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The U.S. Securities and Exchange Commission has also issued warnings. A May 2014"Investor Alert" warned that investments involving bitcoin might have elevated rates of fraud, and that investors may be solicited on interpersonal networking websites.175 An earlier"Investor Alert" warned about the use of bitcoin in Ponzi schemes.176
The self-regulatory organization FINRA and the North American Securities Administrators Association have both issued investor alarms about bitcoin.177178
An official investigation into bitcoin dealers has been reported in May 2018. The U.S. Justice Department launched an investigation into potential price manipulation, including the techniques of spoofing and wash trades.180181182 Traders in the U.S., the U.K, South Korea, and maybe other countries are being investigated. Brett Redfearn, head of the U.S.
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The U.S. federal investigation was prompted by concerns of potential manipulation during futures settlement dates. The final settlement price of CME bitcoin futures contract is determined by prices on four exchanges, Bitstamp, Coinbase, itBit and Kraken. Following the initial delivery date in January 2018, the CME requested extensive detailed trading information however a few of the exchanges refused to supply it and later provided only limited information.
State and provincial securities authorities, coordinated through the North American Securities Administrators Association, are investigating"bitcoin scams" and ICOs in 40 jurisdictions.185
Academic study published in the Journal of Monetary Economics concluded that price manipulation occurred 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 2011.187
Research by John M. Griffin and Amin Shams in 2018 suggests that trading related to increases in the amount of the Tether cryptocurrency and associated trading in the Bitfinex exchange account for about 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
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The Bank for International Settlements summarized 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 debasement (from forking), and also the influence of miners.191192193.
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The Economist wrote in 2015 that these criticisms are unfair, predominantly because the shady image may induce users to overlook 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 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 site web bankers, including former Federal Reserve Chairman Alan Greenspan,200 investors like Warren Buffett,201202 and George Soros203 have stated similar opinions, as have business executives such as 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 utilized modern amenities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year).133
At the end of 2017, the worldwide bitcoin mining activity was estimated to consume between one and four gigawatts of power.205 Politico noted that the even high-end quotes of bitcoin's overall consumption levels amount to only approximately 6 percent of the total energy consumed by the global banking industry, and even if bitcoin's consumption levels increased 100 fold from the current levels, bitcoin's consumption would still only amount to approximately 2% of global power consumption.206.
To reduce the expenses, bitcoin miners have set up in areas like Iceland where geothermal energy is economical and cooling Arctic atmosphere is liberated.207 Bitcoin miners are known to use hydroelectric power in Tibet, Quebec, Washington (state), and Austria to reduce electricity prices.206208209210 Miners are drawn to providers such as Hydro Quebec that have energy surpluses.211 According to a University of Cambridge study, a lot of bitcoin mining is done in China, where power has been subsidized by the government.212213.