ANOTHER IMPLICATION OF KLEPTO-CURRENCY: POWER THEFT
Seigniorage.
Or if one prefer its French form, seigneurage.
One does not encounter that word very much, even in recent technical journals having to do with it. The word and the concept it represents are almost completely forgotten, or at least, the word is, though the concept has been in the news lately when the Trump administration announced that pennies would no longer be minted. Why? Because the cost of minting the penny exceeded the actual worth of the coin. Seigniorage is simply and technically the difference in the cost of minting a coin, and its actual stated value. If the cost is less than the stated value, the government doing the minting makes a profit off of every coin it makes. Extending the concept somewhat, the term can be used to mean the cost of producing money of whatever type, from coins, to paper certificates, to - here it comes - computer blips.
And there one encounters a problem, for as our friend and colleague Catherine Austin Fitts once quipped, the cost of "mining" crypto-currencies (or as we like to refer to them here, klepto-currencies), is astronomical as massive amounts of power are required to do so. Fitts jokes that they have the energy consumption footprint of a German panzer division.
Indeed, the overhead cost, the seigniorage on any given klepto-currency is enormous, and may even exceed the actual value of the klepto-coin being mined. (And please note, the whole concept of seigniorage was baked into the whole klepto-currency scheme at the outset with the term "mining", since real coins were made of real metal that had to be mined, and thus became part of the overhead costs of producing that type of money. These folks are clever, aren't they? the mining equivalent for a klepto-coin thus becomes the power needed to generate, sustain, log, and trade it.) Of course, in the world of real coins with real metal, there were many ways to "cut costs and overhead" via various criminal and fraudulent means. Coin clipping was one of them, which was simply the obvious expedient of shaving off a small fraction of silver or gold, and accumulating enough of these fragments to melt down and sell as bullion, or better, to cast as counterfeit coins. Those little ridges stamped around your dimes or quarters in your pocket change are a holdover from that monetary era, because those ridges are simply "anti-clipping" devices. If they're not present or only partially present, you know that coin has been "clipped" and its metal content is not up to the legal requirement of its par value.
So what would be the modern klepto-currency equivalent of coin-clipping?
Very simple: steal some power and not pay for it and use it to mine more "coins"(article shared by M.D. with our gratitude, after hitting the link scroll down to find the article):
How Soaring Energy Demand Helped Push Bitcoin Below $90,000
Notice the overhead cost, the seigniorage, in any klepto-currency mining:
Electricity accounts for 70-80% of the cost of mining Bitcoin. The April 2024 halving cut the block reward to 3.125 BTC, and even with prices above $100,000 earlier this year, many operators were already running on narrow margins. Since then, wholesale power prices in key mining regions have continued to climb. In ERCOT (Texas), the largest U.S. mining hub, average wholesale prices rose 18% year-over-year in the third quarter of 2025, according to the Electric Reliability Council of Texas. In Northern Virginia, home to both large mining operations and hyperscale cloud regions, prices jumped 13% over the same period, data from grid operator PJM show.
The U.S. Energy Information Administration now expects national wholesale power prices to increase another 8.5% in 2026, to $51 per megawatt-hour, citing demand from data centers as a primary driver. AI training and inference workloads are projected to push U.S. data-center power consumption from roughly 200 terawatt-hours in 2024 to more than 400 TWh by 2030.
Now notice: the extreme financialization implied by klepto-currency drives up electrical costs for -- let us say - the car company down the road actually producing cars, or for the farmer up the road to heat his barns and run the milking machines on his cows. And what does the klepto-currency produce? Computer blips that are bought and sold... in effect, power is being consumed to produce nothing tangible at all, only to make a very small group of people very rich. So how to increase profitability? Clip the coins, or in this case, steal some power:
Malaysia uncovers $1 billion in power theft losses from illegal crypto mining
Note the opening three paragraphs here:
- Malaysia's national utility Tenaga Nasional Berhad (TNB) has uncovered over $1.1 billion in losses from electricity stolen for crypto mining operations over roughly the past five years, amid the country's ongoing crackdown on power theft.The country's energy ministry wrote in a parliamentary filing dated Tuesday that TNB has identified 13,827 premises that illegally siphoned power to mine bitcoin and other cryptocurrencies between 2020 and August 2025. That led to losses of at least 4.57 billion ringgit ($1.1 billion).The ministry said the activity poses a serious threat to the national electric supply system and public safety, the country's economic stability. (Italicized and boldface emnphases added.)
In other words, in Malaysia, the theft of power has become so large that it is now a social, cultural, and national security problem endangering public safety. It is not merely a financial and economic problem.
And herewith we embark on yet another mad dash to the end of the speculation twig, and a somersaulting nosedive into High Octane Speculation Canyon: imagine turning this whole process of "coin clipping" over to a small class of private individuals able to build artificial intelligence "data centers" with a prior lien on public power facilities, water usage, and who are able to put said facilities into the coin clipping business? Who would know? especially if the ability to cover up the clipping were in the hands of the very same artificial intelligences doing it in the first place?
In other words, magnify the relatively small Malaysian problem to the scale of the United States or China, and their economies, and the scale of potential corruption becomes truly unmanagable and, I would suggest, so large that an actual functioning human economy becomes impossible in a kind of economic apocalypse: either that false and corrupt economy collapses and returns to a human scale with real humanity operating it, or it becomes so large and so corrupt that humans simply cannot function in it, and are "replaced" by machines that can. Humanity either goes underground in a parallel economy of its own, or simply "goes under ground" in the other, final, way.
Which brings us back to seigniorage.
Back in that day, these activities, clipping, and counterfeiting, were considered to be such a bad influence on society and culture that oftentimes the penalty for those caught engaged in the activity was death. This meant, in practice, that only the well-connected and powerful tended to engage in it, and even then, there was risk because people were executed for doing it. Sir Isaac Newton himself, in fact, when he was the warden of the Royal Mint, sent more than a few counterfeiters to the gallows, and considered it his highest duty and one of his greatest accomplishments to have done so. One other thing that the Middle Ages did, which might be worth a discussion: corporate personhood also meant that the directors of a corporation were held personally criminally liable for the criminal acts of the corporation... or is it finally time to have a long look at the notion of corporate personhood itself?
See you on the flip side...
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