What article is claiming is based on a misunderstanding of how Bitcoin works, this really is an odd way of thinking about it.
If half of all people stop sending bitcoin around, the amount of electricity used doesn't go down by 50%. So you sending or not sending bitcoin doesn't impact the electricity spend by miners at all.
Miners mine to secure the network, there is not a certain amount of electricity needed per transaction.
But, the only purpose of mining -- the whole purpose of the blockchain -- is to facilitate transacting.
So if the network can only do X transactions per day, and it costs $Y to run the network, it seems fair to use a "cost per transaction" to describe that inefficiency.
Kind of like how I could represent the total cost of ownership of a car (purchase price, oil changes, tire changes, big repairs, fuel) in terms of $ per mile, even though out of all those costs, only fuel is directly consumed by driving a single mile.
It is incorrect to assume that the only, or even the most important, purpose of bitcoin is for transactions. Bitcoin users primarily hold Bitcoin as a store of value or speculative savings technology, typically held over long periods of time (years) with an expectation of price appreciation at the expense of short-term volatility.
It is not, as many on HN have correctly pointed out, a viable transactional currency for most use cases due to price volatility, taxation related friction, limited real-world adoption for payments or transaction costs. The only compelling transactional use cases I know of are censorship resistant payments (e.g, Wikileaks) or high value international funds transfers outside G8 countries where wires are slow and risky.
Most Bitcoin is held by savers or speculators over long periods and transactions are infrequent. Therefore the primary purpose of Bitcoin mining is securing the network from bad actors. Bitcoin is a secure vault on the internet. Just because people put money in and take money out of a vault doesn’t mean the purpose of a vault is transactions. It is security against 51% attacks.
Therefore, the appropriate measure is not cost per transaction. It is cost per total value secured.
I didn't say the only purpose of Bitcoin was to conduct transactions, but that the only purpose of mining (and the blockchain) was to do so.
Specifically, mining exists to ensure that if you send me Bitcoin, I can be quite confident you haven't sent the same Bitcoin to somebody else. All that expenditure is there to guarantee nobody double spends. It facilitates trustworthy transactions.
Now, it's fair to say that in a way, that also protects people who are just sitting on their Bitcoin not transacting it, since their Bitcoin wouldn't be worth anything if they didn't believe that they could transact if they wished to. But the literal, direct purpose of mining is to protect people receiving Bitcoin in trade, not people sitting on it, who are protected from theft by the secrecy of their private keys.
Mining hash rate is correlated with value in network. It is not correlated with transaction volume. If tx volume dropped by half it would not meaningfully impact the hash rate. If Bitcoin’s price were to drop by half the hash rate would definitely fall.
For now, that's true, since miners are mostly paid with newly minted BTC. The payout for the job of mining is currently based on BTC's valuation, but the reason for the mining is to secure the transactions. That also aligns with its design.
Why else would Satoshi design Bitcoin's block reward to slowly dwindle towards zero? Apparently in his vision, the eventual steady state for Bitcoin is to be supported entirely by demand for block space (aka, transaction volume), with no correlation to "value in network".
Edit: to put a finer point on my question...
Does the transaction-fee-only mining model work?
If it does work, isn't the current block reward wasteful, funding tens of millions of dollars a day worth of mining, when the fees set by competitive demand for block space are a fraction of that? If fees alone are going to be enough to secure the network adequately, why can't Bitcoin adopt a more aggressive halving cycle and move to fee-only by, say, 2040 instead of 2140?
If it doesn't work, that means there will eventually be a problem with Bitcoin as it slowly moves toward that model. How can Bitcoin change its design to fix this, without compromising the "only 21M coins ever" promise that many of its stakeholders consider a fundamental strength?
> It is incorrect to assume that the only, or even the most important, purpose of bitcoin is for transactions.
Transactions may not be the only purpose of Bitcoin, but they are essential to the existence and security of Bitcoin. The block rewards for mining drop by half every few years and will eventually drop to zero. Soon, miners will be paid by transaction fees.
As Satoshi Nakamoto reportedly said: "In a few decades when the reward gets too small, the transaction fee will become the main compensation for nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume."
Still, the primary purpose is most likely to be security of the network, not transactions which makes the cost to secure the network the better metric.
It's not clear whether they estimated how much of that money supply is actually still accessible (ie, how many dead wallets there are), and it's not a given that all of that money could actually be cashed out anyway (see the recent stablecoin fiascos). But lots of asset classes are vulnerable to runs, so let's assume that it's completely accurate, and Bitcoin is using all this power to meaningfully secure 2.9% of the world's money.
In order to secure that 2.9% of the money, Bitcoin generates more e-waste than a mid-sized country and uses roughly the same amount of energy as the entire country of Sweden every single year. And the problem is that even the most generous estimations of the amount of power that current financial markets use make that energy expenditure look really inefficient. Even pro-Bitcoin articles that I find online (ex. https://news.bitcoin.com/banking-system-uses-significantly-m...) are estimating that gold and banks each use in the neighborhood of 2-4x more power than Bitcoin annually. Which is a little bit embarrassing given that Investopedia above suggests that Bitcoin secures less than 10% the amount of money that gold secures. Similarly, it's tough to estimate how much money is held inside the financial sector (and of course, banks do way more than just secure value), but nobody I can find is giving estimates as low as 6-12%, instead I'm seeing some estimates as high as 25%.
I would not really classify gold as an environmentally amazing asset, but when considering gold we're still looking at a store of value that per-year is basically 2-5x more energy efficient per "dollar-secured" than Bitcoin is.
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And I feel like this should honestly be kind of intuitive to people, if anything people should be surprised that those numbers aren't worse. Bitcoin's design is such that it uses electricity proportional to the amount of profit available from mining. Until the mining rewards drop to zero, as Bitcoin rises in value the energy/hardware expenditure will also rise to match that value. If it doesn't then the value of the coin will eventually get high enough to make 51% attacks profitable.
So take a step back and think about that: a system that keeps its assets secure via a constant, massive expenditure of energy, that has to grow in energy expenditure as the price of the asset increases, and that has to be maintained in perpetuity in order to win an ever-escalating computing arms race against attackers... well, that's not a system that's exactly setting itself up to be an amazingly efficient store of value. It's not surprising that more traditional methods of running and securing databases and coordinating databases/transactions would be more efficient. It's not surprising that even a mostly physical asset would be more efficient to secure.
If we are comparing energy consumption of monetary systems I think we also need to look at the incumbent system’s costs with open eyes. The US dollar is the global reserve currency. It is no longer backed by gold. Instead it is backed by energy and military might in the form of the largest military industrial complex in the history of the world, responsible for more death and destruction of humanity and the environment than any other single entity over the last 70 years.
Unlike Bitcoin which currently consumes a greater proportion of green/renewable energy than virtually any other industry, the US military operates almost exclusively on carbon-emitting fossil fuels and has left a trail of dead and wounded, mostly innocent civilians with brown skin, whose only crimes were being born with our oil under their feet.
The US military is by far the single largest fossil fuel consumer in the world. Isn’t it curious that so little attention is focused on reducing the military’s dependence on fossil fuels? Where are the ESG proponents on the topic of the single largest contributor to global greenhouse gases?
Will you stay silent on the subject now that you are aware of the fully-loaded costs of supporting the USD as the world’s reserve currency?
By contrast, Bitcoin uses less energy than the world’s hair dryers to secure a considerable amount of value without the need for violence. If we consider the full extent of externalities required to secure the current monetary system, Satoshi’s invention of Nakamoto consensus starts to look like an alternative worth considering for at least some of the world’s wealth.
> If we are comparing energy consumption of monetary systems I think we also need to look at the incumbent system’s costs with open eyes.
This is kind of goalpost moving. It's fair to ask about the human costs of other monetary systems, but I thought we were just trying to determine whether or not Bitcoin was efficient. It's not. But whatever, I'll follow that goalpost for a little while.
In isolation I do think that criticism of government policy to value/devalue and secure traditional currencies would be a good argument... if Bitcoin was well positioned to be a replacement for traditional currency.
But by your own admission Bitcoin isn't primarily a system for transactions, it's a system for storing value (actually I would argue it's primarily a speculative asset, not a traditional value store, but whatever, it doesn't matter). Bitcoin is not in its current state trying to replace dollars, because dollars need to be good at transactions, and Bitcoin is bad at transactions: it's wildly inefficient and environmentally unfriendly, it's slow and has high fees, it requires you to essentially move off chain to get anything approaching a normal transaction experience.
> Isn’t it curious that so little attention is focused on reducing the military’s dependence on fossil fuels?
If the biggest problem with the US military complex was its environmental cost, I would sleep better at night. I think a big reason why people don't talk a lot about how much carbon the military emits is because they're too busy talking about the massive human cost.
But this is kind of silly; a lot of Bitcoin's critics do criticize the military. I'm not here as part of a conspiracy to prop up government invasions of other countries, I just think your "currency" is bad and has fundamental flaws.
> Will you stay silent on the subject now that you are aware of the fully-loaded costs of supporting the USD as the world’s reserve currency?
Bitcoin is not going to replace USD. It's technologically incapable of doing that; it only supports 7 transactions per second and the last time anybody tried to fix that problem, the community hard-forked and had a giant schism. Because of course they did, Bitcoin isn't optimizing for transaction speed or transaction fees and most of the community doesn't care about any of the high-minded goals that Bitcoin was originally sold on. They just want an asset that goes up in value, so eventually they can convert it back into USD.
This could be a longer conversation, but while Bitcoin was originally based around some ideals like democratic access to currency and reduction of reliance on military/global power, I feel like it's kind of silly now that we can look at how Bitcoin has played out to say that the whole movement is still about raising people up and democratizing finance. Bitcoin is primarily a speculative market, it's not driven by ideals at this point.
Also just as a sidenote, but even in a world without traditional finance, most countries would still probably have a military; so even just the core idea of "tanks use too much power" is a little weird to me given that the US is not going to throw away all of its tanks if it transitions off of USD. Bitcoin does not get rid of the concept of exploitation, the US can still steal another country's oil and then sell it for Bitcoin.
> Bitcoin uses less energy than the world’s hair dryers
Not sure if you intended this to sound like a small amount of power, but that is a heckin large amount of power in order to secure such a small proportion of the world's wealth that it has next to no impact on the current exploitative measures taken to secure other existing currencies.
Bitcoin does not do enough to address the exploitative nature and human cost of securities like gold in order to justify its enormous energy expenditure, and there is little reason to believe that it is capable of scaling to the point where it could address those problems, and there is a ton of reason to believe that if it did manage to scale to that point it would in the process start consuming even more energy.
Even taking everything you've said at face value and assuming that Bitcoin is actually just straight-up liberating value from a highly exploitative system (rather than in more than a few ways participating in that same system) -- no; quite frankly, it is not worth using the same amount of energy as Sweden just to liberate a measly 3% of the world's wealth. That is too inefficient, it costs way too much power to do way too little. Come up with a more efficient way to secure that wealth, preferably one that actually scales.
If 50% of Bitcoin users went away tomorrow or stopped transacting, almost certainly the amount of electricity used would decrease, because the value of the coin would decrease.
This is like saying that if the US banned gold that gold mines wouldn't be impacted at all. Demand (and thus profitability of the asset) fuels mining.
People mine because mining is profitable, not to secure the network. Securing the network is a side effect.
True, but the network serves a purpose. Without transactions, would there be a network to begin with?
Therefore, you can model a per transaction cost within certain bounds.
It's incorrect, but absent Bitcoin having an actual plan to increase transaction volume it's a reasonable way to imagine what a world where Bitcoin actually functioned as a currency might look like. It's possible that the bitcoin design is fundamentally flawed and cannot scale, but in some ways, OP has a very charitable way of imagining what it would look like if Bitcoin could actually function as a global currency.
It's not so odd. Those people are willing to transact in Bitcoin because it's sufficiently secure against a 51% attack. So in a sense they're consuming the benefit of the overall network hashrate, even though the cost they pay is heavily subsidized.
They are ultimately humans, not machines, so they mine for the mining reward, not as a public service of securing the network.
Transactions are the only service provided by Bitcoin (what else is a currency for other than transactions?), so it's totally fair to consider it's energy cost per transaction, especially since the banking system is evaluated in the same way.
> there is not a certain amount of electricity needed per transaction.
Not yet. But that will be increasingly the case in the coming decades as the block subsidy gets repeatedly halved into insignificance. Then the brunt of Bitcoin's security (protection against 51% attacks) will have to be borne by transaction fees.
How saturated is Bitcoin currently? I stopped following the details years ago but I guess Bitcoin could not handle a ten fold transaction rate increase today, right? Which means at best - if you completely saturate the network - you could get the costs per transaction down to 10% of the given number.
The price of Bitcoin is not supported by the amount of fresh money coming in. It’s based on the lowest price a current Bitcoin holder is willing to sell for.
If all Bitcoin holders decide tomorrow that it’s worth $200k per coin, then that’s the price, even if there are very few buyers at that price.
It’s like the price of a stock: it’s not dependent on trading volume.
It’s so frustrating having these discussions about energy consumption.
If you make a statement about the absolute energy consumption of a PoW blockchain, the first response usually is “But this other thing consumes way more energy!!!!”
In order to compare the consumption of the network to anything you will need to calculate it by some unit of utility. Transactions is the only metric that makes sense.
here we go again, they use a faulty understanding and a faulty source
> Each Bitcoin transaction consumes around 2,150 kWh as of the time of this writing.
This is wrong because Proof of Work blockchains use the same amount of energy whether any individual makes a transaction or not.
Doesn't anyone else find it ironic that actually understanding how that blockchain works could bolster that particular anti-energy use reaction?
Ah! but the same people don't want to spend any of their own energy understanding how blockchains work because they've already made up their mind that its not worth doing that!
I've mentioned this elsewhere, but even assuming that usage doesn't affect mining, why on earth do people think this would be a positive?
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"My car constantly consumes oil at a prodigious rate even if I only drive it to the grocery store occasionally."
"Even if it's just sitting in your garage? Does... does that make it go faster or further?"
"No, even if my car suddenly starts consuming a lot of additional oil out of the blue, I still can't drive it any faster or further than I could before. The maximum distance I can drive it in a week is a fixed distance regardless of how much gasoline I pump into this bad boy."
"..."
"Anyway, this should probably be the future of transportation."
----
The reasonable conclusion here is not, "when you think about it, driving my car has no environmental impact". The reasonable conclusion is, "holy heck, why would you design a car that way?"
Nobody is saying it is a positive, as I wrote in my post:
> Doesn't anyone else find it ironic that actually understanding how that blockchain works could bolster that particular anti-energy use reaction?
I'm saying make the better, more accurate, argument. I also think if people were able to independently come to those arguments, they would discover things they find interesting about blockchains in the process, as well as where to place that energy
> I'm saying make the better, more accurate, argument.
I do not believe that expending a ton of energy every block regardless of the number of transactions on it means that it's unreasonable or inaccurate to criticize the energy usage in terms of the number of transactions that it on-average supports through that energy expenditure.
I get into this below, but pretty much any system that expends energy to perform a task can be made to act like Bitcoin and expend constant energy regardless of usage by just leaving it running all the time. Doing that doesn't get rid of the "how much energy per-transaction is Bitcoin using" question.
I guess some people have taken issue with the car analogy, so I'll use another: If I leave my shower running 24/7, does that mean that the amount of water I use divided by the number of showers I take is no longer relevant to conversations about my water usage and whether my showering system is water-efficient? No, of course those questions are still relevant, leaving the shower on constantly just makes those numbers really bad for me.
Or yet another analogy, if you're doing math on whether to keep an Amazon Prime subscription, how do you determine if the subscription is worthwhile? Typically, you would add up the number of things you order, and you might say something like, "I'm on average with my current usage paying <subscription cost>/<orders> dollars per-order for same-day delivery using Amazon Prime." And if Amazon jumped in and said, "no, that metric isn't applicable because you'll still pay the same amount with a different number of orders", we would pretty much all recognize that as a bad argument.
Bitcoin has a maximum block size. The fact that in theory people could transact more or less isn't really relevant to the cost/benefit calculation that we're doing right now. Yes, in theory Bitcoin could have max block sizes of 500mb instead of a single megabyte. But it doesn't.
So with the numbers we have now, it is reasonable to say that each Bitcoin transaction cost us 2.5 months worth of household power, even if Bitcoin would have used that power anyway. If the volume of transactions went down, the numbers would be even worse. Bitcoin is currently a system where we can collectively as a society get ~7 transactions per second at the cost of 2.5 months worth of household power for each transaction. I think that phrasing and critique is entirely accurate, and I don't think that the details of the blockchain change anything about that critique or its implications.
Particularly when Bitcoin's energy usage is often compared against much larger financial systems as a way of excusing its excesses, it is entirely appropriate to point that Bitcoin is currently much less efficient than those systems. And breaking things down and looking at the amount of energy per transaction is a reasonable way of determining the network's current efficiency.
Interesting rationale, unfortunately I am not able to see it this way - being more like the Amazon itself who can only see it from the technical way - so lets look at why I can't see it that way and why I find it counterproductive.
Bitcoin is more than transactions, and it is more than onchain transactions, and it is more than its layer 2 transactions which I don't think we can quantify.
It has a much greater use as collateral. It has a much greater use as a reference value for derivatives (sometimes where it is also collateral, sometimes where it is not). As collateral several orders of magnitude more transactions occur - just onchain! And offchain, several orders of magnitude more.
I would say (even if we weren't seemingly in a debate) that none of this justifies its energy use, but only because that is a completely separate phenomenon. Barring any alternative solution for that, I lead to focusing on putting its energy use where it is most applicable and sustainable. Primarily at flare gas mining sites that don't pull from the grid.
I’m not sure that clarifies anything or makes the point you want to, since it would generally be a good thing for a car’s energy consumption to be independent of distance traveled. (“O(1)”)
> it would generally be a good thing for a car’s energy consumption to be independent of distance traveled. (“O(1)”)
No, not unless the energy consumption when taking into account actual average usage is lower than a car where the consumption is tied directly to the same level of usage.
If you really believe that constant rate O(1) is always superior to usage-based consumption, then send me $3000 a month for your electricity bill regardless of how much power you use. Of course, Bitcoin still has an upper limit on how many transactions per-second it can fulfill, so similarly you would still have an upper limit on how much electricity you can use throughout each month.
But, you'd pay $3000 to me regardless of whether you had your fridge running or not, so technically the fridge is now free to run, right?
You’re missing the forest for the trees. Yes, O(1) is not always better, but you’re using an analogy that attempts to demonstrate badness by comparing to a scenario that is generally good. That does not help clarify your criticism!
You’re effectively saying, “that’s bad, because it’s like a good scenario that happens to be bad in this case”. What explanation do you think you’re improving upon?
> by comparing to a scenario that is generally good
It's good if cars use gasoline even when they're not being driven? If people aren't understanding the comparison, then fine, I'm open to better ones, but my point is that it's not improving energy numbers to expend energy even when transactions aren't happening. Even in the world of public transportation, that's an undesirable outcome that we would love to avoid if possible.
I'm not sure what the better comparison would be. Having a fridge lightbulb that stays on even when the door is closed? Running your shower 24/7 to make the number of showers you take independent of the water usage? Take your pick, I'm not married to cars, anything will work.
My point is that anyone can make any system O(1) energy cost by never turning off the thing they're using. You could make your car O(1) energy right now by forcing the engine to run at full speed even in your garage. But in most cases, we recognize that this is bad for energy usage, so it doesn't make sense in the world of cryptocurrency for people to argue that they can invalidate a measure of efficiency as a criticism by purposefully being less efficient.
And I think in those situations, it still does make a lot of sense to compare the total energy expenditure to the actual amount of usage it gets. I don't think that turning on a shower 24/7 means that it no longer makes sense to ask how many showers a household takes, I think that it just makes the water usage to shower ratio really bad. I think similarly, it makes a ton of sense to look at the amount of energy mining is using and compare that to the number of transactions per second that are actually happening on the network.
Reducing it down to "O(1)" is disingenuous. While true, that "1" in the Big-O can actually be pretty large.
If my car burns 30 gallons of gas every week regardless of how much I drive, then that'd be pretty damn bad considering I work from home and drive <15 miles per week on average. The fact that I could then drive a 2,000+ mile road trip and still only burn that 30 gallons doesn't make it good if I never make a road trip like that.
A car that got <max traversable distance in a week> per 30 gallons would be awesome, and the existence of people who don’t drive that much wouldn’t change that fact.
You’re just validating my point that it’s a bad analogy in terms of blurring more than it clarifies.
No, not at all. Let's talk about public transportation.
If you have a public bus that seats at max 20 people, and it's continuously running on a loop, it is entirely appropriate to take the gasoline cost of running the bus for one loop, divide it by the average number of people who ride each loop, and compare that to the costs of normal transportation.
If the bus uses way more gasoline per loop than is justified by transporting 10-20 people each loop, then riding the bus is bad for the environment. It would be wild to look at that situation and say, "well, the bus is going to spend that power regardless, so actually riding it is environmentally free and the criticism doesn't make sense."
The bus exists because of the passengers, and how much work it's doing per loop and the number of passengers it's serving should factor into an analysis of whether it's worth keeping it around.
Similarly, Bitcoin's POW system exists to provide transactions, and it is entirely reasonable to take the average number of transactions it processes per block and ask whether it's good that Bitcoin spends so much energy to process so few transactions.
It's especially valid to question whether it's good that Bitcoin's energy usage can increase without increasing the number of transactions it handles. At least with a public bus, the amount of gasoline it uses doesn't start dramatically rising just because the bus became more popular, independently of how often it makes a loop or what its seat capacity is.
> Proof of Work blockchains use the same amount of energy whether any individual makes a transaction or not.
Not entirely; that depends on the blockchain in question and on how much block subsidy is left. For bitcoin at this time (as well as for blockchains with a tail emission at any time), it's mostly correct since tx fees are a small part of the block reward. But in a few decades the bitcoin tx fees will dominate the every halving block subsidy.
The article is really about the environmental cost of the network. Breaking it down to transactions is just a basic tool to promote understanding and quite a common one (like in cost of ownership ratios.) Mind that the whole purpose of the network is still to enable and maintain these transactions. The article eventually transitions from there to the total cost of the network in TWh and the number of those participating in this network by individual transactions.
Its next section does slightly better, after doubling and tripling down on the household consumption framework.
The source of energy is way more important, bitcoin's source of energy is pretty good compared to any industry, and it can be better. Individual vigilance should be placed on ensuring that the overall source of energy for bitcoin gets better. because some of those major sources are reducing pollution and emissions. more mining can happen at more of those places. while other energy sources can be avoided.
Except that energy usage is mostly zero-sum: if Bitcoin is using all renewable energy sources [0], then all other uses of energy must use dirtier sources if those sources are already heavily utilized by bitcoin. Homes have to use more coal if Bitcoin is using all the wind/hydro. The pool of available energy resources is currently quite finite and while "the grid" abstracts away most of the sources from your view as an electricity user, it doesn't eliminate the fact that there are some very big zero-sum tradeoffs between the sources and "the grid" will adjust to increased demand with increased supply of increasingly dirty sources to meet that demand.
[0] Which is a presumption that is extremely arguable given how much we've seen shutdowns/restarts of coal-powered plants in for instance China and Kazakhstan impact the Bitcoin mining pools over time.
So great that its not totally zero-sum. Now that we both acknowledge that, and a large portion of bitcoin mining is using energy sources that are not taking away from other energy uses, and a larger portion of bitcoin mining can use more of this kind of energy. Because, well we've come full circle, Bitcoin doesn't use that much energy. There is way more untapped energy, thats been there for decades just being wasted and spewed away, because nobody else could figure out a use for it.. except the bitcoin miners.
You have a very different understanding of the word "mostly" than I do. You are also presuming that by the parts not covered by "mostly" in my hedge that I mean "positive sum", but I very much was considering and including cases that are truly "negative sum" games where more consumption is actively worse for all players involved. (For physical example: blackouts and brownouts.)
You are also assuming that Bitcoin is a good use of energy, which is also not something that I would agree with. Bitcoin mining is a massively distributed partial preimage attack on a cryptographic hash function of some importance to internet/world security and I have a very hard time seeing that as a good (both as in good ethics and as in good utility) use of energy.
One bitcoin transaction costs two orders of magnitude less than my monthly power bill, yet the author claims one transaction uses 2.5 household-months worth of electricity. Something seems way off with the numbers.
I'm not an expert on Bitcoin's power usage, however a few things spring to mind.
- Electricity costs are not constant everywhere, not everyone burning that power is spending the same amount as you (and in general, home farming Bitcoin using the cost of electricity in your area is probably not profitable, at least for most people reading this). It's almost certainly a mistake to use your local electricity rates as a baseline for how much money mining costs.
- Not everyone mining Bitcoin actually pays for their electricity, some of it is stolen. Some mining happens on hacked hardware, sometimes mining rigs tap into electrical sources that they shouldn't have access to.
And the really big reason that springs to mind:
- You are not paying the full electricity cost for mining Bitcoin in transaction fees, the generation of new coins is offsetting some of that cost.
Remember that Bitcoin is a speculative asset first, and a transaction method second. The network, and payout/fee structure for transactions are also constructed in a way that can mess with market forces a bit. There's a lot more going on than just "you want to spend money, pay enough to cover the electricity fees to make that happen."
If the network was amiable to increasing the number of miner contracts per block, wouldn't they have done it already?
Transaction speed and cost is already a regular criticism of the Bitcoin network. It's so much of a criticism that the Bitcoin community made the Lightning Network and started pulling transactions off-chain and pooling them to address that concern.
But they didn't collectively decide to increase the number of allowed miner contracts. They literally built a second network rather than change the max block size.
And in fact it was not only not accepted, it was a big source of controversy to even try to increase the block size. That was the whole deal with Bitcoin Cash, people were outright hostile to this idea.
>If the network was amiable to increasing the number of miner contracts per block, wouldn't they have done it already?
“Contracts” is a verb in that sentence, not a noun, and yes, miners do leave the market as it loses profitability, and no, the network does not have a requirement that there be a minimum number of miners, and there are reasons why they haven't left now but might not leave in the future.
You're not using the "why haven't they done it already" heuristic correctly.
The difference is the mining subsidy. The energy expenditure for a block is related to the total mining reward, which is transaction price + 6.25 newly minted bitcoins.
There are generously 2k transactions per block. Block reward is 6.25 bitcoins. A bitcoin costs $30,000 so the block reward is $187,500. Amortizing over 2k transactions, each transaction is worth a smidge under $100, before transaction fees (which as you point out are two orders of magnitude smaller so don't really matter here). $100 is about the average US monthly power bill, and it doesn't seem unreasonable that miners making use of the cheapest energy around the globe would be paying 2.5x less than that.
If they increase the arbitrary block size by x100 this number will become 21.5 KWh and nothing will change but at least these annoying articles will go away.
That comparison makes no sense. Your monthly power bill includes taxes, grid connection fees, etc - not just the cost of the power. Depending on where you live, there may also be natural gas bundled with electricity, adding costs that are not relevant to bitcoin. A lot of those fees don't scale with electricity used, but are fixed (driving down the marginal cost, etc).
Further, the rates for your home are not the same as rates in other places (odds are that somewhere else has cheaper electricity than you do).
I don't think the method is correct. There is no "energy cost for transaction" in Bitcoin, it's an energy cost per block. And it's a global constant, it doesn't make sense to say that you making 26 transactions a year will be worst for the environment than 1, or 0 for that case.
You're right that the energy cost is incurred at the block-level, but since each block can hold a certain number of transactions, you can then infer what the effective cost is per transaction. The source for kWh per transaction comes from Digiconomist's bitcoin energy consumption index, and you can find their methodology here: https://digiconomist.net/bitcoin-energy-consumption#assumpti...
It's just an incorrect attribution. If there are no transactions, blocks will still be mined. If there are more transactions than can fit in a block, no extra blocks will be mined. If the transaction format changes so that more transactions can be included in a block, the energy usage doesn't change.
It's just a very obfuscating way to describe what's happening. Not only is it not a useful abstraction, but it actively leads you to wrong conclusions to talk about it in terms of energy use per transaction.
All of those things are directly attributable to miles on the car. More miles means more repairs, more frequent oil changes, faster depreciation of your purchase price etc. On the other hand, number of transactions is purely a function of block size and transaction size (which again has no influence on energy usage).
> And it's a global constant, it doesn't make sense to say that you making 26 transactions a year will be worst for the environment than 1, or 0 for that case.
The amount of energy spent on a Bitcoin transaction is partially a function of the expected payout for mining that transaction.
The network doesn't only pay the energy cost one time per block, Bitcoin by design duplicates effort mining that block because miners compete with each other -- that's the whole point of POW, duplicated effort. The amount of attention/price of Bitcoin influences that, which is partially dictated by usage.
If Bitcoin crashed to $10 a coin tomorrow, the amount of energy being expended on each block would go down because there would be fewer people mining it. The number of miners (and the amount of duplicated work) will increase with Bitcoin's usage.
Energy usage in Bitcoin is not a global constant, the coin is designed so that people will suck up as much available electricity as possible until the cost of that electricity is higher than the profitability of mining. It is designed to always take up the maximum amount of electricity/hardware possible and to immediately consume any extra bandwidth or lower prices on the electrical grid (sidenote, this is why the "Bitcoin pushes renewables" argument is so silly).
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> There is no "energy cost for transaction" in Bitcoin, it's an energy cost per block.
This feels like word games to me. The blocks are getting mined in order to process the pooled transactions, that's why mining was invented in the first place.
If we say that the transactions aren't contributing to the energy usage, then we might as well take it a step further and say that the energy is all wasted because it would be spent anyway, regardless of how many transactions are happening. But I think the more reasonable way to approach what's going on is to say that the energy is expended in order to keep a functional network that supports transactions, and that it supports transactions at a fixed maximum rate.
It's like arguing that the environmental/human cost of gold shouldn't be factored into its usage because literally handing someone a block of gold doesn't at that moment incur that cost. That doesn't mean the gold mine stops existing and it doesn't mean that the usage of gold as an asset isn't the main reason why the mine was built in the first place.
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And in a lot of ways, this take (the block would be mined anyway so transactions are environmentally free) is kind of the opposite of the conclusion that would be more logical to reach. The fact that Bitcoin's energy usage can rise independently of functional usage is a flaw, not a strength. One of the sources for the article goes into more detail (https://digiconomist.net/bitcoin-energy-consumption#scalabil...). It argues:
> Unlike the network’s transaction limit, the energy consumption of the network isn’t capped. The price of Bitcoin is the main driver of the network’s environmental impact, and there’s no limit to how high this can go.
It isn't actually a positive that Bitcoin's energy usage can spike to match the entire country of Hungary while still only processing at max 7 transactions per second; far from meaning that individual transactions don't matter for energy usage, this means that individual transactions can spike to even higher energy usage than they would otherwise require regardless of how congested the network is. It's bad that the spike in energy usage does not come with any benefits to scalability.
Apologies, I meant that "for the same security level"/"for the same price of bitcoin" (these two have causal effects on the other), the amount of energy is constant, a global limit. We can asume the blocks are about full all the time.
If you leave the amount of transactions constant, and the price rises, the security of those transactions goes up (this might be too idealistic of a model, maybe wrong, but it's widely accepted basic microeconomics, not macro). If you leave out the speculation aspects of the price of bitcoin (say, in a couple of decades), a price increase means the market wanted to pay for more security (which is why the price rises). If the price goes down to say, $10, it's just the market signaling that bitcoin is not useful anymore.
I don't know about you, but I would like to have some backup next time Trudeau wants to freeze my accounts for protesting his measures. I'm not sure about 30k, or $10, probably right now something in the middle. But if that isn't a concern that bothers me, I would leave for a warmer authoritarian country, if there are any left.
The title should be: 'Proof-of-work cryptocurrencies are worse for the climate than you think'. The author knows it as described in the footnote [0], but why not put in some clickbait anyway and hide the fact that the study they linked to are related to all PoW cryptocurrencies [1].
Not all cryptocurrencies are PoW like Bitcoin. XRP, Cardano, Solana, Polkadot, Stellar and Algorand to name a few with over $1B market cap are not 'burning the planet'. Maybe by that logic, every single car (including electric ones) is worse for the climate than you think. Is that a safe generalization? Does that mean you should stop driving your car, truck, etc? No.
Greener alternatives to petrol and diesel actually exist for such vehicles. The same is true for some 'cryptocurrencies' (coins) that have over a billion market cap which are greener alternatives to PoW cryptocurrencies like Bitcoin.
But nice try with the clickbait headline and sweeping generalization to all cryptocurrencies though. How comes this petition, led by many critics also know this difference? [2] They tried to ban mining in the UK and it appears to have failed to get attention and enough signatures for a discussion in parliament in the UK.
Arguably, only the ones that can really claim to be decentralized. PoS, in its different variations, seems to introduce more obvious centralization in one from or another. I’ve yet to hear a solid argument otherwise.
PoS cryptocurrencies are like attaching wheels to horses.
Why make alternative finance systems based on the same fact that the wealthiest entities control the policy of the network? Exactly like in the current system with central banks and governments.
"omg bitcoin's 0.5% of global energy use (while being a smaller footprint than all these other industries) is the same amount of energy as countries!"
which means everything that uses 0.5% or more of global power uses the same amount of energy as many countries
seems like an irrelevant metric, and it is. this isn't about "pointing out worse things to justify bitcoin's energy use", its about this just being a bad metric to begin with.
Yes , proof-of-work crypto is a terrible idea for the environment.
But also, this article gets so many things wrong I don't even know where to start. For one, it confuses a "transaction" with "mining a block". A single block can facilitate around 500 transactions on the bitcoin chain, so if an end user wants to "send a bitcoin" as the article states, divide that monstrous energy usage by 500, and suddenly the graphs are not quite as emotionally charged anymore.
The other part is that not all energy is created equal. A third of the time, the world has a surplus of energy that can't be efficiently used or stored (daylight for solar, wet season for hydro...) — miners have taken advantage of that years ago and most mining is done when and where energy is cheap because it's a surplus. Doesn't mean that this nullifies the impact, but any comparisons of bitcoin energy use to that of a physically constrained country are incredibly misleading.
No, the calculation is done per transaction, not per block. You can calculate the per-block consumption pretty easily based on the stat that there are about 150[1] blocks mined daily and the total TWh used per year for the network is 200[2]. 200 TWh per year / (365 days * 150 blocks) = 3.6MWh per block. The amount of transactions per block is around 2,000[3], so if you divide that number by 2,000 you get around 1,800 kWh per transaction
If we end cryptos today, in the grand scheme of things, we are going to see no real difference proportional to the global energy consumption of everything else as, while enormous quantity wise, consumption is still below 0.5% or so (so really not that big of a deal percentage wise). How did the predictions and articles from a few years ago on how Bitcoin was going to take, by 2020, the global energy share of consumption pan out? Obviously they were wrong, as consumption of everything else grew as fast or faster than it.
The drama against cryptos and their energy consumption is unproductive and is imho going to yield no change (in the grand scheme of things), as the field can't really be tamed the same way other industries can due to its decentralized approach of doing things. Instead of wasting time with this approach, we should be pushing for and incentivizing cheap green energy sources, as that is where the real issue comes for every industry.
As long as the source is green, which it already is fo a huge chunk of the energy behind cryptos, and as long as it is not messing with the availability for the demand in the grid for other industries/consumers, then who cares how much it consumes?
My issue with takes like this is that Bitcoin is currently barely used by anyone (many people are holding, almost no one uses it as their primary medium of exchange), and yet it’s responsible for about 0.5% of the world’s power usage. If Bitcoin remains a niche hobby and doesn’t grow, then yeah, that’s not a big deal. But the people saying “It’s only 0.5%!” are also the people advocating for it to overthrow the world financial system and bring about a global decentralized digital monetary system.
And if that happens, if Bitcoin goes from being used by ~0% of the world population (for everyday exchange) to being the main way people transact goods and services, then we can expect the demand for miners to skyrocket, possibly leading to an energy draw that is a multiple of the world’s current non-blockchain usage.
If/when that will happen is unclear, and I’d agree that “this much by 2030” forecasts that just extrapolate the current trend will likely be inaccurate. But if we’re debating whether Bitcoin/crypto should be more used or less, I think it’s only fair to reckon with the effects that future crypto growth would have on its energy draw. We can’t argue about tomorrow’s revolution with yesterday’s numbers.
I don't disagree but at the end of the day how do you really plan to tame it if it's still a "niche" hobby in 10 year? Which I doubt a lot as Wall Street and other industries are starting to get quite involved in it now investment-wise. The practical approach from a government pov would be to regulate the hell out of mining businesses but nothing prevents me as a user to set up a mining rig at home and join a pool somewhere around the world. Look at China as an example. They still have 20% of their previous mining activity happening (after the ban) and they have the "best" surveillance system in the world. That's why I think fighting it is less productive than guiding it to use clean sources.
If it remains a niche hobby in 10 years then that means we’ve succeeded in preventing Bitcoin from becoming mainstream for another 10 years, which would be good. We might even make progress on clean energy sources in that time. It will still be wasting energy for little societal benefit, but that’s not the scenario folks are most worried about, we’re worried about what happens to the environment if it becomes more popular or becomes the dominant world currency (which is what many Bitcoin proponents are pushing for).
> still be wasting energy for little societal benefit
I don't think you are paying attention to developments in the Global South with it. Use of it is increasing at an insane pace in Latin America (where I'm from) and I don't see it stopping any time soon. Similar trend is happening in Africa. Does it make sense to use it if you live in a developed country? Probably not. You already have all the infrastructure and financial privilege you can have. Plus your organizations are the ones setting the rules for the rest of the world. Good for you. But not all people using it are gambling my friend. As of now, there are 2 countries that have adopted BTC as legal tender. I'm willing to bet that by the next (or around) the next halving, we are going to have more countries in that list, specially from the Global South.
The problem is, cryptocurrencies as an aggregate industry, see "success" as replacing all of the global monetary system as a whole. So even though this weird hobby that some people have is not currently, today, a major percentage of total climate-harming CO2 emissions, if the end-game comes to pass it will be a disaster.
Similarly, F1 or NASCAR racing are incredibly inefficient uses of fossil fuels. But there is no threat of performance racing becoming how everyone's cars work. So it can stay as just some weird hobby of rich people and not represent an existential threat to life as we currently know it.
The point of continuing to advertise the climate cost of cryptocurrency is to help keep consumers informed. If people care about the climate, are thinking about getting into crypto, and they learn ahead of time that crypto is bad for the environment, then they might skip getting involved in the first place. In this way, we can hopefully cut off the supply of Greater Fools that are necessary to keep the cryptocurrency-cum-hyper-speculative-asset-investment pyramid scheme from growing.
> The drama against cryptos and their energy consumption is unproductive
Why is it "drama" to put forth arguments against crypto and why is assessing pros and cons less productive than any other argument on Hacker News? Making a statement like that marks you, at least in my mind, as a true believer.
Because it has being going on since it's inception and nothing has changed because the dynamics of how it operate are not the same as other industries. Hence drama, because the approach of trying to take down mining has not worked and is unproductive at the end of the day if the goal is to reduce carbon emissions. And yes I am also a crypto enthusiast so put me in the believer camp.
Every true faith welcomes doubts and questions as a way of either strengthening faith or finding out the one's faith is misplaced. Organizations that are hostile to questions and criticisms are cults.
I agree with literally all the problems in the criticism presented here. I think the problems are real as well. My only issue is that the approach to solve some of the issues generated in crypto industry are either not practical, sustainable, or effective, hence my criticism of the criticism presented in this thread. I don't like the idea of insane power consumption, specially when coming from non renewable sources. But at the same time I also recognize that the incentives built into the protocol (BTC specifically here) are stronger than the environmentalist approach of either killing the industry or moving to POS (which has not been proven to work at scale or in the wild outside a testnet yet). Which is why I think that a better approach is to guide the industry into ONLY using and incentivizing renewables.
[...] consumption is still below 0.5% or so (so really not that big of a deal percentage wise).
What? Look at all the things we do with electricity. Spoiler, there are quite a few. Spending half a percent on crypto currencies is a lot.
As long as the source is green, which it already is fo a huge chunk of the energy behind cryptos, and as long as it is not messing with the availability for the demand in the grid for other industries/consumers, then who cares how much it consumes?
Even if the energy is green, it could be used for better purposes. [1]
[1] Yes, I have heard about the green energy used in remote places where there is no other demand. If this is the dominant source of electricity, then calculate as much hashes as you want.
You are missing on the incentives side of the equation. If I'm a miner and the green energy source is cheaper, I will get that infrastructure built for it.
This could also help to recoup investment, for someone who doesn't see mining as its main goal, in the case where renewable infrastructure is not cost effective for a specific region but could help with reducing overall carbon emissions.
Other than price of most of them (due mostly to macroeconomics really and unhealthy rapid expansion which is not uncommon to happen each cycle) adoption and use of them in almost every metric is up and increasing.
I would argue this can only be proven by showing the number of individual users buying crypto over time. Of course, due to the pseudonymous nature of crypto this is impossible to prove. One person can open 10 billion accounts and make a minor transaction on each in the extreme case. Do you have any data that proves your case conclusively?
this data clearly doesn't show current situation (June 2022 to be precise) as that report is not out yet but the macro situation is clearly affecting valuations in all markets (commodities, equities, crypto, etc) specially crypto and growth-driven tech companies as they are obviously more risky in a higher interest and more uncertain (from the global macro perspective) environment.
While these environmental critics are trivial, at least they are true for PoW, and have made a significant change. Crypto projects now like to offset their carbon footprint even if they have a very low one to begin with.
If half of all people stop sending bitcoin around, the amount of electricity used doesn't go down by 50%. So you sending or not sending bitcoin doesn't impact the electricity spend by miners at all.
Miners mine to secure the network, there is not a certain amount of electricity needed per transaction.