[bransonf]

It’s a simple equation: So long as there is more money in mining BTC than there is cost in energy to mine it, mining will proceed.

No entity in the world can control the price of crypto. But, we can and already do regulate energy production.

I think we need a carbon tax, that is specifically a financial disincentive towards any means of energy production that directly pollutes the atmosphere.

Seriously, what are the current best arguments against levying such a disincentive?

Moreover, if energy were priced correctly (its toll on the climate priced in) would BTC become higher in value? That is, we have a supply, increasing at a rate fixed between the arbitrage of energy and mining efficiency. If energy were to become more expensive, the growth in supply would slow. Assuming demand remains constant or continues to grow as well, the only way for price to go is up.

[ayngg]

To me it seems like Bitcoin (and other pow cryptocurrencies) are almost like the climate change scapegoat for a number of social and economic issues that have seemingly come to a head recently to facilitate their rise.

People mine because it is expensive, it isn't the other way around, so the real questions we should be asking in good faith are things like "Why it is profitable in the first place?" and I think it is probably related to other questions like why have the greater financial markets become so wonky, why has the behavior of investors changed so radically (GME et al), why have politicians been unable to be effective policymakers for decades, and why many institutions, both social and political in nature, appear to have become less trustworthy in the eye of the greater public? These are some of the questions among others which I think probably provide a better understanding of what is happening than the overly simplistic 'ponzi scam' explanation that has been repeated ad nauseam since its inception.

Bitcoin is just one of many things (pretty much everything) that have been able to use energy profitably, while subsidizing the costs by externalizing them via climate change, that part isn't new. People get too caught up on bitcoin because it is new and nobody understands it (not just from a technical perspective), so it is really easy to dismiss. Singling it out in that manner seems silly.

[caf]

I don't think the criticism is exactly wrong, but it's more like Bitcoin mining is the reductio ad absurdum exposing the waste of resources that goes into gold mining (yes, there's some industrial uses, but that is a rounding error compared to the quantities that are dug up, purified, cast into bars, shipped around the world and buried back underground in vaults).

[arcticbull]

About half is used for jewelry because gold is shiny pebbles. About 10% is used for electronics.

Mining Bitcoin consumes 5X as much energy as gold, btw, per unit value extracted. It also requires mining gold to produce the circuit boards used for mining Bitcoin - given the popularity of the ENIG immersion gold plating process for PCB contacts.

The secondary issue is that of course each Bitcoin transaction generates 100g of e-waste which cannot be recycled and just gets buried. E-waste has a few grams of metals, but is mostly plastic and FR4 (epoxy filled fiberglass). Plastic and FR4 cannot be recycled. What little of the e-waste can be recycled is shipped to third-world countries where poor people dig through piles of scrap and dunk it in toxic chemicals.

The only meaningful way to move forward is to reduce consumption, especially consumption which achieves nothing, like literally wiring up a power plant to compute hashes of random data instead of attaching it to the grid to do useful things.

What a disaster.

[roenxi]

There is a really easy solution for this disaster - a trusted party could run a big relational database that was basically a non-inflating currency and really cheap to run.

Except that isn't going to work, because governments are untrustworthy and as history shows will sooner rather than later debase their currency.

All people are looking for here is a safe way to store value over time. If governments would let people keep reliable records without bringing in the inflation tax or changing the rules, things like gold and bitcoin wouldn't be anywhere near as interesting. But they are interesting, because it is normally policy to block anyone who tries to store (small-time) wealth for more than a couple of years.

[Webox]

I don't get your argument.

Bitcoin is very very volatile and just because it went up the last x years, doesn't make it stable or trustworthy.

My money in my bank is very safe and it doesn't cost me anything.

The inflation itself is a systematic thing and should affect bitcoin equaly.

When corona came, i was looking at the stock market and was surprised how many people left it. It doesn't make much sense to distrist the stock market that much. After all alot of pension funds are existing, lots of companies or people who are self employed also have to keep their money safe. There is a lot of dependency on the share market and we are all bound to a certain degree of not being able to move it out asap.

[bradstewart]

I'm assuming you're in the US/Europe/somewhere with a stable currency. Places like Argentina that have had serious devaluation of currency do not see money in their bank accounts as "safe".

Bitcoin can provide a way for e.g. Argentinians to get their money into other currencies when the government is actively preventing that through "standard" mechanisms. It's safe (er, safer) from that perspective.

[roenxi]

> My money in my bank is very safe and it doesn't cost me anything.

Your money is safe, your wealth is not. Taking the US as a reference, it is official government policy that if you store your wealth as money then it has a half life of 35 years.

> Bitcoin is very very volatile and just because it went up the last x years, doesn't make it stable or trustworthy.

I was sneaky in my wording - I'm a gold bug and think Bitcoin is worthless. Nevertheless, a rational person who was interested in bitcoin would probably note that whatever its bad points it is simply not subject to the sort of technical intervention that makes fiat untrustworthy.

Also, using gold as a reference, the unofficial policy half life looks more like 12 years. Using the M2, maybe 14 years.

[arcticbull]

lol, non-inflating is bad.

People aren't owed a risk-free return on thier capital and inflation is an incentive to invest. You're looking for a merged risk-free long-term store of value and medium of exchange. There's no reason to couple those two. It's actually counter-producive as they have different objectives. Money's job is to remain stable enough for as long as you hold it and cheap to transact. A long-term store of value's job is to go up.

Money is your short-term medium of exchange and lossy store of value. Which you use to buy long-term store of value. This is how capital is productively allocated while also creating a stable financial system.

The ability to adjust the money supply is crucial to reacting to shocks, to a changing population, and a changing economy. Taking away the knobs from the Fed removes their ability to create a stable monetary system in which business and individuals can operate.

If you actually look back in time you'll see under the gold standard, an attempt at this, boom/bust cycles were worse and more exaggerated. And much harder to control. There's no such thing as a free lunch.

This whole trope about the fed "stealing" 99% of money's value over the last 100 years is voodoo fringe economics. These are the people who used to hang out with megaphones at the corder of 5th and Market. Of course it went down, they told you it would, and they told you to buy something else with it.

[mountainriver]

Bitcoins wild fluctuations based on speculation would say it’s not a safe place to store value over time

[BTCOG]

Interesting that you should say the opposite of what JP Morgan is now saying. That the wild fluctuations are steadily going away as volatility has been calming down quite a lot.

[0xfaded]

In my world view, if you are actively removing wealth from circulation, then it should be disappeared.

But I do agree that it is too hard for the average person to save in the sense of "I will need to withdraw some wealth in the future". The best option out there seems to be ETFs. The dirty secret about the stock market though is that companies don't issue new stock nearly as much as one might think, and therefore the stock market is basically counter-parties playing off each other.

There are plenty of people out there with good, useful ideas and skill sets that really ought to be funded. And no, not all will generate VC like returns.

Figuring out how to link your minor excess now to your needs in the future in a way that isn't a net negative could very well be the defining problem of a generation.

[malka]

"a trusted party" does not exist at scale.

[FDSGSG]

Liberty Reserve was such a trusted party for a long time before Bitcoin became popular. In fact, there's a good argument to be made that the US government shutdown of Liberty Reserve is exactly what kicked off bitcoins popularity in the first place.

On May 6, 2016, the operator of Liberty Reserve was sentenced to 20 years in US federal prison

[o-__-o]

Including with Bitcoin, since 51% ownership of hash rate is simply a function of who has the most pooled resources (read: money)

[webinvest]

One such trusted party does exist. It’s a non-profit and it’s called the Stellar Development Foundation.

It’s cryptocurrency, the Stellar Lumens (XLM) is trusted well enough to be in the top 15 cryptocurrencies by marketcap. It has years of history to look back at. It doesn’t have a inflation rate (0% inflation rate now + occasional coin-burns).

It uses orders of magnitude less electricity than bitcoin because it uses distributed databases instead of ASICS, transactions are sent and received in a few seconds (near-instant), and transaction fees are less than 1 cent (just high enough to disincentivized spamming the network). Compared to Bitcoin’s $250 tx fee and Ethereum’s $30 tx fee, XLM’s tx fees are very cheap.

Finally you can buy XLM on most exchanges since it’s been around so long.

[FireBeyond]

> All people are looking for here is a safe way to store value over time.

There are ways to do so that don't involve scenarios literally as absurd as _buying power plants_ to do random equations.

Perhaps some of that desire for a safe value store should be invested in that direction.

[cabalamat]

> Except that isn't going to work, because governments are untrustworthy

Some governments are more trustworthy than others, and lots of people trust some governments. For example many people hold USD because they consider it a better store of value than their own country's currency.

> a trusted party could run a big relational database that was basically a non-inflating currency and really cheap to run

Somewhere like Switzerland would probably be quite trusted to run this.

[pydry]

There are plenty of inflation proof assets out there. Bitcoin's value lies in its immunity from government oversight and transportability.

It's most useful for transactions or transfers that are illegal somewhere. A government can deprive a criminal of a house more easily than a password.

I suspect it was embraced by western governments because it facilitates capital flight from the developing world to the developed world - especially from China.

[CTDOCodebases]

Once the gold is extracted how much energy is spent to transport it, turn it into jewellery and store/protect it throughout its lifetime?

[throwaway271818]

Where did you get the 100g of e-waste figure from btw? Is that, roughly speaking, the e-waste mass of storage/txn * total number of nodes?

[arcticbull]

Digiconomist [1]. I should have linked it up top, my bad.

Looks like they, in turn used this reference [2].

[1] https://digiconomist.net/bitcoin-energy-consumption/

[2] https://www.cell.com/joule/fulltext/S2542-4351(19)30087-X

[throwaway271818]

Ah, but they’re calculating e-waste in the form of specialized mining hardware (ASIC) that, at present, goes obsolete every few years.

The e-waste generated this way is not an intrinsic cost of handling a transaction, since the hardware could hypothetically be reused or recycled. It seems unwise to think of it as an irreducible cost per txn, rather than a dynamic figure that would likely improve over time (especially if the carbon externality were appropriately taxed)

[celticninja]

This is a better index and not run by someone with an axe to grind https://cbeci.org/

[AustinDev]

Gold mining btc mining isn’t the best comparison. For your 5X number. You’ve still got to ship and store the gold which undoubtedly has additional environmental costs.

[CTDOCodebases]

The miners don’t compute hashes of random data. They confirm transactions.

If you don’t think that a technology that allows you to store value in a tamper free digital ledger is useful it’s hard to argue the usefulness of PoW crypto currencies to begin with.

[berdario]

The nonce used as input of the mining hash function IS random (or rather, arbitrary).

Comments like the above are a sad demonstration of the fact that, while Bitcoin was originally an interesting technical project... Discussion of it has now been completely taken over by shills that try to dismiss/refute/hide all of the problems with Bitcoin (or the cryptoasset du jour) to safeguard their bet

[Siira]

You’re just deflecting. Your argument is as invalid as “mutations are random so evolution is false.” Randomness in an algorithm does not mean the algorithm is non-converging.

[UncleMeat]

What if we had 1000x the power being used to confirm transactions? 1,000,000x the power? At some point we aren't achieving anything.

The is made worse by the fact that there are alternatives to produce trustworthy ledgers that don't involve destroying the planet.

[Siira]

Yes, alternatives that work for rich, powerful people.

[tsss]

It does so with the same efficiency as a Rube Goldberg machine moves a marble from one place to another.

[CTDOCodebases]

Efficient or secure. Take your pick.

[imtringued]

Jewelry is a surprisingly big chunk of global gold demand. Yes it is ultimately meaningless other than to impress other humans, however this meaningless activity is part of human nature. We derive joy from it.

Meanwhile Bitcoin is just a means to an end, getting rich quick. The fun doesn't happen because we have Bitcoin, but rather because we get rid of them for an unreasonable price.

[CTDOCodebases]

It could be argued that people are flocking to Bitcoin not to increase wealth but to preserve it over a long period of time.

I don’t know where you live in the world but where I live wages haven’t risen in line with the cost of food and shelter.

Leaving money in the bank is like working to buy a block of ice only to watch it melt away. To argue that any store of value isn’t speculative to some degree is naive.

[etripe]

> To argue that any store of value isn’t speculative to some degree is naive.

Isn't there a difference between currency in general being speculative to some degree and cryptocurrencies specifically, whose main value proposition is speculation?

[CTDOCodebases]

I wasn’t referring to fiat currency since that is a terrible store of value. It is guaranteed to have less buying power in the future.

What I was referring to was stocks since they have outperformed government bonds and gold the last few years. Take Amazon for instance. I don’t think the share price is equal to total assets minus total liabilities divided by number of shares. Amazon doesn’t issue dividends so why did the shareholders pay so much for the shares?

[ballenf]

Maybe humans were created by an ET life as mining/purifying beings whose sole purpose is to be dropped on planets and left alone for a few millennia to do their thing.

The ETs come back once all the minerals are refined and purified and neatly stacked.

[reader_mode]

I think Bitcoin (and crypto in general) has prooven to be disruptive in many areas (in a negative way) and has yet to deliver any tangible positives that would outweight the negatives.

It's basically becoming a unregulated comodity that big money institutions get to gamble with because there is just nowhere to put the money on the market right now. If bitcoin and crypto (ETH, etc.) was just a money dumping speculation comodities I wouldn't even bother thinking about it - but it's causing realworld problems (eg. hardware disruptions) and it's going to get worse and worse.

So I'm in favor of preventing institutional investors in crypto in some form, but unfortunately it's not going to happen - too many individual interests behind it at this point and nobody gives a fuck about the overall stability.

[ClumsyPilot]

"because there is just nowhere to put the money on the market right now"

For civilisation to survive we need renewables, electric cars/trucks/busses, nuckear power olants, grid scale storage and fusion power or hydrogen.

There are only two scenarion -there things are built and our society rewards them - or in the alternative money in your bank ceases to exist, along with moth of economy

[DennisP]

ETH is on track to eliminate its hardware disruptions and energy consumption in less than a year.

[bb88]

> People mine because it is expensive, it isn't the other way around, so the real questions we should be asking in good faith are things like "Why it is profitable in the first place?"

FOMO, mining lotteries, and the guise of financial innovation are typical cover stories here. But all stocks and other publicly traded investments are basically making a bet that others will buy in after you do, raising the price higher. Most stock owners hope this very thing, though some stocks actually pay dividends on profits. The same is true with BTC with the added benefit of that novel mining lottery thing going for it.

> These are some of the questions among others which I think probably provide a better understanding of what is happening than the overly simplistic 'ponzi scam' explanation that has been repeated ad nauseam since its inception.

So what if the rich have too much money? That would explain a lot. It would explain why GME stock was shorted %140 of float.

It would also explain why politicians are so ineffective at regulation. If you were rich, would you want effective politicians? No. You would put your money behind the least effective politicians.

It would also explain why most institutions have become less trustworthy in the eye of the public, as big money has corrupted the system.

And finally it would explain the gold rush on BTC. Because they need new investment vehicles.

[FeepingCreature]

> So what if the rich have too much money? That would explain a lot. It would explain why GME stock was shorted %140 of float.

How would it explain that?

> It would also explain why politicians are so ineffective at regulation. If you were rich, would you want effective politicians? No. You would put your money behind the least effective politicians.

Just because you'd want it that way doesn't mean you did it. Motive, but where's means and method? https://fivethirtyeight.com/features/money-and-elections-a-c...

> It would also explain why most institutions have become less trustworthy in the eye of the public, as big money has corrupted the system.

As opposed to in the past, where big money hadn't corrupted the system?

[bb88]

> Just because you'd want it that way doesn't mean you did it. Motive, but where's means and method?

Pinky swear with me that you've seriously never heard of dark money. Koch brothers, Russian oligarchs. You've never ever heard of this? Really?

[FeepingCreature]

Heard of it, yes, heard of much reason to buy that it had an effect, no.

[jariel]

"Most stock owners hope this very thing, t"

Stocks imply ownership of assets.

Sure, in terms of 'hoping that someone willy buy' is similar to BTC, but the valuation is completely different.

A stock is valued based on the performance of it's actual profit generation.

BTC is just a made up number. It's what people think the crowd will buy it for. Granted, this mechanism itself can be useful in some scenarios, but BTC itself isn't useful, at least not right now.

[_huayra_]

I think people with BTC FOMO forget that it was always some sort of "hype Ponzi scheme". Back in 2011, I worked in an office that had one guy who was really into BTC. Looking back now, everyone thinks "wow he was such a genius to get in so early", but back then it was not profitable to mine, even if the difficulty was far lower. We'd constantly roast this coworker over his seemingly loony efforts to put solar on his house to cover the cost of mining neglecting to consider the solar panels would (in our opinions back then) put him in the red for a long time. (good on him for at least going green with it). I must admit I'm quite jealous of his insistence despite us roasting him (he's probably a multimillionaire now on BTC), but anyone who says "Oh yeah I could totally tell that BTC would take off in 2011" is being disingenuous at best.

Unlike stocks which imply ownership of assets of a company, BTC is a pure hype machine, with the most hype given out by people who are already bought in.

If any product or service has ONLY people who use it hyping it up (e.g. BTC, and especially NFTs!) or only people who are NOT using it hyping it up (e.g. the myriad get-rich-quick schemes about some drop-shipping Amazon thing, real estate, or "hOw To BE aN eNTrePreNeUR" in a vague sense of the term (whatever the Gary V & friends stuff is); all those guys make money not by doing what they're telling you to do but by telling you what to do...), it's usually a bad sign.

[ccortes]

> A stock is valued based on the performance of it's actual profit generation.

I'm not sure that's the case any more. I mean we've seen billion dollar companies that just can't reach profitability.

[XorNot]

You still can't call it till they actually go bankrupt. And most of them don't - the underlying business and assets get sold off or absorbed somewhere else. And at the end of the day there's an actual service they provide - value is being created, just potentially not profitably.

Bitcoin is the opposite: what value it had (international transfers for Americans who live with one of the first world's worst banking systems) has been completely wiped out by the cost of transactions.

At the end of the day the hashes are valueless, no one has a product, or designs, or even any useful code.

[jariel]

The stock is valued of the basis the net present value of future earnings.

The obvious difficulty there is determining the future earnings (and discount rate).

But that doesn't mean they don't exist - it's a rational premise of valuation.

Amazon is worth a lot because it's a giant machine with $350B in revenues - so investors can quibble over their earnings and 'how much that is worth' in future earnings - but it's based on those numbers.

BTC valuation is just whatever the crowd wants to pay.

A BTC is a magic number, and that's it.

[ccortes]

> But that doesn't mean they don't exist - it's a rational premise of valuation.

Some times they do and some times they don't. That means it's not a fundamental property for stock valuation.

What was the rational premise of valuation behind Gamestop? There was one, but it had little or nothing to do with Gamestop's future earinings.

[saalweachter]

I also like to point out in these contexts that a trillion dollars a year flow back from the profits of the companies of the S&P to the investors in the S&P 500, in the form of dividends and stock buybacks.

It's not just a zero-sum game, making money off fellow investors who bet the stock will go one way when it goes the other.

[bosswipe]

Yep. Follow the money. Who benefits from weak ineffective democratic institutions?

[young_unixer]

Yes. Cryptocurrencies are used because they're the only market that hasn't yet been regulated to death. People come to Bitcoin for 2 reasons, mainly:

1. It's a practical way to store value without the government destroying it by monetary emission.

2. People are free to speculate.

The solution to the first point is that governments should stop pulling the rug from under people's feet. Monetary emission should be predictable in the short, medium, and long term, or be tied to some real world indicator, like the cost of consumer goods. Just stop with this inflationary nonsense.

Problem 2 will be partially solved by time. Relative price changes in Bitcoin are reduced each cycle, so by the year 2030 the incentive to speculate in the short term will be much smaller. We will see it more as a long term investment. Another solution is to deregulate other markets so that we can freely speculate in them and stop putting as much attention to Bitcoin, but I don't think politicians are very eager to do that, and it could also have some negative consequences.

[jrek]

Monetary emission is already tied to the cost of consumer goods. Central banks make interest rate and reserve requirement changes that regulate growth in money supply. Those changes are aimed, in part, at achieving a price inflation target.

And price inflation, which is the relevant metric (as opposed to monetary inflation) in the context of a claim that the government destroys value, has been extremely predictable for 20 years.

This comes up again and again in bitcoin discussions. Money supply has to grow for price stability and to avoid deflation. This also applied even when there was gold convertibility.

What exactly is your issue with a growing money supply?

[vkou]

> What exactly is your issue with a growing money supply?

The primary issue is that simply sitting on a dragon's hoard of money should entitle me to a bigger share of the world's wealth, as time goes on, rather than a smaller share.

[Applejinx]

Socially, why? I could see making the argument for 'the same share, in perpetuity' as that is kind of the whole idea of what money is: parking value in some way.

Why bigger, exactly? What is the justification?

[XorNot]

Sarcasm (I presume) doesn't transfer well on the internet. The parent is pointing out the absurdity of the whole idea of deflationary currency: sit and do nothing, and force the next generation to turn over more of their productivity then you ever produced.

[arcticbull]

> The solution to the first point is that governments should stop pulling the rug from under people's feet. Monetary emission should be predictable in the short, medium, and long term, or be tied to some real world indicator, like the cost of consumer goods. Just stop with this inflationary nonsense.

That's literally exactly how it works right now lol.

> Freedom to speculate.

Have you seen the options market.

[bb88]

> 1. It's a practical way to store value without the government destroying it by monetary emission.

> 2. People are free to speculate.

So it's a store of value that's destroyable by speculation. That's, if anything, worse than the US Dollar.

[puchatek]

Doesn't look destroyable in the long-term

[cromwellian]

If some flaw is discovered in SHA-256 or other parts of the algorithm, like how MD-5 and SHA-1 had weaknesses, overnight the value goes to zero. Or if a basic widespread exploitable bug was found in most bitcoin stacks like Heartbleed, that went unnoticed, boom, value evaporated overnight.

You can based the entire world monetary economy on a single point of failure like this.

[celticninja]

This is true, it is also true that no implementation breaking bugs have been found for a long time and you can also be sure that there are any number of people constantly looking for ways in which to exploit bitcoins codebase to either steal, destroy or create new coins.

[ben_w]

Neither do tulips, doesn’t make them “a good unit of currency” or “not a massive bubble”.

But the core point bb88 was making is that it can serve at most one of those two goals: “store of value” and “good for speculation” are mutually exclusive. Something can be neither, nothing can be both.

[cromwellian]

Oh come on. My portfolio is safer in a diversified basket of stocks, bonds, real estate and other holdings than it is in bitcoin.

> we can freely speculate

Right, because that worked oh so well for Long Term Capital Management, or the 2008 Housing Crisis, or the Great Depression, or Dutch Tulips, or...

This libertarian, nay, Austrian, fantasy that if only we would deregulate everything, these incredible damaging boom/bust cycles and disappear and everything would be smoothed out are a discredited zombie theory that never dies.

[jokethrowaway]

While I agree with you on Bitcoin safety (your portfolio is safer because the only thing keeping BTC up is speculation), I don't think you can say the Austrian school is fantasy.

It hasn't been attempted and I think deregulation / decentralization of the economy has good chances of getting rid of boom/bust cycles.

Without a central bank playing with credit you wouldn't have boom / bust cycles: what's more likely is that you'll find smaller players doing boom / bust cycles in different industries with far less damaging effects.

I sympathise with the libertarian ideas behind BTC, but it's also the most inefficient and power hungry way of reaching the goal. This is a political problem and we need to solve it politically, not technically.

[ISL]

Boom/bust cycles preceded central banks.

[jokethrowaway]

Sure, but the problem was similar: unbacked money printed by banks and used to prop up the economy.

[arcticbull]

And they were a lot worse when no tools existed to mitigate.

[collyw]

Doesn't that make it a target for regulation, at which point it's value is likely to go down?

[ganafagol]

How is this related to the comment you replied to? It was about pollution and introduction of a carbon tax.

As long as we are having this kind of "discussion" I can see why fantasies about leaving earth and colonizing space are popular.

[rhn_mk1]

The parent highlighted that carbon tax may do little to nothing to stop proof-of-work cryptocurrencies. The relevant quote is:

> People mine because it is expensive, it isn't the other way around, so the real questions we should be asking in good faith are things like "Why it is profitable in the first place?"

[throwawayzRUU6f]

> why have the greater financial markets become so wonky, why has the behavior of investors changed so radically

Since the global saving glut (1), the best question to ask of crazy asset valuations is not "does it reflect the fundamental value?", but "does the money have anywhere else to go?"

(1) - https://en.wikipedia.org/wiki/Global_saving_glut

[ballenf]

Loss of trust. Trust in society creates enormous efficiencies. We're seeing the loss of those efficiencies as society splits apart into more and more tribes.

Bitcoin, in part, is a marker for loss of trust in governments. Trust in their motives and/or ability to responsibly steward currencies.

[wayoutthere]

I think the problem with the whole economy right now is wealth inequality. You have a lot of people really struggling, which keeps overall prices low, but the top 10% or so of earners have more money than they know what to do with. The pandemic cut my expenses by probably $1000/mo in addition to the huge bonus I got last year, I literally have money burning a hole in my pocket.

Where do I invest that cash? Equities are obviously overvalued as an asset class, and treasuries return basically zero, so people are buying up real estate and crypto instead, and using some cash on the side to gamble in the options market. But this really only exacerbates the wealth inequality problem.

[hooande]

> "why many institutions, both social and political in nature, appear to have become less trustworthy in the eye of the greater public?"

It sounds like you're saying that bitcoin is like a hedge against trust in government. A sort of financial measurement of conspiracy theorism. This is a fascinating perspective, but I'm not sure who is financially exposed to that form of risk. It seems like a great vehicle for speculation ("do I think people will trust institutions more or less in the near future?") but not much else. I'm sure there's someone who stands to lose money if public faith in government erodes. but its difficult to imagine that investor

[bruiseralmighty]

Many institutions are exposed.

Most university loans are federally backed. All home loans are understood to be federally backed since '08 and most low income home loans are officially federally insured as well.

US Treasury bonds which make up a significant portion of pensions and corporate debt are essentially federally insured as well since it is know that the Fed will simply print the dollars needed to cover those debts.

So far higher education, home ownership, pensions, and corporate debt; and those are just the financial exposure. There is not a single financial instrument that doesn't in some way depend on these financial bases working properly other than crypto and perhaps some commodities.

[jariel]

No, this is really quite upside down.

"People get too caught up on bitcoin because it is new and nobody understands it"

We understand it quite well thank you (and it's not new!) - far far more often than not, it's the BTC proponents who don't really grasp what it is, and it's not the 'technical aspects' that are the most salient factors.

Bitcoin creates no value.

It's 'profitable' to an individual, but not the system as a whole - and because it has negative externalizations in the form of CO2 emissions etc. - it's actually a net negative.

Making magic digital baseball cards and trading them does not help us make roads, bridges, iPhones, software, drugs, vaccines, clothing, homes - it just makes all of that a little bit harder actually.

Much like residents of Easter Island using all their resources competing to make Giant Heads. Those heads may have mad some people very powerful, they did not help them grow food, make boats.

If all BTC mining stopped right now, not a single thing would change, other than the price of electricity would be a little cheaper in some places.

BTC isn't going to 'end the world' but the energy consumption is a really negative artifact of this purely speculative activity.

There's not so much wrong with people wanting to exchange digital baseball cards if they want to do that - fine - but with the externalizes it's a problem.

[jerry1979]

> Bitcoin creates no value.

Bitcoin creates a "source of truth" which has lots of value for people. For example, working at an organization where everyone wants to cooperate to deliver a product, figuring out who should own, update, and report on sources of truth takes lots of effort. But those sources of truth within organizations help people coordinate their collective efforts.

Out here in the regular world where we cannot trust each other, having a ready-made source of truth has lots of value because it lets people all over the cooperate who otherwise could not.

[jariel]

That's a good idea, but in practice, no value is created by BTC.

And of course, there are a ton of ways of having a 'source of truth'.

So BTC is not a good currency, and it's not a very good store of value either. But we knew that going into it, because it's obvious from the start. It's just a speculative instrument.

If you get paid in a regular currency, then you're good. If you don't want to hold it, than buy an ETF or real estate or whatever and you good.

[doggosphere]

Value is created by having an asset that cannot artificially be inflated at will. It is a protocol that is open source, decentralized, permissionless, and censorship resistant.

Central banks have monopolized money and obliterated the concept of sound money when they began manipulating the interest rate. They allowed fractional reserve banking, where you can give out money you don't have. They created and spent trillion of dollars they didn't have to prop up markets through quantitative easing.

And now you have housing markets and stock markets in bubbles. Inflation that is inevitably coming.

Mortgage rates only ever go down to support the housing market.

http://www.fedprimerate.com/mortgage_rates_chart-graph.htm

Treasury yields only ever go down to support the stocks market.

https://www.macrotrends.net/2016/10-year-treasury-bond-rate-...

Debt to GDP ratio only ever goes up:

https://fred.stlouisfed.org/series/GFDEGDQ188S

Ask yourself why this is happening, and how we return to sound money.

[jariel]

"Value is created by having an asset that cannot artificially be inflated at will."

That is not value.

You can do that with Gold.

We could do that with an arbitrary fixed currency that someone invents.

BTC 'has not value' because it can't be used for anything - as a currency it's useless, and as a store of value it's next to useless (there are better stores of value).

Your comments about 'money' don't necessarily relate:

1) Currency is not supposed to be a hard store of value. It's there to grease the economy, not for you to hold large quantities. If you want to store value there are plenty of ways to do that.

2) Inflexible currency i.e. 'hard money' makes no sense, and that's why nobody uses it.

3) You say 'inflation is coming' - well if we have such bad currency, why hasn't inflation already taken root in the last 20 years? It really has not.

Again - BTC creates zero value, there's no point to it - it can't be used as currency and it's not a better a store of value than rare comic books.

[jerry1979]

I think you make a good observation when you say that we have many kinds of sources of truth. People want to create many different kinds of sources of truth because people find sources of truth very very valuable. The fact that we can agree that bitcoin gives us a source of truth proves that bitcoin creates value because, as we know, people find them so valuable.

[jariel]

" The fact that we can agree that bitcoin gives us a source"

'Sources of Truth' are a commodity.

There are any number of ways to do that.

There's no reason to have a $50B source of truth.

And FYI there is no value merely in a 'source of truth' it has to be put to use in some way, and BTC has zero uses.

[dpweb]

Since the cryptos electricity usage, at least that part which is generated by fossils, is a real problem (it is) - it would be nice to see this problem addressed with blockchain technologies.

Carbon offset tokens, or some token that will increase in value when cryptos global electricity usage goes up, and offsets with renewable projects. If it were funded by governments in billions of dollars it would make an impact, and everyone could participate in funding the token.

The problem must be addressed in altering the fossil/non-fossil energy mix. You are not going to control the financial incentive to mine, or kindly ask ppl to use less electricity please. Carbon taxes have been proposed but you would have to get that done globally, they are certainly working on that from a political perspective but you never know there are always resistance to a new tax.

[TomSwirly]

"What about the climate change impact of things that aren't Bitcoin"?`

Literal whataboutism.

[px43]

Mining difficulty tends to be a lagging indicator of price, not the other way around. I doubt that a price increase in power would have much affect on the price of the currency itself.

We 100% need massive carbon taxes right now. It's really telling how the energy industry is trying to push blame to consumers, especially cryptocurrency miners, in order to distract from the discussion of real carbon taxes to force polluters to pay for the damage they're causing.

I'm sure I'm one of the largest supporters of cryptocurrency in this thread so far, and I'm perfectly comfortable stating the obvious that mining with fossil fuels is an abomination. It's going to keep happening though until regulators get serious about reigning in the fossil fuel industry.

[paulgb]

Would you support a carbon import tariff for PoW cryptocurrencies mined outside of countries that implement a carbon tax? Because otherwise I can just imagine mining moving to countries without one, as is already happening with regards to other climate-based restrictions.

[Avamander]

They can move, but that undermines confidence of the blockchain because then it's under the influence of fewer governments. Which makes me think that quite a few wont.

[Kbelicius]

Isn't majority of bitcoin mining done in China? If so then we can safely conclude that the people don't care under whose influence it is.

[paulgb]

And even if they do, no miner individually has an incentive to do what’s best for the collective.

[jstanley]

> if energy were priced correctly ... would BTC become higher in value? ... If energy were to become more expensive, the growth in supply would slow.

It doesn't work like that. The consensus algorithm targets 1 block mined every 10 minutes. If the amount of energy expended goes up (i.e. blocks are mined more frequently) then the difficulty increases to counteract it. If the rate of block production decreases, then the difficulty decreases to counteract it.

This page has more information: https://en.bitcoin.it/wiki/Difficulty

(I've used "difficulty" here in the English-language way. Confusingly, "difficulty" is kind of backwards in Bitcoin - the "difficulty" is a number that a mined block hash must be below - it gets more "difficult" to mine a block if the "difficulty" number is lower. Maybe it should be called "easiness" instead of "difficulty").

[ziml77]

And this is exactly the problem with Bitcoin. Adding more computational power to the network changes absolutely nothing in terms of the amount of mining completed per unit time. Instead it just shuffles around the chances of being the one to succeed at a block.

This is something that I'm not sure many people actually understand. Because in the physical world, increasing your energy input into mining will result in more output of the resource you're mining. Adding another excavator to your mine doesn't reduce the effectiveness of every other excavator in the world.

[ChrisClark]

Yeah, the only point of the mining system is to secure the blockchain. As more and more energy is spent on it, the more energy is needed to attack it.

It just turns greed into security. As long as it's profitable to mine, it's practically impossible for someone to do a 51% attack.

[Siira]

It directly increases the difficulty of doing a 51% attack.

[hannob]

We know since many decades that a carbon price might be a good idea. But it's not that simple, because either you do it worldwide or you introduce lots of exceptions or you do something like carbon import tariffs (which the EU wants to do, but I think no such mechanism exists anywhere in the world right now).

Bottom line is: Most of the world has no carbon price, and the places that do have one (e.g. the EU ETS) there are so many loopholes that it is not very effective. It's not that it isn't worth trying to do better, but a carbon price is definitely not a short term solution.

So I'm inclined to think whoever proposes a carbon price as "the one true solution" really doesn't want a solution at all.

[ganafagol]

The age of the proposal for carbon tax mirrors the age of sophisticated "reasons" why it should not happen or why it's supposedly not a good idea "if you think about it".

Nonsense. It's lobbyism. In more drastic terms, corruption. Plain and simple.

We can have this "discussion" once significant industrial nations have implemented a carbon tax. Until then, it's all just excuses. Similar to all the bunch of nonsense people come up with why they can't start working out today or save money today or go to bed right now instead of after watching the next episode of whatnot-series.

[prussian]

I don't think it helps that carbon isn't the be-all, end-all in the polluting effects of general consumption (including crypto mining). Even if all these miners were 100% green energy, the green tech would still be a net pollution on the world. I wish we stopped thinking of things so simply.

[throwaway346434]

It already worked in Australia until conservatives and vested interests ran an aggressive media campaign, facilitated by Newscorp. Emissions dropped. Consumers didnt notice a hike in prices, or where they did, switched.

[caf]

An increase in energy price wouldn't (in equilibrium) affect the Bitcoin price - it would affect the Bitcoin block difficulty, requiring less energy to mine the blocks (the mechanism being that miners unprofitable at the new energy price are driven out).

[jariel]

"No entity in the world can control the price of crypto."

If it were banned in the US/EU the price would crash.

Most major BTC backers have a lot of money and they can't be involved in something that is illicit.

For regular citizens, it's just not worth the risk.

That leaves quite a lot of people to play with it, but not enough to maintain the price.

Without constant headlines, Tesla's involvement, Coinbase IPO headlines etc. the price would suffer quite a lot.

It would maintain some price but not so much that people would be buying energy sources.

[ArkanExplorer]

Turkey - a minor economy - was able to crush the price of BTC by 15% with their recent ban. A large economy doing the same could have a major effect on price. Energy and hardware use is directly aligned with price.

If there are any Governments out there who desire to fight climate change - and it seems like there are a reasonable amount - then illegalising proof-of-work coins seems like a reasonable step at least from an energy use perspective.

[kolinko]

The growth in supply would not slow - in Bitcoin every two weeks you have a rebalancing of difficulty, so if miners have less hashing power the difficulty of producing each block gets lowered to keep the supply stable.

[skybrian]

Sure, but energy usage still goes down. Revenue from block rewards is limited. Costs can’t exceed revenue or unprofitable miners will drop out. More money spent on one expense (the carbon tax) would mean less can be spent on the electricity itself.

Or more likely they’re outcompeted by anyone who doesn’t have to pay the tax, such as miners using green energy or in a jurisdiction without the tax.

[mbar84]

Wrt. your second question: Supply of Bitcoin is pretty much constant, regardless of energy expended, regardless of mining technology. The causation runs like this: demand -> price -> mining. Less demand, lower price, less mining. More demand, higher price, more mining. This is different than any other resource we are used to, because the supply of nothing else is as constant as with bitcoin. If the cost to mine Gold increases, the supply goes down and the price will rise.

Wrt your first question: The best argument against making energy more expensive is the same argument as it was 100 years ago:

If you use energy now, you build a more prosperous civilization for the future. Your grandchildren may have to deal with a warmer climate, but they will be much better able to do so than if they were more poor.

This argument stands and falls with your evaluation of the benefits of using more energy, the costs of a warmer climate and how you weigh these against each other.

[dmurray]

> Seriously, what are the current best arguments against levying such a disincentive?

The best argument against it is: it's very hard to enforce it on everybody internationally, and if one country adopts it unilaterally, then production just moves to another country (making everyone worse off - same amount of pollution, but the production is presumably less economically efficient).

The second best argument against it is "the tax shouldn't be $x/ton, it should be $0.5x, which is a more accurate reflection of the external costs".

A distant third, but very effective in practice, is "the carbon tax is good, but it shouldn't apply to Special Interest Area X, because of these social/political/historical reasons..."

These aren't completely unsolvable problems, and people do try. But if your question was genuine, I hope you now see that there are some reasonable arguments not to just do this tomorrow.

[iso1631]

> The best argument against it is: it's very hard to enforce it on everybody internationally, and if one country adopts it unilaterally, then production just moves to another country

So tax imports (including the carbon cost of shipping)

It would likely require agreement between the US and EU to shift enough of the global consumer market to actually care, but with Poland and Texas that doesn't seem likely.

[bransonf]

Absolutely agree, thanks for this reply. I was cognizant of the foreign policy implications (how would this possibly get implemented globally) but I hadn’t heard or considered your points 2 and 3.

Given how much lobbying I suspect there is, 3 probably isn’t all that distant of a concern. Especially in older industries, say railroads or trucking, I understand there could be a lot of contention.

And as others mention, I think there needs to be a separation of taxation by segments of polluting activities. Would burning fuel in a combustion engine count as taxable energy production? Only power plants? What about agriculture, construction, material production?

[joshspankit]

I think you’ve stumbled on The Solution.

Like, in reality miners will use whatever power is cheapest, and solar is currently the cheapest. They are also extremely* agile and can shift location/power source in a handful of days which leads me to believe that they are currently driving adoption of solar, BUT: with miners being framed as The Big Threat, we might be able to finally use that perception as a crowbar to remove incentives for energy sources that pollute and even impose heavy taxes on those sources and end up completely digging out the oil/coal industries.

Win Win Win as far as I’m concerned.

*Apparently unless you can buy an entire power plant

[skybrian]

A carbon tax would be great, but I don’t know why you think governments couldn’t significantly discourage holding cryptocurrency?

A wealth tax on proof-of-work currencies would discourage legitimate businesses (that don’t cheat on taxes) from holding them.

[arcticbull]

Well that's fine, no legitimate businesses hold them. Seriously. Your suppliers are paid in dollars, your tax burden is in dollars based on the conversion price on receipt. To hold them on receipt is wildly irresponsible speculation, as a business.

[DennisP]

I don't know whether you consider Tesla a legitimate business but they're holding bitcoins.

https://www.thestreet.com/crypto/bitcoin/tesla-up-1-billion-...

[HWR_14]

Tesla (and Time) hold them as a speculative asset. Keeping a percentage of a corporate treasury in bitcoin is speculation, but possible a reasonable one. Allowing the mixture of funds that people opt to pay you in to determine your corporate allocation of assets seems a bit careless.

[12elephant]

Also Time Magazine: https://www.thestreet.com/crypto/bitcoin/time-magazine-to-ho...

[arcticbull]

Legacy media is a tough business. GBTC is paying Time in crypto produce shill content.

[arcticbull]

I consider Elon to be a troll, who's messing with people. He's named his CFO "Master of Coin".

[Vinnl]

> what are the current best arguments against levying such a disincentive?

I think the biggest hurdle is that it is a tragedy of the commons: the entire market needs it, not just a single country...

[wdn]

We don't need a carbon tax.

What we need a get rid of all the print and spend politicians. The reason for the raise of bitcoin is a direct response to the trillions and trillions of dollars just printed out of thin air.

It is insane how much grocery cost nowadays. I was at the supermarket last week and was looking at lobster, I thought it was listed for $6.99/lb for those 1 to 1.25 lb size, but when I got closed, it was $16.99/lb. It is crazy. Blue Crab at $5/each.

[adamisom]

Well less energy does have downsides, see: all the things we use energy for. We probably don’t want to tax that except to prevent terrible harm. So I can imagine an argument being along the lines “alternative energy production isn’t ready to meet demand yet, oh and also burning carbon is useful for figuring out alternative energy (see: Tesla and the coal in China that’s burned to make their batteries) so how about instead we greatly fund alternative energy”.

[jnxx]

Are not renewables (that is, wind and solar) the cheapest energy sources today? If I understand correctly, that would mean that bitcoin mining has to use them (in order to stay competitive), and bitcoin is effectively subsidizing renewables (because it pays money for renewable power generation, especially at times with low other demand - which makes expensive storage of electricity less of an issue).

The only thing necessary would be to cancel ASAP any public subsidies for fossil-powered generation of electricity (which is a measure that is overdue anyways).

[machiaweliczny]

AFAIK No, BTC algorithm ensures fixed mining difficulty (so amount of mining&minners doesn't matter (only for overtaking network)). Actually if too much BTC will be mined by limited amount of miners whole coin my lose value, e.g. if we require that barier to entry is having own power plant BTC might get destroyed by too greedy miners.

IMO BTC existence is possibly good as it raises demand for cheap energy (and currently green energy is cheapest it seems), it's also good as forcing function for fiat.

[triceratops]

> BTC existence is possibly good as it raises demand for cheap energy

As opposed to the rest of the economy, which only demands expensive energy?

It would be pretty funny though, if the world's various governments decide BTC is an existential threat to their legitimacy and institute a carbon tax to destroy it.

[anoncake]

> IMO BTC existence is possibly good as it raises demand for cheap energy (and currently green energy is cheapest it seems), it's also good as forcing function for fiat.

No. It increases demand for energy period. Increasing demand makes energy more expensive, not less.

[hedora]

The carbon tax should be earmarked to be spent capturing carbon, and cover about 2x the emissions of the power generated.

A handy rule of thumb, for gasoline: A gallon of gas produces 20lbs of CO2. A ton is 2000lbs. If a carbon capture technology costs X dollars per ton, it costs X cents per gallon.

Most carbon capture technologies will be in the $15 to $85 per ton range when they scale.

Therefore, a $1/gallon gasoline tax (and equivalent for coal, etc), would be enough to solve climate change.

[carlsborg]

> we can and already do regulate energy production.

True. If BTCUSD goes to $1m AND you have strict global regulation banning carbon energy, it will be a powerful incentive to harness green energy, which will be good for mankind in the long run.

[criddell]

Has there ever been strict global regulation of anything?

[carlsborg]

Sure, CFC emissions. And coal fired power plants are harder to hide.

[criddell]

CFCs & the ozone hole is a great example.

[Nursie]

The supply of Bitcoin is fixed, energy prices don’t feed back that way.

[johnchristopher]

> I think we need a carbon tax

I think we need a carbon quota. Something grounded in the hard reality, not a tax you can bypass or finance indefinitely with a money printing machine (edit: or bitcoin :).

[tiku]

The price of bitcoin will only rise if it's more pricey to mine. Miners will never (or almost never) sell their new bitcoins against a lower price than they invested.

[drexlspivey]

No it won’t, miners that are mining at a loss would just stop mining which would make the difficulty to drop.

[arcticbull]

> No entity in the world can control the price of crypto.

Paolo Ardoino would like a word with you.

[ekianjo]

> I think we need a carbon tax, that is specifically a financial disincentive towards any means of energy production that directly pollutes the atmosphere.

Then by all means lets ban video games which are an extreme waste of electricity polluting the atmosphere for no good reason.

You see how this reasonning can go?

[iso1631]

Let say carbon tax of $200/ton, or 20c/kg.

US co2 generation on the grid is about 0.5kg per kwH, so would add 10c/kWh.

That means that your PS5, using 200 Watts, costs an extra 2c per hour to play -- on top of the existing 15c/hr for normal electric costs.

A single bitcoin transaction of 780kWh would cost $78 and a transatlantic flight about $300, or $1.20 to a gallon of gas.

Make the tax $2k/ton, it raises your PS5 cost from 15c/hr to 25c/hr and a bitcoin transaction to $780 and take transatlantic flights back to the cost of the 70s

That sounds fine to me. The energy used by a PS5 is insignificant.

> You see how this reasonning can go?

Yes I do, it sounds really exciting.

The money raised would be spent on carbon reduction (which gives a financial incentive to Brazil to not chop down rainforest, or pays for other forms of carbon capture), and disincentivises carbon usage. Brilliant.

[throwaway939321]

Video games don't produce any electricity. The idea is to disincentive electricity production.

[machiaweliczny]

Then people will switch to producing energy at home via sonar panel, disel engines etc. illegally, or some countries will just allow it and get rich (see corporate tax for similar mechanism)

[EdwinLarkin]

That's absurd.

>I think we need a carbon tax, that is specifically a financial disincentive towards any means of energy production that directly pollutes the atmosphere.

Ok then lets end 2 biggest industries that pollute the planet the most. Construction and food production.

We can live in environmentally friendly uniform grey boxes and eat protein bars.

[whywhywhywhy]

> I think we need a carbon tax

I get the concerns for the carbon issue of Bitcoin but I don't see why the solution should be governments profiting more from it.

[beachy]

Carbon tax is unusual in that it has a major benefit simply by suppressing consumption.

If an alien civilization invaded earth and imposed a carbon tax, and took all of the proceeds back to their own planet, then we would still be better off.

[adrianN]

Typically proponents of a carbon tax also support a carbon dividend.

[triceratops]

Governments don't have to profit from it. In fact to get the desired effect (less carbon) the tax should be revenue neutral. It should be used to fund UBI or give everyone a tax credit.