Taxation mining cluster.

[Anonymous]

I just tweeted this- the government should hire bitcoin mining consultants and setup a taxation mining cluster which means they get a part of the entire economy and have a stake in protecting it rather than destroying it. This means they leave individual bitcoin users alone as they have their fair share of everything the network outputs.

The level they tax it at is up to them depending on the size of the cluster they build.

Bitcoin could actually remove the need for taxation in any other form if a bitcoin becomes worth a lot compared to fiat.

The government then doesn't need to rely on corporations to fund itself and it would respond somewhat to us as it has a vested interest in the health of its bitcoins.

This means they can have their own bitcoin address or any government worker could be issued their own. If you had a good or bad experience with a particular government bitcoin address holder they could be placed on a list of bad operators. If a fireman saved a cat from a tree and had a bitcoin address would you donate to it ?

ie serve people properly and get some cookies.

What do you think ?

By government I probably mean the US one. Any smaller ones out there who want to give it a shot ?

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[Anonymous]

I am not arguing the need for governments just coming up with a way to transition the current system to something better in the meantime. using the carrot rather than the stick is sometimes a better way to operate.

The government is made of individuals . Bitcoin offers a way to affect individuals in a way that wasnt possible before.

I wonder if this would start a bitcoin mining war with governments each trying to outdo each other to get a share of the bitcoin mining network ?

[henchan]

In addition to other considerations, Governments generally prefer to use efficient tax collection methods. The cost of collecting a tax should be much less than the revenue it brings. In the case of Bitcoin mining in a large and liquid market, the cost of mining is likely to eventually approach revenues accruing from mining. Making mining a very inefficient way to tax the Bitcoin economy.
Also, you appear to assume that there is only one Government, whereas in fact there are many. If this is a serious proposal it needs to indicate how any particular Government is to determine the amount of taxation relevant to its own jurisdiction.

[Anonymous]

In addition to other considerations, Governments generally prefer to use efficient tax collection methods. The cost of collecting a tax should be much less than the revenue it brings. In the case of Bitcoin mining in a large and liquid market, the cost of mining is likely to eventually approach revenues accruing from mining. Making mining a very inefficient way to tax the Bitcoin economy.
Also, you appear to assume that there is only one Government, whereas in fact there are many. If this is a serious proposal it needs to indicate how any particular Government is to determine the amount of taxation relevant to its own jurisdiction.

Maybe its the UN. 

If "a governmet" owned 30% of total bitcoin mining output Im sure that would be a significant return at current price levels.

[em3rgentOrdr]

bitcoin mining is not a terribly profitable  endeavor.  I suspect that over time the market world drive the profit margin of mining to just a little over breakeven. So the government would just be one of many miners in a highly competitive playing ground. However, if the government could limit the ability for ordinary folk to mine, then the government could generate reasonable revenues. But that would destroy the appeal of bitcoin if we cant mine competitively.

[henchan]

Disregarding the question of which government, let's just focus on efficiency.
Assuming all governments to whom revenues should accrue could somehow acquire control of 30% of mining operations. And do so a cost effective rate - accounting for capital investment and operating expenses. Now other private interests would surely want to follow, in order to get some of that cheap income for themselves. This new supply of miners would have the effect of making it harder (more expensive) for everyone, including the governments, to capture subsequent revenues. Driving down any cost advantage the governments originally had.
So efficiency is not sustainable in a large and liquid market for mining. Governments are currently able to collect taxes using the force of their monopoly position within that jurisdiction. They would not be able to do so in fair competition with private interests.

[Anonymous]

Disregarding the question of which government, let's just focus on efficiency.
Assuming all governments to whom revenues should accrue could somehow acquire control of 30% of mining operations. And do so a cost effective rate - accounting for capital investment and operating expenses. Now other private interests would surely want to follow, in order to get some of that cheap income for themselves. This new supply of miners would have the effect of making it harder (more expensive) for everyone, including the governments, to capture subsequent revenues. Driving down any cost advantage the governments originally had.
So efficiency is not sustainable in a large and liquid market for mining. Governments are currently able to collect taxes using the force of their monopoly position within that jurisdiction. They would not be able to do so in fair competition with private interests.

Governments aren't effective at anything once they have competiton 

[Patat3]

Who's afraid of that?

The governements I know (Canada and Québec province, which is the worst) are so ineffective and corrupted at doing anything, that if they do this kind of project, it will be a total economics failure:

• Their new cluster of 64 nodes of IBM PowerPC AIX servers with Power6 CPU, connected with 10 GigE ethernet, a centralized SAN and Oracle RAC licences (do not ask questions, there is an Oracle taxes here for IT projects) at 350 Millions $CAD will end up generate 1 BTC per day and cost hundred of $ per day in electricity.
• The consultants will slip out of the office a box containing 128 3D highend Nvidia graphics card that were bought for this project.
• Their 10 Millions $ Windows 2008 server 'Bitcoin-Miner edition' licences (it does not exists, but it will be charged 10 times higher than regular Windows 2K8 licences) won't be used (it do not work on PowerPC!), but Microsoft resellers will host parties in stripper bars and government project managers will be their guests.

After 3 years, the project will be a total failure.
Total BTC generated: 900.
The wallet will be backed on tape and lost in the next 5 years.
Tax money lost, one more project down the drain.

Nobody will care and medias won't cover the irregularities to protect the system.

[NghtRppr]

As long as the government isn't using my money to run this project, they are just another miner. I don't care who is generating the BTC. They won't be taxing me anymore than all the other miners are taxing me.

[Patat3]

For sure your governement will use your money!

[Anonymous]

Who's afraid of that?

The governements I know (Canada and Québec province, which is the worst) are so ineffective and corrupted at doing anything, that if they do this kind of project, it will be a total economics failure:

• Their new cluster of 64 nodes of IBM PowerPC AIX servers with Power6 CPU, connected with 10 GigE ethernet, a centralized SAN and Oracle RAC licences (do not ask questions, there is an Oracle taxes here for IT projects) at 350 Millions $CAD will end up generate 1 BTC per day and cost hundred of $ per day in electricity.
• The consultants will slip out of the office a box containing 128 3D highend Nvidia graphics card that were bought for this project.
• Their 10 Millions $ Windows 2008 server 'Bitcoin-Miner edition' licences (it does not exists, but it will be charged 10 times higher than regular Windows 2K8 licences) won't be used (it do not work on PowerPC!), but Microsoft resellers will host parties in stripper bars and government project managers will be their guests.

After 3 years, the project will be a total failure.
Total BTC generated: 900.
The wallet will be backed on tape and lost in the next 5 years.
Tax money lost, one more project down the drain.

Nobody will care and medias won't cover the irregularities to protect the system.

 This sounds exactly like most government plans except you forgot one thing - they would put the data centres in each reps district so it would become political suicide to close them and take all the server admin jobs . 

The government here introduced a housing insulation scheme which resulted in scam artists turning up and performing dodgy work on peoples houses in an effort to claim the free grants. It resulted in 4 deaths and many houses burning down from badly installed insulation such as being nailed to electrical leads making the roof live with electrical current and placing insulation over downlights causing them to overheat.

They had to spend another few million re-inspecting all the dodgy work.

[river]

I don't give a shit what anyone  sais ... I will never pay any government tax ..

 1. they are all criminal and high treasonous ..
 2. any of you that keep talking about taxes (other than specific local RETAIL taxes for specific products for school, hospitals, etc.) are high treasonous criminals and most likely PAID government and/or central bank infiltrators.  There are countless examples of this on youtube alone.
 3. If I have to pay corruption taxes (most likely at gun point) because you f#$% idiots demand it .. then you f#@$ idiots have to give ME 30% of ALL YOUR MONEY (GOLD, SIVLER, BITCOIN, FIAT) (most likely at gun point) because I demand it.


until the legit (non-central bank infiltrators) noobs of the bitcoin community get the lies and bull-shit out of there stupid heads and learn what the hell true money/barter/trade/etc is, they should not get opinions that effect others ...

If you going to steal from me ... I guaran(fucking)tee you that I WILL return it in kind.  You play nice, I play nice, everyone is happy .. you lie, cheat and steal from me, I'll burn you at the same #$%#$ stake.

Learn what taxes TRULY are supposed to be, and how they are truly supposed to work before forcing your shit on others.

[Anonymous]

I don't give a shit what anyone  sais ... I will never pay any government tax ..

 1. they are all criminal and high treasonous ..
 2. any of you that keep talking about taxes (other than specific local RETAIL taxes for specific products for school, hospitals, etc.) are high treasonous criminals and most likely PAID government and/or central bank infiltrators.  There are countless examples of this on youtube alone.
 3. If I have to pay corruption taxes (most likely at gun point) because you f#$% idiots demand it .. then you f#@$ idiots have to give ME 30% of ALL YOUR MONEY (GOLD, SIVLER, BITCOIN, FIAT) (most likely at gun point) because I demand it.


until the legit (non-central bank infiltrators) noobs of the bitcoin community get the lies and bull-shit out of there stupid heads and learn what the hell true money/barter/trade/etc is, they should not get opinions that effect others ...

If you going to steal from me ... I guaran(fucking)tee you that I WILL return it in kind.  You play nice, I play nice, everyone is happy .. you lie, cheat and steal from me, I'll burn you at the same #$%#$ stake.

Learn what taxes TRULY are supposed to be, and how they are truly supposed to work before forcing your shit on others.

Its a hypothetical conversation not a gunfight.

Paranoid much ? Its virtually impossible not to pay tax. Someone pays the tax on the electricity you use to connect to the internet. Unless you live in an alternate universe where the men with guns dont exist. You cant live in modern society without paying tax not because you want to but because it has been forced into every single aspect of our lives . We arent all chuck fucking norris .

[river]

Sorry for the last post folks, twas a stressful day and I took it out here ... apologies.

[em3rgentOrdr]

Sorry for the last post folks, twas a stressful day and I took it out here ... apologies.

No problem    That's what the bitcoin community is here for!

[Gavin Andresen]

Governments can print money, so if they want bitcoins it would be much more efficient for them to just buy them (with newly printed money) than try to mine them.

Going on a bit of a tangent:

Once common criticism of bitcoin is that there is nobody like the Federal Reserve to "smooth out the bumps in the economy by manipulating the money supply."  Set aside for a minute whether or not the Fed actually does a good job of that or whether or not the Fed actually has the ability to do that.

One response is that there is absolutely nothing stopping the Federal Reserve, or anybody else, from stepping in and "smoothing out the bumps in the bitcoin economy."  The Fed could buy bitcoins when it thought the value was too low, and sell them when it thought the value was too high. It'd have to plan ahead and keep a big stock on hand so it had some to sell, of course.

That might lead to a productive discussion on why that would or wouldn't work, and if or how it is different from what the Fed (or the World Bank) does now.

[em3rgentOrdr]

Governments can print money, so if they want bitcoins it would be much more efficient for them to just buy them (with newly printed money) than try to mine them.

Going on a bit of a tangent:

Once common criticism of bitcoin is that there is nobody like the Federal Reserve to "smooth out the bumps in the economy by manipulating the money supply."  Set aside for a minute whether or not the Fed actually does a good job of that or whether or not the Fed actually has the ability to do that.

One response is that there is absolutely nothing stopping the Federal Reserve, or anybody else, from stepping in and "smoothing out the bumps in the bitcoin economy."  The Fed could buy bitcoins when it thought the value was too low, and sell them when it thought the value was too high. It'd have to plan ahead and keep a big stock on hand so it had some to sell, of course.

That might lead to a productive discussion on why that would or wouldn't work, and if or how it is different from what the Fed (or the World Bank) does now.

Interesting...in a way, I guess it's not possible to isolate the bitcoin market from the coercive power of the state.  As long as states exist, they can use coercion to forcibly extract wealth from people (via head tax, property tax, etc) and then use their tax revenue to purchase bitcoin to "smooth out the bumps" (or whatever other reason they come up with).  If the state buys up a ton of bitcoins all at once, this will undoubtedly cause disruption to the bitcoin economy, and likewise if they sell all their bitcoins all at once.  So they could attack bitcoin without even bothering with mining, simply by destabilizing the economy.  But on the otherhand, such government actions would also provide great trading opportunities for traders in the bitcoin economy to get great deals, so I guess the net result of all this action would be a net wealth transfer from the victims of taxation to traders in the bitcoin economy...

That whole "smoothing out the bumps in the economy" is a very tempting argument for government control of the money supply.  But as you point out, assuming one accepts the necessity of smoothing out the economy, it doesn't necessarily follow that there needs to be some sort of central bank managing money supply, as there are other means, such as adjusting the tax rate for booms and busts.  Or it may be even possible to have enitrely voluntary means to ensure stability.  For example, those people who are concerned about smoothing the economy (I'm guessing rich affluent people of the take-care-of-economy persuasion) could pool a large part of their savings into a combined "smoothing" fund.  That fund would switch between buying/selling stock market indicies, commodities, bonds, etc. depending on what the managers of that "smoothing" fund deem the best action to smooth out the economy.  I would suspect that such a fund could profit by buying cheap stuff during the busts and selling them for high prices during boomtimes...  Anyway, I guess I could use such an line of reasoning to defuse the "we gotta have a government to smooth out the economy" argument.