If supply is constrained, and demand grows, it won't stop growing until the price goes up.
An imposition of a quota system is interesting, just because it might yield free residential heating for homes that welcome miners into their basements.
That may not be nuanced enough for the desired results. Sounds like a lot of these places would like to still provide plentiful cheap power to industrial companies that actually create jobs and generate useful output that stimulates the local economy.
If government-directed job creation is the desired goal, why not just hand the preferred companies cash? That would be a lot more transparent and targeted than subsidizing utilities Venezuela-style.
> If government-directed job creation is the desired goal, why not just hand the preferred companies cash? That would be a lot more transparent and targeted than subsidizing utilities Venezuela-style.
This isn't a subsidy, it's hydro power; which is limited, but cheap to produce. If the bitcoin miners drive the price up without providing many jobs, it may incentivize the actual employers that were attracted by the low price to leave for other areas. It's a net negative for the community.
To benefit from cheaper electricity, you have to use it, and traditionally that's been through employing people to operate machines. If the companies got a cash subsidy instead, they would probably pocket the cash without doing as much as they promised to do to get it.
> To benefit from cheaper electricity, you have to use it, and traditionally that's been through employing people to operate machines. If the companies got a cash subsidy instead, they would probably pocket the cash without doing as much as they promised to do to get it.
Money is fungible. Whether they're saving it by having cheaper electricity or getting cut a check is irrelevant.
Electricity isn't fungible. There are substantial costs and efficiency losses involved in transmission, so electricity is significantly cheaper to supply if the consumer is right next door to a giant hydroelectric plant.
Energy-intensive industries that form part of the productive economy are exactly the industries that we want to use that power. We want aluminium smelters and chemical manufacturers to be sucking up that cheap, clean energy. It's an efficient use of resources.
Churning out gigajoules of waste heat to process kilobytes worth of transactions is not an efficient use of resources. It's a colossal waste that has done nothing useful except enrich a bunch of speculators.
> Money is fungible. Whether they're saving it by having cheaper electricity or getting cut a check is irrelevant.
That's wrong (and also kinda dogmatic). Money is fungible with itself, but it's not fungible with electricity. If a business gets a cash subsidy, they have all kinds of options to subvert the purposes that subsidy [1], but still collect the money. With cheaper electricity, the incentive is tied far more tightly to the actual activity of operations.
[1] which are to incentivize them to locate their operations in a particular place
> This isn't a subsidy, it's hydro power; which is limited, but cheap to produce.
The government is buying electricity from the region next door to make up for shortfalls, so I am confident they could sell their cheap electricity the other direction as well when they have an excess. Not selling that electricity at market prices and instead selling it at below market rates to companies because you think they benefit your community is a subsidy.
Heck, even if you couldn't sell the electricity to neighboring regions, you should still sell it at market rates and then distribute the resulting money in a more targeted way.
> If the companies got a cash subsidy instead, they would probably pocket the cash without doing as much as they promised to do to get it.
You don't have to hand them cash for nothing. You could give it as payroll tax breaks or a million other methods that are a lot more targeted than per-KW-hr. It's lunacy to think that power usage is even roughly proportional to the number of people employed pre-bitcoin. Businesses very tremendously in their power-usage-to-employee ratio.
probably because subsidizing electricity sounds better to voters than handing out cash. same reason why governments prefer giving tax breaks rather than cash to entice multinationals to "create jobs".
What if the allotment of cheap electricity for each company was calculated as a function of the number of people employed by the company whose primary residence is within county limits?
The hivemind doesn't agree with itself on anything, so that can't be it.
A comment is unsubstantive if it doesn't include any more information than 'boo' or 'yay'. (Although polite empty comments like congratulating someone are just fine.) On HN we want discussions where readers can learn a bit more than that someone likes mining.
Thanks for getting back to me. I have to disagree with your first point. There is very much a hivemind on HN, and any comment that doesn't fit in there gets downvoted. I find myself scrolling all the way down every thread to get different points of view, by the time I get to the interesting comments I can barely read them because you made the CSS make "unpopular" comments barely visible.
I'm currently negative 3 points for trying to start a conversation about the topic at hand. How is this not a hivemind? I followed your instructions and yet this still happens.
Not really. I think that the gold and diamond industry is hugely destructive and I'd encourage everyone to avoid their products wherever possible. Gold has some valid industrial uses, but diamonds are just bullshit and I think the world would be a better place if everyone believed that.
If De Beers found diamonds in my neighbourhood, I'd petition my local government to refuse them a permit to mine; if that permit was granted, I'd petition them to enforce high environmental standards and ensure that the externalities of that mining activity are appropriately priced.
Diamonds do have some industrial uses, but those can be lab-grown with absolute purity, and for jewelry, synthetic diamonds are actually 20-40% cheaper than mined diamonds and look better, whether that's because of a higher clarity or colors that "real" diamonds don't have. So there's really no reason to mine diamonds anymore except to market them as more expensive and more luxurious "real" diamonds, which is just bullshit. And there's no reason to buy mined diamonds unless you look to spend extra money and want to support an environmentally destructive and exploitative industry; the very same industry that financed wars to get what they want and tried to make sure that lab-grown diamonds couldn't be called diamonds even though they have the very same chemical composition so they could keep selling their blood diamonds without ethical and cheaper competition. Luckily, they lost that battle.
And since we can't create gold in labs yet, at least not more than a few atoms, it's actually better to buy diamond jewelry (as long they're lab-grown) than gold at this point. Just don't buy the De Beers lab-grown diamonds; even if those are ethically produced, we shouldn't support that company in any way, shape, or form.
Never mind the energy used to prop up the Militaries, financial systems, & other centralized industries?
The real "problem" is that Bitcoin mining is harder to centralize & control, so certain jet-setting, energy-guzzling, interested parties will play the morality card. The general population is not allowed to use untaxed energy, but those who control the energy are allowed to. It's the original scheme of civilization.
> I wonder what the chances are that you believe in man made climate change?
Key in on the word "believe". It's a faith. Not saying the climate is not changing, but I am suggesting we ought to have healthy skepticism & awareness of the history of the networks of people (i.e. the priesthood) who demand that we allow them to tax energy; lest the wrath of the gods (e.g. Gaia in this case) tear us asunder with their judgment. Unless you pay your tribute, using their money, of course.
If climate skeptics are right, we will have only hastened the inevitable transition away from fossil fuels - there's only enough coal, oil and gas in the ground to last us another century, give or take.
If climate skeptics are wrong, millions of people will die due to avoidable natural disasters and hundreds of millions will become climate refugees.
Those are our choices - do the thing we need to do anyway, or put it off until later and risk catastrophe.
Asking whether or not climate change is "real" is entirely the wrong question. It's always the wrong question. We need to ask what the probability is, how wide the error bars are and what the effect size will be across the range of possible outcomes. Even if our predictions are wrong by a couple of orders of magnitude, reducing our carbon emissions is +EV. Doing something now is obviously the best course of action, because you avert a high-probability and high-magnitude loss at a relatively low marginal cost.
Wow. What an unfair statement. I am mostly vegan, drive as little as possible with my third hand high-mpg vehicle, and make a conscious effort to reduce reuse and recycle. However, yes I eat industrial animal products (not a lot but . . . ). Does that mean I'm just signaling because I think, and state, that cryptocurrency mining is a hugely wasteful environmentally damaging and morally dubious activity?
I never stated my position at all. Just asked what his is, since he sees no problem wasting massive amounts of energy on bitcoin. Many of the people caught up in cryptocommity are the ones turning around and posting about melting ice caps with no sense of irony or shame at all.
I could be entirely opposed to the idea of a tax solution to "fight" climate change while also being entirely opposed to bitcoin because of the uses of money laundering, drug purchasing, a My First Day Trading schemes.
I'm personally opposed to bitcoin for lots of reasons, mostly like kids think it's a decentralized currency, when really it's a very centralized commodity (any one of 12 people could effectively destroy bitcoin at any point in time) - but...
I'd be a hypocrite if I considered myself into bitcoin and environmental issues.
There is something interesting to be said about Bitcoin's ability to expose and correct market distortions so neatly.
I personally quite like the idea of a quota system for access to cheap, local power. It is interesting however to imagine what might happen if the power was sold into the market at market rate and the profits divided up amongst local businesses and residents instead of giving them cheap power.
That way, they in theory would be no worse off (they can buy power and the dividend cancels the loss of the subsidy), but they can also directly buy things that have higher utility than the direct energy would provide them.
That would also stamp out local bitcoin mining operations and divert the cheap energy to uses more productive than burning it for crypto creation.
If the local systems sold the electricity on the open market and used the funds to subsidize public services or just keep taxes lower, the locals would still benefit and there'd be no bitcoin mining incentive.
The market distortion here means that the overall % of green energy in the country is lower than it otherwise would be.
Why would anyone mine bitcoins there if the profits would be taken and distributed to the locals? Or does your proposal include the local government managing the bitcoin operation?
I don't think you understand. Theoretically with an efficient grid there should only be one "market rate" for power. Bitcoin miners would pay market rate regardless of where they are geographically. Certain places pay a vastly reduced marginal rate to generate power, and there are a number of ways to handle the delta between the generation cost and the market rate. One way is to give those who paid for the generation infrastructure (locals in this case) cheap power. That results in bitcoin miners becoming locals. Another way is to just sell it on the open market at market rate, and give the money back to locals. In this latter scenario, the market rate would likely drop a small amount due to the increased supply, and the locals who are now being compensated in dollars rather than an energy surplus, could use those dollars for more productive things like food, or startup capital.
There are actually (at least) two distortions being exposed here:
1. Power being sold for below market rate
2. Someone being able to join the original investor pool (i.e. become a local) and reap the benefits of an earlier investment by the municipality
The geography of power generation is important. The losses for a 345kV 1GW transmission line are about 4% over 100Mi. As I understand it, they also increase in a compound manner, so over ten times that distance would be 48%. Higher voltage / superconducting lines would reduce this, but they're expensive. The difficulty of transmission losses, combined with geographically specific power sources (hydro, geothermal, wind, solar, etc.) means that power costs legitimately vary throughout the world, and within countries the size of the United States.
How would this keep bitcoin miners from becoming locals? I assume locals would receive rebates in direct ratio to the amount of electricity used, thus local miners would still win the exact same amount. If locals don't receive rebates in proportion to usage, there will be a lot of people "living" there who don't actually live there for the free money.
Seems to me if Bitcoin was going to "become a thing" (to use American parlance), it would already have done so by now. What milestone could mark success for this currency? Conversely, when shall we declare failure?
As a tradeable commodity, I'd say that an easy bar for having "made it" would be when you see a BTC exchange-traded fund on a major stock exchange. Progress seems to be happening on that, but we'll see.
As a currency, I'd say that, in the narrow case of BTC itself, failure is baked into its design. The current protocol imposes an estimated upper limit of 3-7 transactions per second on the network. That's just not acceptable for a currency (assuming it has dreams of being more useful and widely accepted than Ithaca Hours, anyway), and the suggested plans around forking are awkward at best.
There are also solutions like the Lightning network. To me, I have a hard time seeing those as efforts to make Bitcoin a currency so much as efforts to create a new currency that is backed by Bitcoin. Sort of like the gold standard of old, where different currencies were backed by commodity reserves.
Sure, but a main point of a crypto currency is realizing there's no reason to back a monetary currency with anything. It's just a shared hallucination. There's no rational reason a new currency would be "based" on btc holdings. That's just silly.
My view is that the upper end of btc viability is taking over some fraction of why people want gold. The system is way too expensive for a viable txn network (a la cash or Visa) and will never become one.
> a main point of a crypto currency is realizing there's no reason to back a monetary currency with anything
I'd argue that BTC is very much backed with something - lots and lots of thermal dissipation. The entire argument for why it should be accepted as a stable, reliable, trustworthy store of value is based on proof of work.
If BTC is challenging anything about money, it's challenging the idea that money needs to be something that exists under the auspices of a government body.
Bitcoin mining can scale depending on demand, from a bunch of laptops to massive farms. It is only greed that brings more and more miners into the game, pushing energy demands higher.
It's normal for governments to crack down on mining at some point, the energy consumption is indeed hilarious, but that's not going to bring down bitcoin anytime soon.
Nah, I'd say the waste is built into the Bitcoin design itself.
The reward rate is relatively constant, since the protocol automatically scales the difficulty of completing a block to try and make it happen on about the same interval regardless of how many people are mining. And mining is also a zero-sum game. (Unlike in real-world mining.)
This creates a completely wacky incentive structure where, instead of incentivizing producers to only expend enough resources to satisfy market demand, and no more, they're instead incentivized to expend as much energy as possible, at all times.
It's like if there were a King who likes to buy cheeseburgers for $10,000 apiece, and he always buys the first cheeseburger he sees, but he considers any cheeseburger that is more than 1 second old to be spoiled. So then you end up with a market where people are furiously making cheeseburgers as fast as they can, and just littering them everywhere, in the hopes that one of the cheeseburgers they made happens to be the one that the King sees first whenever the urge for a snack strikes him. Meanwhile, the world is getting increasingly littered with spoiled, rotting cheeseburgers.
> This creates a completely wacky incentive structure where, instead of incentivizing producers to only expend enough resources to satisfy market demand, and no more, they're instead incentivized to expend as much energy as possible, at all times.
This is not entirely correct. You pointed out that the reward rate is relatively constant which limits the income of all miners combined to 1.25 Bitcoin/minute. They really can't be spending more then that on mining. That includes Hardware + Energy + Salaries + Offices + Warehouse. Any single miner is also only going to get a fraction of that 1.25 Bitcoin/minute and anyone spending more then what they get will find themselves with a deficit.
That is also just until ~May 2020 when the next Halving is going to occur. They have until then to figure out to decrease their spending on mining to be lower then 0.625 Bitcoin/minute.
Bitcoin energy usage is limited by current bitcoin production multiplied by current bitcoin rate. If mining is using more energy, someone's spending their money and probably will stop mining soon. If mining is using much less energy, then there's a good opportunity to get some money (if hardware is available), so people would mine it anyway.
> Thanks to nearby Niagara Falls, Plattsburgh has a quota of cheap electricity available at a low rate
Plattsburgh is 300 miles away from Niagara Falls, on the other side of the state! I don't know why Plattsburgh prices are so low, but it's certainly not proximity to the Robert Moses Niagara Power Plant.
It would be interesting for miners to offer all merchants within the geographic area affected by their power consumption fee-less transaction processing (free mining for their neighbors) . If it's technically achievable I could see it introducing some unusual but generally positive dynamics.
It would be easy to do, but the savings in transaction fees would not be enough to be worth the increased energy cost, even for the people who use Bitcoin, which most of them probably don't.
I admit I don't know much of anything about cryptocurrency, but is there something fundamental about the need for "mining" (in whatever form) for currency? It seems like the intent behind bitcoin mining was to mimic the scarcity of mining for gold or other precious metals by substituting hefty computations. But isn't that just a means of getting the currency bootstrapped in some way which ensures that it becomes scarce? Aren't there other, less energy intensive ways to do that?
I mean, could there not be a cryptocurrency which bootstrapped off of the exchange with "real currency"? Or perhaps by direct exchange of goods and services?
There's more to mining than this, but one aspect is that it protects the network from attack. If there's a disagreement about whether a transaction was made, the side with more computing power wins. There's no central authority to arbitrate disputes, so they continuously have to prove which transactions are acknowledged by the majority. If they turned down the hash power to a reasonable level, someone with more hash power could come along and start rewriting transaction history.
Unfortunately I believe one of the core concepts is the "proof-of-work" and Bitcoin cannot work on the decentralized and distributed manner it achieves without it.
What does the word 'waste' mean to you? Why would you use this word to describe what is done by the proof of work?
If you think cryptocoins have no utility, then it stands to reason that the proof of work is wasteful. And beyond: the time and money spent by developers, corporations, exchanges, etc: all waste.
But if you think that cryptocoins do have some utility, then it seems unfair to call it a "proof-of-waste". The PoW is the only way to equitably mint new currency.
I thought it was implicit from context but I should have included "...[for a decentralized] currency."
I should have made it explicit that I meant "trustless + equitable" with respect to minting new currency.
> Why can't exchange of goods or services substitute for proof of work?
'exchange of goods or services' can't be used to mint new currency. When you want to issue new money, you have to give it to someone. If you take goods or services, who should get those? Let's say you come up with a method to solve that, equitably. How could you prove to everyone who got those, and how could they trust your claim?
> Why does proof of work _have_ to be power-hungry number crunching?
It might not have to be number crunching (I didn't say it did), it just happens to be the most popular. However I think that 'Work' here is the physics sense of the word -- the proof-of-work is evidence that you consumed energy.
Another mechanism is to just delete the "trustless" requirement. Just issue the currency via some trust-the-individual(s)-who-created-the-coin mechanism, like some DPoS coins do (e.g. Nano). They can use a fountain with a CAPTCHA, and we have to trust that the fountain is indeed fair. This coin is popular for the sake that it does not require PoW for minting and has no inflation.
If you concede that it has utility at all, then all you're saying is "I wouldn't be willing to pay that much". But clearly the market will bear a higher price than you're willing to pay.
Other things that are proof of waste: 1k USD iPhones, Cartoons on TV, all-you-care-to-eat restaurants, dabbing, hoverboards.
Not worth it to you. Just like your trip to Thailand is a waste of finite resources as far as I'm concerned. Who gets to decide, these things are subjective. That's why we use markets to allocate resources.
I understand that a central respository of work and the need to make the busywork scale cleanly and linearly makes it tough to be decentralized, but I regularly wish that a dominant cryptocurrency could find a way to do proof of (real) work with these cycles. There are so many projects which just lack for computing power (e.g. folding, prime hunting, etc), so it feels like even more of a waste to turning real power into arbitrary hashes.
Weren't the smarter miners already relocating to places like Iceland which have more cheap surplus geothermal power than they ever use themselves anyway?
I'm sure air conditioners in US banks or public offices consume more energy than Bitcoin mining worldwide. They never turn off computers at night, insurance companies require to leave lights on at night, each office has a few TVs with chomecast showing pictures of nature (irony ha!) all day and night long... but it's BTC mining they're fighting with.
Yea, I did a similar analysis on the energy wasted due to the new reddit layout (I got 3 TWh per year, or ~10% of bitcoin electricity usage):
https://news.ycombinator.com/item?id=17619025
I'd love to see someone go more in depth with these types of "how much energy is wasted on x" estimates. Including just addressable grid and power plant inefficiencies. I suspect bitcoin is simply not a big deal (at this point), so this entire issue is concern trolling.
And then you come to the problem of what it means for the electricity to be "wasted". Eg, is going to church "wasting electricity"? What about the entire alcohol industry? Playing videogames? Preparing and storing deserts?
There's many criticisms to make about cryptocurrencies, but people in glass houses shouldn't throw stones. (I live in a country which uses more energy per capita then virtually every country on Earth)
> I suspect bitcoin is simply not a big deal (at this point), so this entire issue is concern trolling.
Or people actually care. The fact there are existing, worse ways to use energy doesn't mean we shouldn't care about Bitcoin. For the same reason I'm composting, even though the nearby supermarket throws out way more packaged food than I'd ever buy.
>"The fact there are existing, worse ways to use energy doesn't mean we shouldn't care about Bitcoin."
Its more like you are trying to catch rainwater in a strainer full of holes but are worried about a tiny pinhole in the side. So sure people may actually care about it, it just makes no sense and living your life that way is not a recipe for success.
Lets say bitcoin used 1000 TWh/yr worldwide (~15-30x what is estimated to use now). That'd work out to:
100*1000/157,500 ~ 0.63 %
Currently its more like 0.02-0.04%. As someone else posted, just christmas lights in the US alone is ~6 TWh/yr (~.004%).
EDIT:
That energy supply number is actually TPES, which ignores efficiency:
"Closely related to energy consumption is the concept of total primary energy supply (TPES), which - on a global level - is the sum of energy production minus storage changes. Since changes of energy storage over the year are minor, TPES values can be used as an estimator for energy consumption. However, TPES ignores conversion efficiency, overstating forms of energy with poor conversion efficiency (e.g. coal, gas and nuclear) and understating forms already accounted for in converted forms (e.g. photovoltaic or hydroelectricity)."
I suspect that if mining encourages even tiny innovations in power plant and grid efficiency it will have a net negative effect on energy waste. Apparently its that about 65% is lost due to powerplant, and 10% due to transmission/distribution, for ~75% total:
Even with 0.04%, we have around 25 power plants [0] operating just for Bitcoin. You say it's tiny just like Christmas light, I say it we could get rid of PoW and improve/chill on Christmas lights we could reduce demand on 30 or so power plants and maybe not build new ones immediately. (Yes, average are bad, we're in a back of the napkin territory)
"if mining encourages even tiny innovations in power plant and grid efficiency "
But it won't. All the incentives to increase power plant and grid efficiency are already there. Moreover, as you state quite clearly, bitcoin energy use is a small proportion of energy usage.
Mining is somewhat unique in that it doesnt really matter where it is done and it is very easy to tie profitability to electricity cost (since that is the main cost).
So I disagree, at least if it gets big enough to matter. I'd expect power plants, towns, etc to find it more worthwhile to invest in more efficient tech to attract the miners.
>Including just addressable grid and power plant inefficiencies. I suspect bitcoin is simply not a big deal (at this point), so this entire issue is concern trolling.
This isn't a zero-sum game. We can address multiple inefficiencies. Bitcoin is just one of the more flagrant sources of tech-based waste that doesn't actually benefit anyone.
>And then you come to the problem of what it means for the electricity to be "wasted".
Nobody's going to ever fully agree but I think we can reach a quorum agreeing that fake money made up by libertarians who think a couple hundred years of bank regulations are totally gay bullshit put in place purely to stifle people and not to address totally legitimate concerns of abusive behaviour is enough of a waste to curtail it.
> Eg, is going to church "wasting electricity"? What about the entire alcohol industry? Playing videogames? Preparing and storing deserts?
Alcohol and food are tangible physical products that have had demand for thousands of years, video games are entertainment, and church builds community. Some people will have problems with all of these, but they are almost certainly going to be the minority.
Thanks, I appreciate this more honest position. You dont like energy being used on bitcoin because you dont like bitcoin. If enough people think that way then it should be considered "waste". Simple enough, but what is enough people, 50%?
Air conditioners actually create value though, in the form of making people comfortable. Most people do not see Bitcoin mining as something that creates real value in the world, so it's a bit more understandable that people might be upset about a huge amount of electricity being consumed by something they see as pointless.
The Reddit analysis is pretty suspect - you can't assume that power usage scales anywhere close to linearly with data usage. If you look at all the devices connected to the Internet, I would bet that a huge majority of the power consumption stems from time that desktop computers/servers/switches/etc are either idle or underutilized.
If you have a better method, I'd love to see it. This is back of the napkin stuff, it doesnt need to be perfect.
And using he same methods, HN is ~70 KB which is decent for a text-content site. The OP wired page is about 700 KB (but wired.com is 4.3 MB), slashdot is ~1.9 MB, and reddit now like 4.3 MB, etc. Pretty much the entire internet is over 90% unnecessary junk at this point even if you allow that the content has value.
This is back of the napkin stuff, it doesnt need to be perfect.
It doesn't need to be perfect, but if the result is off by an order of magnitude or more than it's pretty useless.
If you have a better method, I'd love to see it.
I'm not saying I have a better way of answering the same question, but that doesn't make your analysis more valid.
As noted in the original post, its based on 5 kWh per GB of data transferred
Yes, I believe that if you take the entire amount of data transferred by the Internet, then divide it by the total amount of power used by all internet-connected devices, then you get 5 kWh per GB (or at least you do if you base it off of the data available in 2012 when that paper was written). But that doesn't mean that if I download an extra GB of data that it took anywhere near 5 kWh to do that.
That paper you linked includes things like "total power consumed by all connected desktop computers" as part of the power budget, but this is obviously flawed reasoning. There are many things that computers do besides transferring data, and even if a computer is sitting idle it consumes a good deal of power as long as it's switched on. If I spend 1 kWh of electricity playing an offline computer game for an hour, then download a 1kB file, that doesn't mean that it costs me 1kWh/kB to download data.
Not really. I dont see why anyone would complain about bitcoin wasting energy but not crappy web design when the latter wastes more (reddit is just one example of this).
Afaict, you should complain about both or prioritize the larger waste if your true goal is to reduce the amount of wasted energy.
Yes, really. You're trying to deflect to another subject using extremely shoddy calculations (and don't use the "It's a back of the envelope calculation" excuse) because you have no defense for the topic at hand.
"Afaict, you should complain about both or prioritize the larger waste if your true goal is to reduce the amount of wasted energy."
AFAICT, you should stop deflecting and concentrate at the subject at hand before trying to veer off.
And the energy btc "wastes" is to secure the vaults and the money flow. Other fiat currencies "waste" energy on security with bright security lights, guns, bombs.
However, I do like how things like PrimeCoin have a residual product from their security.
If the incentive to do so was there, banks could become more energy efficient. Bitcoin, however, cannot do this, by definition. PoW systems require server farms to bang out hashes as fast as possible, and the complexity of that calculation increases as the mining pool increases. So there's more power being used than several entire small countries to perform something like 100 transactions a second. Say what you will about the traditional banking system, but it's not set up to burn massive amounts of power by design, and it actually manages a throughput of tens of thousands of transactions a second for actual business purposes rather than just making play money for money-flush nerds and criminals.
>"banks could become more energy efficient. Bitcoin, however, cannot do this, by definition...there's more power being used than several entire small countries to perform something like 100 transactions a second."
I don't see how bitcoin cannot become more efficient "by definition". In fact it is a very straightforward process. All you have to do is add more zeros onto here and get people to use it.
/** The maximum allowed weight for a block, see BIP 141 (network rule) */
static const unsigned int MAX_BLOCK_WEIGHT = 4000000;
Sure, theoretically, except in practice when they actually try to do that, the community flips its shit and we end up with hard forks into shit like Bitcoin Cash and the shit show keeps rolling.
As mentioned, the problem is that increasing that value enough to matter could increase the storage/etc costs of monitoring the blockchain to an extent that would be prohibitive for many people.
If those costs come down then the "efficiency" can be increased without any impact. It looks like in the last decade they dropped about 10-100x:
as long as there is value in mining there will be miners. But it's a new drain resource that required energy and I'm sure energy companies, governments, and greens will have a say. Not clear to me though why mining requires so much power? Is there a way or existing initiatives to reduce this?
https://arstechnica.com/tech-policy/2018/05/new-study-quanti...
Proof of work mining is just a bunch of computers trying to brute force the password for the next block so they can get the mining bounty and fees from the transactions they include, so the vast majority of the results are thrown away. For bitcoin in particular, the difficulty is a sliding scale based on how quickly the most recent blocks have been mined, so increasing the number of miners leads to more energy being required to mine a block while the transaction capacity stays relatively constant.
Basically, proof-of-work cryptocurrency isn't secured by the abstract "computation" or "work", it's secured by money. The security of a blockchain is proportional to the amount of money that is constantly poured into securing it. If this amount of money is too low - even temporarily - a malicious miner could spend a certain amount of money and expect to break the chain somehow, for profit, as a hostile government, or for the lulz.
> as long as there is value in mining there will be miners.
I'm gonna get a bit Marxist on value here.
Transaction value, or intrinsic value?
A bitcoin can be exchanged at the current exchange rate, as can any commodity given unit of exchange.
What is the intrinsic value of that commodity? The amount of wind needed to blow through a windfarm makes it virtually free aside from the depreciation and cost of producing that windfarm, which is the cost of production.
What is the future discounted future value of Bitcoin? That will depend on the Bitcoin interest rate, for which there is only a transaction value, there is no yield on Bitcoin. Not yield means no return on capital. Given it has cost to produce, yet to yield (intrinsic return on capital) it is a negative sum game, so zero.
If the power's there, why not use it, even at below market rates? Because Bitcoin may be using cheap power, but why does that power even need to be there? Paying little / subsidising producers to over-produce for negative-sum good is still paying something, and encouraging over-production and inefficient production.
Bitcoin is interesting, has some transaction value, but negative intrinsic value/opportunity cost.
It’s pretty simple, bitcoin mining has the same purpose as gold mining: to get something which is hard to get. The rarity just makes these things useful as a store of value.
The world would be better off without bitcoin mining, and much better off without gold mining.
The speculation value of bitcoin dominates the use store of value, well, value. It is a speculative instrument at this point. Yes, a nice proof of concept, but now an instrument of speculation with a net negative yield.
Gold mining was of kinda stable fixed supply for millennia, then after the 'miners' in Johannesburg discovered half of the world's gold beneath their feet and industry progressed, became of productive value. As of diamonds today.
Bitcoin is of value there. It proved the blockchain, fantastic achevement. But like a natural vs synthetic diamond, of little future value. Further resources invested mining it are seeking returns which will not tend to zero but end in negative. Ethereum, the blockchain which no one fully understands or trusts, the left to Bitcoin's right.
Pivotal ideas, yes. And the end is a long way away.
I'm not sure about where this comment is pointing but I'll have good faith is it isn't a tar with one brush.
The growth of an economy is equal to it's return on capital. Balance sheets must balance. Add-in 'long term growth' as in the short term banks and other money market intermediaries make terrible terrible decisions so what seems like growth is often hidden was, well, not growth.
> What is the future discounted future value of Bitcoin? That will depend on the Bitcoin interest rate, for which there is only a transaction value, there is no yield on Bitcoin. Not yield means no return on capital.
Generalise all individuals, companies, government, across an economy (I suppose it would have to be the global economy): As an aggregate (ignoring individual credit situations, this is an aggregate), can they conceptually apply for a Bitcoin loan of B10 @ 10% annual interest and with successful growth repay B11 next year with no change in exchange value of Bitcoin (i.e. there has been growth in the real economy)?
Until this market exists, where real value dominates speculative value, Bitcoin remains a commodity of negative intrinsic value return.
Edit: Financial companies allocate capital. How well they do it is under question by regulators too. Efficient allocation of capital is really important for creating growth.. obviously. Reward for allocation of capital... in my view should be a lot less shorttermist quarterly or annual results-chasing.
Isn't the energy spent for the security of the network, instead of armed guards and bombs? Compared to that, is it more or less wasteful then how we secure USD?
There is absolutely zero chance of municipal electricity companies destroying bitcoin. Cutting off some miners will not destroy bitcoin. Raising electricity costs aren’t going to destroy bitcoin.
This isn’t about libertarian dreams, that’s just not at all how PoW works.
The author is clearly utterly clueless (or intentionally trolling).
If you happen to disagree, I’d absolutely love to know how municipal electricity companies could even hurt bitcoin.
If the revenue from the money transfers business is 30 billions per year and the cost of electricity is 0.12 U$D per KW/h. Then the cost, in energy terms, of the money transfer business is 250 TW/h in a year. This is a lower bound.[1]
Bitcoin miners are consuming in the order of 73TW/h[0] annually.
Let's consider those quantities equal for the next argument:
Isn't it a good thing that crypto is generating business for the energy sector? If those revenues are invested in more energy research it is favorable to human kind, isn't it?
Why deny the energy sector its business and favor the financial sector?
The energy sector is primarily producing the energy in question with non-renewable resources that pollute the environment and raise costs for everyone else, disproportionately harming the poor. Not to mention rising food costs due to money grabs in the ag industry with things like corn based ethinol.
One could have a tiered rate system, where the first N kWhr are inexpensive and the rates rise after that (just as we do in Seattle)
http://www.seattle.gov/light/Rates/docs/2018/Jan1/Schedule%2...
If supply is constrained, and demand grows, it won't stop growing until the price goes up.
An imposition of a quota system is interesting, just because it might yield free residential heating for homes that welcome miners into their basements.