[al_ramich]

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...

[Isomatik]

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.

[saalweachter]

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.

[zhte415]

> 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.

[woah]

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.

[zhte415]

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.

[swiley]

Couldn't the same be said for most of the work done by office workers at financial companies?

[zhte415]

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.