[yrral]

Points 8-12 about energy consumption are well written, but ignore the fact that the flexibility in which bitcoin mining consumes electricity uniquely allows development of renewables in areas where further development would otherwise be economically non-viable.

In places with a high renewable generation mix, electricity prices are often very volatile, sometimes very cheap and even negative in times of high production and sometimes very expensive when production is low and demand is high. Proof of work mining uniquely only draws electricity when prices are economically viable, only buying electricity when there is excess supply, and can quickly shut down when that situation changes.

You can see this eg: in Texas where ERCOT has signed demand response agreements with many bitcoin mining companies to cut power when demand is high and supply is low (not that they would choose to continue operating anyway given the marginal price of electricity vs the marginal bitcoin production).

https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fi...

https://www.dallasnews.com/business/energy/2022/02/04/texas-...

[usgroup]

I think he’s saying that of all the things you could power in whatever electricity consumption regime you care to mention , bitcoin competes for supply with more socially useful things.

[roenxi]

We have a perfectly good system in place for punishing people who waste energy - it is called "the economy". It applies constant pressure to people who waste things.

If crypto manages to run that gauntlet, there is a good chance that someone with a track record thinks it is socially useful. People confidently declaring that it is useless are in the same bucket as people confidently declaring that the internet was a fad in the first big tech bubble - lacking humility. The truth is we don't know if this (likely outrageously large) bubble is a complete waste or masking something transformative.

[onion2k]

We have a perfectly good system in place for punishing people who waste energy - it is called "the economy". It applies constant pressure to people who waste things.

That's a good theory, but it doesn't seem to be working. Because, well... gestures broadly at everything

[AussieWog93]

I think the problem here is that "the economy" is not punishing miners but rewarding them.

Only a small minority of people who buy crypto genuinely have a considered belief that it's socially useful. The overwhelming majority are simply speculators who believe that they can sell it for more than they bought it for.

[roenxi]

> ...speculators who believe that they can sell it for more than they bought it for...

Which, assuming that the individual speculators are intelligent and rational, has the emergent property of providing something that is socially useful. And if they are stupid and irrational, it'll bankrupt the lot of them so that they can't waste that much money again.

The economy is a cruel beast, but it is much better than you or I at deciding what needs to happen to get people what they need. If something like bitcoin really is just a money burning exercise with no redeeming property, sooner or later it'll go bankrupt and disappear back into obscurity. It can't be a hot new thing forever. And "speculators" only have power when they are consistently right. If they routinely make big gambles and get it wrong then they don't get to speculate for long.

[randalluk]

As the article says

>Libertarianism's attraction is based on ignoring externalities, and cryptocurrencies are no exception.

The economy as currently regulated doesn't correctly price in externalities such as the ongoing cost of global heating generated by burning fossil fuels.

[roenxi]

I'm all for including externalities. My usual argument is if you look at positive and negative externalities, fossil fuels are a massive win.

People seem to struggle with positive externalities so the argument usually falls flat, and the situation is too clear to me to be able to spell it out easily. But without fossil fuels, 40-80% of the modern world would have been all but impossible. The knock-on effects of abundant cheap energy (and precursor materials to plastics) aren't being priced in.

[ericd]

Sure. Bring on the carbon taxes.

[derac]

This is flawed libertarian thinking. For example, if a scammer called your grandmother and got her to send them her life savings, it wouldn't be a good thing just because she is "too stupid" to have the money.

[roenxi]

The logic does break down for criminal activity. But:

(1) Mr. Wog93 was talking about speculators, not criminals.

(2) If any of my grandmothers were still alive then they could be scammed in any asset class. Bitcoin is riskier but, frankly, anyone crazy enough to "invest" in bitcoin is probably going to lose all their money regardless of whether they get scammed or not. So this grandmother test is a bit of a wash in my eyes.

The only thing that makes me special is I'm humble enough to say maybe I'm completely wrong in my opinions so other people should be allowed to take risks I think are stupid. There is a fair-enough system that will sort out who is right and who is wrong based on evidence.

[inter_netuser]

>Only a small minority of people who buy stocks genuinely have a considered belief that it's socially useful. The overwhelming majority are simply speculators who believe that they can sell it for more than they bought it for.

Replaced crypto with stocks, how does it read now?

[Swenrekcah]

You can also replace it with tulips.

When someone makes an argument of the sort that just because there is a market for something then it magically becomes useful, it tells me they haven’t heard or understood this quote:

“The market can remain irrational longer than you can remain solvent”

[inter_netuser]

Sounds like you have to read up a lot more on tulips.

Also, strange how such prominent tulip story never resulted in adoption of tulips by any country? So weird, why is that?

And yet with Bitcoin, we see adoption not by one, but by several G-7 countries as a valid payment mechanism, one small country as legal tender, another small country preparing a bill this year, and Russia signalling it will regulate Bitcoin as currency, not property?

Strange, that.

[meheleventyone]

Pretty spot on, it’s a fairly popular criticism of the stock market that it’s disconnected from providing much social utility. For example that some companies have massively outsized valuations.

[inter_netuser]

small people invest money in hopes of being less poor. They never get truly wealthy doing that.

The ultra-wealthy deploy or deny capital to mold the society to their views.

"Social utility" is just this mind virus the ultra-wealthy spread in everyone's mind to make their rule-by-proxy feudalism palatable to the peasant class.

[lariati]

You obviously don't understand the pricing mechanism and utility of basically a decentralized equity valuation engine. I mean that is what the stock market ultimately is.

These articles are pointless. No one is going to bother reading Brian Arthur of all people to have any clue.

Just the same dumb conversations over and over and over.

[AussieWog93]

>Replaced crypto with stocks, how does it read now?

It reads like a false equivalence.

I do own stocks in companies such as Woolworths (retailer), BHP (mining company) and Westpac (banking company). The fact that they produce goods or services that they can sell at a profit was a huge decision in my decision to invest (and a big reason why I didn't invest in crypto).

I don't have data, but I suspect this is how most stockholders think. They accumulate shares over their lifetime and rely on the dividends to pay for their lifestyle during retirement.

Yes, Wall Street Bets exists, but the average person with stocks is not a day trader leveraging themselves up to their eyeballs to gamble on some crazy contracts.

[inter_netuser]

and all of your investments did worse than Amazon or Tesla, that haven't been particularly profitable.

Amazon hasn't been profitable on paper for decades. Tesla took until 2021 to make a profit.

You'd underperform terribly if you were to wait until they make a profit, as markets are forward looking and you are paying attention to trailing indicators.

Profits today for an organization size of Amazon is execution of a plan put in place 5 years ago.

If you are about to dive into value investing: Berkshire made most of their money from Apple, which was a side bet made by a hired portfolio manager, not Buffett himself.

[bluecalm]

The system doesn't work because crypto currencies (and thus energy they use) is used directly to bypass laws of regulations we have.

It's like saying that we perfectly good system called economy and thus drug cartels are the natural results. Who knows, maybe their bloody rule will result in something transformative as well. Still I wouldn't be happy just accepting the state of things.

[inter_netuser]

>"more socially useful things."

What's socially useful is drastically different from Iceland to Tonga.

People have their own mind to decide what is useful to them.

[inter_netuser]

..and it's absolutely not possible to build more nuclear powerplants..?

We are going to settle Mars by relying on windmills. That's the plan?

[arrrg]

We will not settle Mars. That doesn’t even begin to make sense. There are places orders of magnitude more friendly to human settlement on Earth than on Mars and we don’t even settle those.

On Earth those windmill are much cheaper than nuclear power, even taking into account their capacity factor.

[inter_netuser]

"settling mars" is just a meme.

humanity however, needs to branch out, and quick. and windmills aren't going to help us make that jump to an interplanetary civilization.

Nuclear is cheap, very cheap. It was made expensive by political decisions, under the guise of proliferation suppression, but is actually a tool of economic suppression of potential challengers.

Germany, one of the most high-tech countries in the world, cannot make renewables work. Germany also has very electricity rates. France, on the other hand, builds nuclear, supplies Germany, and has MUCH lower electricity rates.

I guess no one told them nuclear is too expensive?

[dopidopHN]

Cost was not really a factor in France decision . Historically De Gaule launched the trend to reach energy indépendance and get the bomb.

Now Macron is doing it to secure energy independence and win point in upcoming elections.

[inter_netuser]

so why is the expensive French nuclear so cheap, and supplies the enlightened fully-green Germany that's has insane high electricity rates then?

Someone forgot to inform them nuclear bad?

[yholio]

> Proof of work mining uniquely only draws electricity when prices are economically viable, only buying electricity when there is excess supply

The numbers don't make sense to do that.

The average time a piece of hardware lives on the Bitcoin network is just 16 months, after which it becomes e-waste, too underpowered to matter.

So assuming the CAPEX is $1000 for a piece of hardware that draws 1kW, the most it can consume is 11 MWh during its lifetime - about $1500 at residential prices (Texas) or $500 at wholesale prices.

So just how deep can you throttle down the rig to take advantage of the low energy prices? The numbers seem to show that anything below 70-80% active ratio will start to cost you more in capital than you save in electricity.

So you can avoid the peaks but certainly cannot wait for the relatively rare excess renewables events.

[cubic_earth]

The amount of time a miner is economically viable for should be increasing as "Moore's Law" for ASICs slows down. Just the same laptops are usable for more years nowadays than they were in the early 2000's.

Also - if you have free electricity, which is a thing in certain settings, where prices can and do go negative, mining hardware will be viable for "a long time".

[cr__]

The “work” does not need to be done. Doing the work cannot have a societal benefit

[yrral]

> The “work” does not need to be done.

That point is up for debate, but that's not the point I'm addressing.

> Doing the work cannot have a societal benefit

I'm just pointing out that this use of electricity makes new renewable electricity deployments viable when they otherwise would not be. In that sense, if you think that replacing fossil fuel generation with renewables is valuable then bitcoin mining is valuable in that sense.

Renewables are cheaper already than fossil fuels. Their electricity generation is just not stable enough to replace all of fossil fuels. We can use bitcoin mining to smooth out supply/demand of electricity which allows us to use a higher proportion of renewables in our supply than would otherwise be possible.

[gefhfffh]

We can use storage systems to smooth out supply/demand of electricity.

Mining is unsufficient, because it can't provide energy in the night when the sun is not shining. Storage systems can

[yrral]

> We can use storage systems to smooth out supply/demand of electricity.

They have a max capacity. They cannot be steady consumers of electricity for the 95%+ of the time that there is enough electricity to go around.

> Mining is unsufficient, because it can't provide energy in the night when the sun is not shining. Storage systems can

I can use the same argument: Storage systems are insufficient, because they can't consume most of the excess generated power to make development of more renewables economically viable. Bitcoin miners can.

[arrrg]

It would be much more useful to pour excess power into green hydrogen production.

There are industrial and chemical processes where electricity is not a viable replacement for the CO2 intensive approaches we are using now. Building up a hydrogen economy for those applications would be great. And much more useful than that cryptocurrency bullshit.

[gefhfffh]

Are you going to copy your stuff to every post of mine now?

I have already answered that.

Excess power can be removed from the system removing valuable CO2 emissions damaging society for about 700 dollars a ton

[inter_netuser]

or we can just finally admit renewables cannot supply the entire Earth, and something else needs to be in the mix too.

[gefhfffh]

Like storage systems, yeah.

Bitcoin only makes it worse, because it uses/wastes energy of which we don't have enough clean one

[inter_netuser]

Usually, when you don't have enough of something - you go and build it.

Bitcoin requires only as much power as a tiny country size of Portugal/Netherlands, less than 1% of electricity consumption globally.

Less than dishwashers, heated pools or computer games use. Perhaps we should ban these also?

If anything, we should be thankful Bitcoin exposed the inability of renewables to scale in practice.

[RandomLensman]

But the effects could have a societal benefit, i.e., spending the gains.

I would also hope that we do not go back to some "darker" forms of society where only the "value to society" mattered.

[raverbashing]

> n Texas where ERCOT has signed demand response agreements with many bitcoin mining companies to cut power when demand is high

So the "cryptobros" think this is new and exclusive for crypto? No and no. Their hype to damage ratio is starting to match those of tobacco companies.

[yrral]

I am not aware of any other large consumer of power that can cut power with seconds of notice without economic harm.

Eg: google/facebook datacenters, aluminum smelters, factories, etc.

[raverbashing]

Some domestic users can (for things like AC, heaters etc)

For industrial, they can establish peak-times and broadcast the pricing info. So maybe not "seconds" but they can react to demands and pricing. It is possible (and depending on the industry, likely) that some industries do have backup power on site, so they switch to that and stop using grid power.

[inter_netuser]

only failed states turn off residential AC or heating.

Boggles my mind how some think it's acceptable.

[Thorrez]

I don't think raverbashing was talking about the state turning it off, but rather individual people turning their own AC/heating off.

Nest Thermostat offers many features to automatically do this if users want it, both to save money, as well as to help the planet. Full disclosure, I work at Google, but not Nest.

https://support.google.com/googlenest/answer/9244031

https://support.google.com/googlenest/answer/10975756

https://support.google.com/googlenest/answer/9242289

[gefhfffh]

Nope, smart states do that. Heat can be stored. Heat when it's cheap.

[inter_netuser]

Nah, I'll just run my own generator instead.

[rrrazdan]

Aluminum smelters do this all the time btw.

Also there is economic harm in shutting down mining I.e loss of mining fees.

[yrral]

> Aluminum smelters are typically slow to curb production as the costs of shutting down and restarting capacity are high.

https://www.bloomberg.com/news/articles/2021-12-22/europe-s-...

> "I think it's clear that one of the issues facing aluminum is that it is costly to bring down smelting capacity and even more costly to bring it back up again," Harvey said during a virtual presentation at the Bank of America Securities Global Metals, Mining & Steel Conference. "I think it has tended to be a relatively slow process for producers to come to those decisions."

> Harvey said each potline at a smelter requires about $25 million to restart, which made it challenging for operators to reach curtailment decisions.

https://www.spglobal.com/platts/en/market-insights/latest-ne...

[yxhuvud]

In the long term, I expect this to become very common as hydrogen replaces methane in ammonia production and coal in steel production. Hydrolysis can happen when price is low and as long as the hydrogen buffer is big enough it will last through high prices.

[gefhfffh]

E.g. energy storage systems

[yrral]

They have a max capacity. They cannot be steady consumers of electricity for the 95%+ of the time that there is enough electricity to go around.

[gefhfffh]

So does mining.

Just turn off fossil based plants and you reduce needed max capacity.

Didn't know we have too much energy with a low carbon footprint.