Bitcoin And Dented Radishes: This Week’s Hype Penalty Box Nominees

“Hype” is defined by Webster’s Dictionary as “to promote or publicize (a product or idea) intensively, often exaggerating its importance or benefits.” It is not all that hard to generate hype – there are whole ecosystems to help people and businesses create it.

And a little hype can be a good thing. In a world with seemingly infinite variations on every good or service imaginable – and digital access to all of those things a tap or click away from consumers – hype can be the power to stand out in the crowd. Instead of hoping that the consumer finds you by serendipitous occurrence, generating some hype will bring them looking for your offering.

But hype is only as good as the ability to live up to it. And that is a much, much taller order.

This week was not a good one for two pretty big hype-makers.

The Ugly Food Fight

Food waste is a massive environmental problem, even if it doesn’t quite get the same airplay as other things that create issues, such as carbon dioxide emissions. Food that goes uneaten each year wastes roughly 4.2 trillion gallons of water, two billion pounds of water-polluting fertilizer and 30 million acres of land.

This has led some, like environmental activist Chad Frischmann, policy director of the climate solutions group Project Drawdown, to opine in The Washington Post that fighting food waste needs to be one of our top battles in the war on global warming. He further states that the time has come for American consumers to  “embrace ‘ugly food’ — fruits and vegetables that are blemished and not perfectly shaped, but are perfectly delicious and nutritious.”

And where there is an activist’s call to action, there is an entrepreneur at the ready to answer the call – or, in the case of the ugly food movement, there are actually several well-funded entrepreneurs. Misfits Market, Imperfect Produce and Hungry Harvest all offer variations on the “ugly food in a box” motif, offering up elegant solutions to food waste. Produce that is deemed too aesthetically displeasing to grace grocery store shelves can instead be boxed up and sent to a consumer’s doorstep, usually on subscription.

Food waste problem solved!

Well, maybe not, as recent reports note. Because while the world embracing veggies for what they truly are – instead of in accordance with our rigid societal standards for perfect produce – might be an admirable moral goal, it might not be doing all that much to really fight the food waste problem.

Firstly, as The New Republic points out, ugly produce isn’t actually going to waste quite as often as most people think. Restaurants, processed food makers and canners are all markets into which these excess and unsightly foods can flow into, and often do.

“The stuff in these boxes is not ending up in a landfill,” co-author Max Cadji, the founder of Phat Beets Produce, noted in an interview. “They’re just tapping into the same marketplace as the guys who make shredded carrots.”

That supply line is notably very uneven. Larger industrial, agricultural operations – think Dole – have a much easier time selling their excess or imperfect products than smaller and mid-size farms. And smaller and mid-size producers have reported that services like Hungry Harvest and Misfits Market do buy inventory that would otherwise remain unharvested in a field. But with the exception of Misfits Market, most ugly produce box firms do buy produce from large agricultural producers, in unspecified amounts – and in those cases, many experts note, they aren’t fighting the food waste problem so much as they are giving industrial-scale producers more incentives to overproduce.

“The food system is a hot mess, but using ugly produce is one thing it’s actually really good at,” crop scientist Sarah Taber wrote in a long Twitter thread explaining why ugly produce can’t solve the food waste problem.

And while that is the main issue affecting ugly food boxes, it isn’t the only one. The boxes also tend to compete with other measures to counteract food waste, like community gardens or community-sponsored agriculture projects, where groups of individuals pay a farmer to grow crops for them by the season. Both do tend to have some effect on food waste levels, but when competing against a service that has much less work and risk involved – like an ugly food box that shows up at a customer’s door on demand – they tend not to fare as well.

And finally, while food waste is a big problem, when it comes to produce, the hand-off between farmers and buyers isn’t where the waste happens. Instead, it occurs after consumers buy the goods – in the hopes that they’ve finally developed a taste for vegetables – and then throw them out because they find that they have not yet developed said taste.

“Fruits and vegetables are the most wasted products in people’s homes,” noted Dana Gunders, a food sustainability researcher who wrote the Natural Resources Defense Council’s 2012 report on food waste.

Food waste is a fightable issue, but it seems boxes of dented radishes won’t solve it. Americans learning to suck it up and eat their veggies just might.

Bitcoin Profitability Problem for Miners

Bitcoin entered the market on a tidal wave of hype that early on declared it the second coming of the internet and the inevitable successor to fiat currency. The claims about bitcoin’s future have ebbed and flowed as its price has rolled up and down (and up and down) over the years. Shortly before Christmas 2017, when the price of bitcoin was scraping $20,000, some predicted that $100,000 bitcoin was in the not-so-distant future.

That didn’t happen. In fact, most of bitcoin’s loftier bit of hype hasn’t materialized. To date, bitcoin has not supplanted fiat currency, unless one happens to be operating as a cybercriminal.

And predictions about its future are looking less sunny lately, particularly as reports emerge that it is now cheaper to buy bitcoin than it is to mine it.

The production-weighted cash cost to create one bitcoin averaged around $4,060 globally in the fourth quarter, according to analysts with JPMorgan Chase & Co., while the average price of bitcoin on the exchanges is around $3,600.

The news does not foreshadow an immediate bust in bitcoin mining, as there is considerable spread in the cost of mining it. Low-cost Chinese miners that produce at a rate of around $2,400 per bitcoin – by leveraging direct power purchasing agreements with electricity generators – might still be net-positive, margin wise. But the story in most of the rest of the world is not good news.

“The drop in bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners,” analysts wrote.

What should happen next is that high-cost producers will drop out of the market, thus raising margins for those that remain by giving them access to a greater share of coins on offer. That, however, has not happened yet – and production shares of miners based in the Czech Republic, U.S. and Iceland have actually grown slightly over the past year or so.

Bitcoin also suffers from cooling interest in the market, as the roller coaster ride of its price and production tend to make it a scary option, according to John Normand, head of cross-asset strategy with JPMorgan.

“Even in extreme scenarios, such as a recession or financial crisis, there are more liquid and less complicated instruments for transacting, investing and hedging,” Normand said in the report.

Moreover, he noted, even if the extreme circumstances that people often list as the natural proving ground for cryptocurrency come to pass, amassing bitcoin still probably isn’t going to be anyone’s primary concern.

“If the future indeed entails dystopia, then for consistency, investors and corporates should be making broader and deeper preparations beyond just acquiring cryptocurrencies,” he said.

“Useless, even in the event of the apocalypse, especially in the event of the apocalypse”  is a rather hype-deflating review.

Which is not to say that bitcoin might not still turn around a miraculous price rally for no particular reason tomorrow – it has happened before – or that ugly food boxes might not find a way to save the world yet.

But for this week, it seems, it is safe to say that both looked a bit like the next big thing – and ended up being a lot smaller than initially expected.