Bitcoin Mining: Textbook Example of Rent-Seeking and Waste in the Financial Sector

The NYT gave readers an excellent example of how the financial sector can lead to an enormous waste of economic resources. It reported on a massive set of sophisticated computers in Iceland that is devoted to the sole purpose of "mining" bitcoins. The point is that these computers are used to carry through complex algorithms more quickly than competitors in order to lay claim to new bitcoins as they become available on the markets.

While this can be quite profitable to an individual or firm...