Laws that Bitcoin Mining is Forcing Us to Rethink

By Rob1,562 wordsarticle

by Rob

As cryptocurrency mining becomes more popular, or merely more present in the public ethos, there’s been a number of sensationalist, clickbait headlines about the perils and societal pushbacks related to engaging in this modern gold rush. These headlines, whether meant to instill fear, uncertainty and doubt (“FUD” in the common parlance) to reduce mining competition or to drive advertising revenue before modern media is forced to turn to crypto-jacking, it’s evident that some of the rules and laws in place may soon be inapplicable or even obsolete. Here are some questions raised that may imply that our laws need updating as technology enters a new paradigm:

Should certain numbers be illegal?

Can certain algorithms/software be deemed illegal?

Can supporting the infrastructure of an “illegal cryptocurrency” through mining be considered an illegal act?

Let’s unpack these one at a time…

1. Illegal Numbers — Declaring the Irrational Rational

A recent BBC article attempts to strike fear into the hearts of anyone running a full node, or put simply, anyone with the entire history of a given blockchain on their servers. As you can attach brief messages to blocks, the BBC claims that at some point in Bitcoin’s history, a miner attached data to a block that contains some form of child pornography to the blockchain. As blockchains, by definition are immutable — they are append only and therefore data can only be added and never subtracted — this illicit content is permanently associated with the Bitcoin blockchain and anyone with that data on their hard drive is liable for harboring child pornography.

So that’s it everyone — Bitcoin is over. It was fun while it lasted. Somebody put some graffiti on the blockchain therefore contaminating it for everyone. It was fun while it lasted, huh?

I’m not commenting on the nature of the illicit content — there is certainly types of content that likely should have deterrents from aiding and abetting in its distribution. But does that mean if I doodle some genitalia in permanent marker on the side of a fast-food restaurant bathroom that the whole franchise need be shut down? Put more bluntly, there’s just a number sitting on the blockchain that if decoded properly, may result in an image that’s not so great. Does this mean that this given number is illegal? What other numbers are illegal? How small does a number have to be to be illegal??

Turns out there is some precedent here. Illegal numbers are a thing. If you accept that all sound and video can be encoded in binary (i.e. how computers work), then there are certain lengths of 1s and 0s that represent copyrighted music. Queen wasn’t pleased with Vanilla Ice’s explanation that Ice Ice Baby was materially different from Under Pressure. Laws are intentionally a bit vague as to how much of a song needs to be different to not fall under a previous artist’s copyright. Perhaps it would be easier if the size of the number was quantifiable…

In fact, in one instance such a number was explicitly declared illegal. When DVDs started coming with encryption to crack down on piracy, there was a court decision that ruled that software to decrypt the DMCA protection was in fact illegal. Yet this software could be represented by a large prime number was executable as the same software. Therefore, a 1,401 digit prime number was declared illegal.

If these rules are to hold, it spells a bit of doom for our society. If numbers are to be made illegal, then all irrational numbers by extension are therefore illegal. Somewhere in the infinite digits of Pi exists that 1,401 digit number. Since Pi is far too useful a number to declare outright illegal, perhaps instead you need to just stop writing down digits of Pi when you hit a number that is illegal, heaven forbid you commit that number down to paper. If this is the case and the digits of Pi terminates, it implies Pi is actually a rational number. If this is true, then (long story short) it would violate several of the axioms of Zermelo-Fraenkel (ZFC) set theory rendering most of Number Theory invalid. We’d lose math. I suppose that would blink the universe out of existence.

Welp, there goes the universe…

So before we rush to say that all users running blockchain software are committing crimes by harboring illegal numbers, we should consider the implications that would have.

2. Forbidden Algorithms

This next one is a little dicier, but some local jurisdictions have recently declared what you can and can’t do with your computing equipment. As Quebec turns away the onslaught of “institutional” Bitcoin miners closing in on their cheap, subsidized power, the City Council of Plattsburgh, NY has issued an outright moratorium on cryptocurrency mining. Let’s discuss why this is troubling.

The logic isn’t necessarily ill-founded. Their residents enjoy cheap subsidized power, intended to bring industrial jobs to the region which in theory would have a net positive effect on the local economy. Bitcoin mining is not a job intensive task; earlier this year the Miners’ Union deployed software to manage our mines using a completely automated chatbot. So unless you’re a robot, you’re not going to be applying to any jobs at a bitcoin mine anytime soon. So as the power demands of running an efficient mining operation are… dramatic, the electrical grid is being drained for personal profit without giving anything back to the [local] community. You can see why the locals are upset.

Cheap hydro-power on the St. Lawrence River

Here’s the key difference between Quebec and Plattsburgh: Quebec is refusing to grant new access to power while Plattsburgh banned a specific activity. Depending on your jurisdiction, and how “governmental” the power company in the region is, they sometimes reserve the right to deny new service if they deem it unsafe or imprudent. Plattsburgh went ahead and told you what you can and can’t do with your hardware/software.

So does a governing body reserve the right to tell you which software you can/can’t run? You could argue that computer viruses are examples of software that you might want to declare illegal, and in many cases it is illegal. But the law here states that it’s illegal to “knowingly access a computer without authorized access”. This isn’t a case of unauthorized access, but instead could be viewed as a breach of personal freedoms. So long as you’re operating equipment properly (i.e. it’s not a fire hazard or a nuisance), can a government tell you what kind of software you run?

Does that mean that eventually ISPs with media arms can make streaming Netflix illegal through lobbying? As we get closer to truly artificial intelligent systems, could enabling a dangerous AI be considered infringing upon the rights of others by letting it “escape the box”? In other words, might we want to make fostering Skynet akin to aiding and abetting a deleterious entity?

Before we set some fairly strong precedent, perhaps we as a society should take some time to reflect on how to update our current societal guardrails. But first, let’s examine a final case of international law…

3. The Curious Case of the Venezuelan Petro

Recently, the President of the United States of America himself declaredinvesting in the Venezuelan Petro, a government-sponsored cryptocurrency backed by their oil reserves, to be illegal. On the face of the issue, this might not be misguided as recent news has shown that this was effectively a Russian-sponsored initiative to circumvent US economic sanctions. I personally raise an eyebrow as to how the accounting works out to ensure that the tokens and the physical oil stay paired in “good faith”, but that’s an issue for another day. Just another way to slap “blockchain” on a project to have money thrown at you, I suppose.

For those playing at home, the Petro is not a stand-alone blockchain. It’s an ERC20 token, meaning it is a decentralized application (“dApp”) running on the Ethereum blockchain. So since the Petro, like all other recent ICOs and tokens, are abstractions built on top of the Ethereum blockchain, does that mean it is a crime to support the foundational underpinnings of something that facilitates an illegal asset? In other words — is mining Ethereum or running an Ethereum node a treasonous activity since it allows the Petro to function and circulate?

Coming full circle to our original example, if this is true then wouldn’t that mean that ISPs (e.g. Spectrum, Comcast, etc…) are also engaging in illegal activity? Their infrastructure supports the distribution of illegal content (back to our illegal numbers) as illicit content can be propagated using their network.

To be clear, the purpose of raising these issues is not to question the motivations of recent events surrounding cryptocurrency mining. That being said, if you take each of these instances and extrapolate them to their logical conclusions, you reach some interesting paradoxes. This should be an opportunity to have an intelligent discussion on how to foster this burgeoning new technology — be it cryptocurrency or any kind of decentralized compute infrastructure that allows individuals to participate without major barriers to entry. Without some revision or discussion on the topic, we may instead be stifling innovation by blindly clinging to the status quo which would be a tragedy.