[mondoveneziano]

But almost any other activity only benefits from getting more efficient. Compare today's efficient LED lighting technology with what was available a few decades ago. With proof-of-work on the other hand, efficiency is actively counteracted. If a proof-of-work cryptocurrency holds its price, its energy usage can only go up.

You are also assuming that only renewable energy will be used for mining in the first place. I don't think that is a given: As long as it stays profitable no matter how, miners will exploit any resource that is available to them, literally burning resources for money in their wallet. Cryptocurrencies are decentralized by design, so while the US for example can stop the use or import of inefficient stadium lighting technologies, there is no way to apply a carbon tax or stop the "import" of cryptocurrency mined through "dirty" means.

[howdydoo]

>efficient LED lighting

This isn't as clear cut as it sounds. The Jevons paradox: as enegry efficiency goes up, enegry demand goes up by more. Or, put another way: humans wasted less electricity 20 years ago with incandescent bulbs than we do now with LEDs. One could also say that LED efficiency is counteracted by tech improvements. But in reality, we may be using more energy, but we're also doing more, and doing things we couldn't have done 20 years ago.

I'm skeptical of assigning a value judgment to things that a lot of people find valuable. LEDs are used for bigger, brighter advertisements. If I don't personally like ads, does that mean energy efficient LEDs are a waste? Bitcoin mining is used to secure a ledger from attackers with the resources of a nation state. If I don't personally care about a secure ledger, does that mean mining is a waste?

And about profitability, this is important, and new within just the past few years: renewable energy is the cheapest energy. [1] Anyone mining with coal is behind the times and will be competed out of the market in due time. The more incentive people have to seek out the cheapest energy, the higher the demand for renewables will be, and the faster the world will get on board. I for one welcome this catalyst.

[1]: https://ourworldindata.org/cheap-renewables-growth

[neither_color]

I'll admit that based on my limited knowledge of PoW I was unaware of this disincentive against efficiency. I'll have to study more about how PoW works.

[mondoveneziano]

That's perfectly understandable, I think relatively few people looked at proof-of-work in detail. I can give you a quick overview of how proof-of-work works (I understand it well enough to actually be able to do it by hand on paper), but nevertheless doing your own research always helps:

To "mine" a block, a miner attaches a random number to the content of the block (the content mostly being the actual transactions), performs a difficult calculation on the entirety (i.e. block and random number), and checks whether the result of that calculation matches a prescribed goal. The goal is to have at least a certain amount of leading zeroes in the resulting number, and it is (to everyone's best knowledge) impossible to know how many leading zeroes there will be without performing the calculation. That is the literal goal, not an analogy.

In the massively overwhelming majority of tries, this goal is not reached. The calculation was useless, and the miner tries again with a different random number attached to the block. There is no other value to the calculation than to reach the arbitrary goal. If the goal is reached, the miner has won the lottery: All participating nodes in the network accept the result (the calculation is easy to verify) and the miner may claim the rewards for themselves.

The amount of leading zeroes to achieve is directly tied to the mutually agreed upon "difficulty". If mining becomes easier and the lottery is won too quickly (say because new faster ASICs flood the market, or more miners participate), the network adjusts the difficulty up, meaning more leading zeroes, so that the overall chances of winning the lottery within a given time frame stays stable.

[Taek]

> If a proof-of-work cryptocurrency holds its price, its energy usage can only go up.

The cost of proof-of-work is paid by the network participants. When you transact on Bitcoin or Ethereum, you pay massive fees to proof of work miners that significantly limits the number of things you can do productively. Dozens of interesting use cases on Ethereum are made completely non-viable by fees that sometimes break $100 per transaction.

Proof of work cryptocurrencies however exist in a competitive environment with other cryptocurrencies. If a new cryptocurrency launches that can provide the same utility and security guarantees at a lower cost (either through less work, or through some other means) you will have a natural migration of users from the more expensive cryptocurrency to the cheaper cryptocurrency.

At equilibrium (which we may not be at, given all the hype currently), a proof of work cryptocurrency is only sustainable if its cost structure is competitive. There is an active incentive applied to the entire space to invent more efficient means to transact in a decentralized way, so that participants don't have to pay such high transaction fees and inflation costs to update a decentralized ledger.

> Cryptocurrencies are decentralized by design, so while the US for example can stop the use or import of inefficient stadium lighting technologies, there is no way to apply a carbon tax or stop the "import" of cryptocurrency mined through "dirty" means.

This approximately applies to all manufacturing though. What percentage of US goods are manufactured in regions that have limited regulation regarding the environment? Most of them, because if you don't use those regions, you are going to have trouble competing in the marketplace. It IS a problem for Bitcoin, but it's also a problem for all global production in general.

[Nursie]

> If a new cryptocurrency launches that can provide the same utility and security guarantees at a lower cost (either through less work, or through some other means) you will have a natural migration of users from the more expensive cryptocurrency to the cheaper cryptocurrency.

This seems to be purely theoretical.

In the real world, most people stick with the recognised names regardless.

[atweiden]

Total energy costs from PoW mining won’t rise to exceed PoW mining revenues unless miners are willing to mine at a loss. In an efficient market, one where PoW mining profits have been driven down to zero, total energy use should remain constant if market price is held constant. PoW mining energy efficiency may increase, though.

The rest of your post could be read as a criticism against incomplete application of hypothetical carbon taxation regimes. It seems weird to single out PoW cryptocurrency as the one and only benefactor to a patchwork carbon taxation regime globally.

[mondoveneziano]

How can efficiency increase in a way that decreases energy use?

Let's say a new ASIC comes out that mines twice as efficiently, i.e. 2x less energy per calculation. Because miners can now afford to run twice the amount of ASICs on the same energy budget, this means that eventually miners are mining twice as fast.

The network however needs to keep the block rate constant (6 blocks per hour in Bitcoin), so it counteracts by adjusting the difficulty. In this case, mining a block becomes twice as difficult. In summary, everyone has now twice the amount of ASICs consuming the same amount of energy, still mining at 6 blocks per hour.

The misconception is that the "work" in "proof-of-work" is meaningful by itself. It is actually not, it is a lottery whose probability to win is adjusted exactly so that statistically, all miners in the world together will mine 6 blocks per hour on average.

As for "mining at a loss": I am not convinced there is a general principle that only allows for absolutely clean energy to make mining profitable, across the whole world and in any situation. We have already seen a coal plant being ramped up for the purpose of mining in New York, and hash rate going down when coal plants in China got flooded.

[mthoms]

FWIW - The plant you're referring to in NY is not a coal plant, it's a natural gas plant.

[atweiden]

You said, quote:

> If a proof-of-work cryptocurrency holds its price, its energy usage can only go up

But in fact, if BTC holds its price, Bitcoin miners won’t increase their energy usage — unless they’re willing to mine at a loss.

[mondoveneziano]

It can spike up when new miners join the game, possibly in remote locations of the world with defunct governments that decide that mining Bitcoin for a select few is a more "important" use of their non-clean energy source. The network will react, miners in other parts of the world where regulations do not allow the same may scale their operation down, but there was a spike, and much more importantly you now incentivized burning resources by whatever means available where regulations do not stand in the way.

[atweiden]

That’s not what you said, though. You said, quote:

> If a proof-of-work cryptocurrency holds its price, its energy usage can only go up

“Energy usage can only go up”

Only go up? When price is flat? I’m really sorry, but it seems you’re just grasping at straws, here.