely and singularly registered in the digital ledger. I think it's much more complex than that and I think, I think that's the one of the challenges with these commercially oriented, private blockchains. They overlook the way these resources are dynamically, entangled with other forms of social, cultural and economic value. So it's high time I think that we start paying attention, and start using blockchain technology to register also how labor standards are enforced, how, environmental and ecological impacts, take place beyond just the pure commercial end of registering a commodity in a blockchain.
Yeah. I I sometimes feel that large corporations, they try to conflate progressivism with technological progress to a percent. So if they're using you know, we're using better technology or new technology, so, therefore, we're progressive in some way. It it feels progressive,
the aesthetic at least. Yeah. And and it's been shown there's studies where if you just, you know, mention the word blockchain, in your say Money just gets thrown at you. Money gets thrown at you. And people are looking for a place to put money. And I think that's, that's one of the risks. I mean, if you think about what, what has been the, I think the other day I read that about 20% of dollars in circulation, US dollars in circulation were issued in the last year. That's absolutely insane, right? So people are really looking for a place to throw their money. And cryptocurrencies has been sort of that home for a lot of people. And I think that, paradoxically enough might work against, the the emancipatory potential that we're talking about earlier of blockchain technology.
Yeah. I I get the one of my biggest fears is that blockchain rock should be used to ossify already existing inequalities and just even more forcefully enforce, the type of power dynamics that's, you know, we want to get rid of. I don't want Elon Musk to be talking about cryptocurrencies.
I don't need these massive whales, you know. I don't want to rely on a system that, you know, a handful of people have the power to, you know, move and shake the market as they see fit, at any point. Right? And that's a big problem. I mean, as much as I don't like billionaires in real life, I don't like these, massive whales as they are cold and I think they pose a serious risk. This is a topic, but,
But it's not, I, I, in my opinion, it's like you mentioned earlier, it's, it's sort of just a reflection of our current existing economy already. I mean, Warren Buffett is a whale. You know, like, The United States is a whale on the world markets.
Yeah. Yeah. And I don't want to sort of have to rely on their benevolence. Right? They may, you know, they may have, good intentions. But, you know, the the the these new sort of, robber barons for me concerns me a little bit. But, yeah.
So one of my last questions I wanted to ask actually because this is obviously a question that a lot of people on the left are very uncomfortable with when it comes to, blockchain, especially in regards to crypto mining. But since you have this experience in real life mining, I'm curious what your thoughts are on the environmental impacts of cryptocurrency mining, compared to mining of traditional commodities like, gold or or diamonds, which is also I mean, that for sure is quite, has an environmental impact in that look in the local region where mining is occurring, of course. But do you have any thoughts on that? And do you think that there can be any definitive claim that one is worse than the other?
It's, it's a really tough question, and I think you're absolutely right. A lot of people are very concerned, and they don't feel, necessarily, inclined, to use blockchain technology that has been shown to have a kind of a very detrimental, environmental impact, right. And there was a nature article published last month that talks about, the kinds of carbon emission flows, of blockchain, Bitcoin blockchain mining operations in China. And the calculation that they, that they, that they estimate that in a few years time, if there's no checks, if there's no any kind of policy intervention, that you know, just with Bitcoin mining operations, the energy consumption will be equivalent to the level of Italy and Saudi Arabia. So, more or less the twelfth country in the world. And, with carbon emission output that would exceed, the, the gas, greenhouse gas emissions of The Czech Republic and Qatar together. And that's huge, right? I think it's a serious problem, that people need to start thinking about. And I have maybe two ways of thinking about that. One is, perhaps articulating, maybe it's something that needs to be developed. I don't have the development, the technological background to be able to assess whether this is a possibility or not, but I think there's a way in which the power invested in proof of work, algorithms could be made more socially valuable, right. So not just wasteful and arbitrary hashing, right, but you can actually try and channel this kind of computing power towards more useful kinds of operations. Right? And I think this is something that we may want to start thinking about in which the left can have something interesting to say both on the decentralized and the kinds of mass collaborations for you know scientific endeavors, for real world applications of different kinds. So I think that's one potential way of thinking about it. The other way and I'm taking the conversation back to the actual mining, it's a current debate that's happening now. As you probably know or some of your listeners may know, we're at the point where, increasingly has become possible to produce inside laboratories what are, eminently natural products. So with a, you know, two ton press and in about a few hours time or a couple of weeks, you can recreate a diamond inside a laboratory. And this has been, you know, massively produced most industrial diamonds, or diamonds used for industrial purposes in The US. About a 100% of them are, producing laboratories. And, the same goes with other kinds of minerals and other kinds of metals. And this has raised, an interesting conversation in terms of, okay, what are the environmental effects of one versus the other? Which one consumes more energy? And which one has a larger sort of environmental footprint? Whether it be the mine industry, which comes with serious environmental effects. You know, just think about the land revolving operations, you know, deforestation, etcetera, versus the kind of energy that's consumed, to produce a diamond, say, in laboratory. The jury is still out on this. But there's another component which I'm particularly tuned to, which is the fact that for the most part, if you think again about diamonds and who are the diamond diamond mining producers in the world, they mostly come from the global South, mostly from Africa. There's millions of people who rely in one way or another, on say diamond mining or other kinds of of of of resource mining. And the technology to produce these resources in laboratories tends to be for the most part in the global North in Europe here in Switzerland. So I think it's important maybe to find ways that don't necessarily exclude the livelihoods of these millions of people. And I think we may come back to an earlier form of mining. Go going back to the small scale artisanal mining, which is slower in pace. It's more socially integrated. It's more community based. The wealth that's generated in a given community where you have artisanal miners tends to stay in the community itself. So it's not shipped away, to a different country. So I think there's lessons to be to be learned, from this kind of mining model, that, that may help address, some of the challenges of blockchain technology. So we come full circle in a way, right? We started off this conversation thinking about, you know, what happened in the history of of gold rushes and diamond rushes and what eventually happened when big mining corporations took over. And I think maybe it's time to go back to a different kind of paradigm. And, and, maybe it's somewhere in the middle that we may find a sustainable, but, but equally sort of generative form of, of developing blockchain technology.
Yeah. Well said. Thanks. This this talk has been really interesting. I'm really glad I was able to have you on and to speak from, someone with real experience when it comes to when it comes to real mining. So thanks a lot for coming. Maybe to finish off, you can share with people where they can keep up with with you and your work.
Sure. Well, there's, I mean, I'm an academic. I don't really pay much attention to social media. That's a bit of a problem. Academics tend to use an academia.edu website. So if people look up, for my name, they can find all of my publications there. That's Philippe Calvan, f I l I p e c a l v a o. I also have a Twitter handle, for about ten years now. I think I have two tweets and a couple of follow. I'm thinking long and hard whether I should give it a shot, and I might. Maybe your listeners, if they find my interest in my talk or my chat with you interesting, they might wanna follow me there. And if they do, maybe I'll start posting some stuff. Definitely have a few things to say about, you know, digital mining and real mining and my Twitter handle is the same as my name. That's Phillipe Calvo, filipecalvao@Twitter. So, they can, I hope? Otherwise, I'm I'm eager to exchange via email. I'm very old school so people can also find me, through my, again, first and last name at graduate institute dot ch. If anyone wants to shoot me an email. And, so yeah, Blockchain Socialists, it was a great pleasure to, to chat with you, and, keep up the good work. It's super important that, people like you are involved, and, and have something to say about, you know, the kind of a leftist project for blockchain.
Yeah. Thanks. I'll, I'm gonna follow you on Twitter. I'm expecting you in the, I'm expecting the trenches.
Gonna give me the the impetus to maybe, you know, start things off, on Twitter. That'd be great.
All right. Thank you.
Awesome.
Stay in touch.