[j0ba]

Let's get rid of bitcoin. Then we can use "green" dollars. They don't need servers to run. Well, except for all the banks, federal reserves, and credit card processors. I wonder how much electricity they take to run. Well, probably not 2% of all US electricity.

But why are banks so secure? I guess because of police partially. I guess those police need electricity too. But we need them anyways, so I guess that only partially counts.

But why dollars? Why not pesos, or euros? The dollar is backed by the US military, of course. I wonder how much electricity the military uses.

Anyways. Let's get rid of bitcoin. That will solve the climate crisis! We can sell anti-bitcoin stickers made in China on Amazon to show our support!

[ThisIsMyAltAcct]

Police, banks, the military, the Fed all provide many more services than bitcoin does and do more than just protect the dollar. What an incredibly dumb comparison.

[j0ba]

Your assertion is that it's dumb to compare two competing financial systems?

The dumb analysis is to talk about Bitcoin energy usage in isolation, without comparing it to the present system. The present system would not work without police officers and military. Bitcoin replaces these things with servers and decentralization.

There is no military protecting the internet. You would need to bomb every country in the world to destroy the internet. The same is true for Bitcoin.

US military is 100% necessary for the dollar-based world order. The fact they do other things is not important. You still need the full US military to protect the dollar, even if they didn't do other things.

[jallen_dot_dev]

> Bitcoin replaces these things with servers and decentralization.

This is totally absurd. We would still need police and military even if the USD stopped existing and we switched over to Bitcoin. You cannot replace them with servers because servers can't protect a nation or enforce laws.

> The fact they do other things is not important.

It is important, because it means they must exist anyway. So it makes no sense to factor in their cost if the cost would still need to be paid regardless of which financial system we use.

[yellowapple]

> We would still need police and military even if the USD stopped existing and we switched over to Bitcoin.

We would need less of them.

[jallen_dot_dev]

I don't think so. It's not like we have a branch of the military dedicated solely to maintaining the dominance of the USD. It protects our national security interests as a whole. The fact that it also scares everyone into using the dollar is just a bonus.

And while there are police dedicated to investigating financial crimes involving dollars today, we would still have them. They'd just be investigating crimes involving BTC.

[yellowapple]

> It protects our national security interests as a whole.

The emphasis of those interests is on ensuring that the US remains the dominant global superpower, particularly economically. Only a modest portion of our "defense" spending actually goes toward defending our own territory; most of it goes toward global force projection.

> And while there are police dedicated to investigating financial crimes involving dollars today, we would still have them. They'd just be investigating crimes involving BTC.

A lot of avenues for financial crime become impossible in a post-dollar world, and said world doesn't really introduce any new avenues compared to cash; that's a strict reduction, and therefore a strict reduction in the need for police on that front.

There's also a considerable reduction in demand for police to investigate robberies when there's a lot less to rob. Banks get reduced to loan centers and safe deposit boxes, armored trucks moving cash around stop being a thing, nothing in cash registers to steal at gunpoint... yeah, criminals will probably try to commit robberies, but will quickly find out that the reward ain't worth the risk.

Police corruption also becomes trickier, especially when it comes to civil asset forfeiture. No cash to steal during traffic stops means less motivation for said traffic stops in the first place.

[anigbrowl]

There is no military protecting the internet.

My dude there is a whole lot of public security infrastructure protecting the internet. Just because the basic internet protocols are public doesn't make it magic.

[tcmart14]

Maybe next time Somalian pirates attack a merchant vessel, bitcoin can put a stop to it!

[p1mrx]

It's an older crisis, sir, but it checks out.

[tcmart14]

Haha. It is, but I always found it funny, the south park song. But yea, bitcoiners will push the military of just being this evil force of violence. And trust me, it can be. I was in the Navy. But we also did so much more. We did search and rescue for civilians missing at sea regardless of their nationality. We did evacuations for scientist and researchers on islands in the path of a really bad storms. Used our hospital on board to respond to calls for helps from smaller ships that needed assistance with emergency medical situations, etc. Provide disaster relief, etc. Had a fellow sailor at the time who was on an air craft carrier that responded to Fukushima by flying all their food on board to the ship to feed victims of that disaster.

[jcranmer]

Replace "Somali pirates" with "Houthis", then.

[staplers]

  provide many more services than bitcoin

To who?

Extremely cringe to see the HN bubble struggle to grasp how the world economy works. Not all government currencies are properly maintained.

[Scarblac]

Still, considering the tiny amount of Bitcoin transactions per day, and the large number of speculators, hardly anybody can be using it for real things, anywhere.

[staplers]

No one rides trains anymore but they service a massive amount of our economic goods. If you want to buy a coffee, use your credit card.

[ThisIsMyAltAcct]

Ok, but this article is specifically about US energy consumption.

[yellowapple]

In which case the question of "to whom?" still applies. As it stands, the primary beneficiaries of American police and military operations are the very same wealthy elites at the helm of the dollar-based global economy.

[tcmart14]

I do some work with financial tech and let me tell you, working with integration partners for payment processing who are fully into crypto made me realize, we shouldn't trust these people with our financial system. I had to explain to a senior engineer with 20+ years of experience why he shouldn't rely on floating point to calculate service fees (their calculations were always wrong and over charged our customer's customers because they used floating point). Can't calculate a 3.5% service fee properly, but will tell you why he so so much smarter than the everyone in traditional finance (who don't fuck up this calculation). And this has been an ongoing problem for a year, to the point that we built around their system because we can't trust their system does what they say.

[lgleason]

That is the tip of the iceberg from what I've seen in the space. I've seen poor security, amateur hour with servers, connectivity etc..

[Gazoche]

Yep. The number of crypto hacks reported by https://www.web3isgoinggreat.com is just mental. Over 100m$ stolen in multiple hacks just this week, and it's not even a particularly busy one.

[tcmart14]

I completely forgot about this site. Thanks for the reminder that this exists!

[happytiger]

The existing financial system uses roughly double what bitcoin does.

[mminer237]

It also processes over 4,000 times as many transactions: https://matthewminer.name/blog/bitcoin-energy-consumption-vs...

The fact that 0.025% of transactions use 33% of the power is not exactly a win for Bitcoin.

[happytiger]

I was just trying to answer the guys question.

[mminer237]

Yeah, no, that's fair. I wasn't trying to attack you.

[happytiger]

Ok. My apologies!

[sumeno]

How many orders of magnitude more is the number of transactions supported by the existing financial system?

Visa alone can process 24,000 transactions per second. Bitcoin can handle 7

[gshubert17]

A Visa fact sheet [0] claims 276 billion transactions in a 12-month period, which would be less than 9,000 per second, but still an impressive figure.

Fedwire, the settlement system operated by the Federal Reserve, processed 196 million settlements in 2022, each about $5.4 million, for a total of over $1,000 trillion. [1] That would be about 16 settlements per second. Visa handles many more smaller, individual transactions; aggregates and nets them; and uses Fedwire to settle them between member banks.

Bitcoin could be used in a similar manner, handling a relatively small number of larger settlements; leaving other systems to handle smaller, individual transactions.

[0] https://usa.visa.com/dam/VCOM/global/about-visa/documents/ab...

[1] https://www.frbservices.org/resources/financial-services/wir...

[acdha]

> Bitcoin could be used in a similar manner, handling a relatively small number of larger settlements; leaving other systems to handle smaller, individual transactions.

That’s what Lightning does but it also removes most of the sales pitch for the system since you’re giving up the global ledger. Once you’re relying on a bank in all but name for your transactions, it’s unclear what you’re getting for the extra cost and lower usability.

[0cf8612b2e1e]

Are these Visa numbers published somewhere? The scale and must-not-fail nature of this infrastructure would be an interesting read to understand how they have built out the platform. Probably all sorts of lessons learned that only apply to a global financial network, but still probably some universal truths.

[happytiger]

https://ycharts.com/indicators/visa_inc_v_total_transaction_....

Their volume is impressive.

[happytiger]

I’m just answering the question. Not trying to start a war.

I do think it’s important to have healthy alternative financial systems. Probably need a more energy efficient one.

[acdha]

Cryptocurrency is a speculative gamble, not an alternative financial system. There’s no path to real world adoption without better cost, performance, fraud control or customer service[1] but the changes needed to deliver negate the concept.

1. Not saying that banks are great here, but that better isn’t an impossibly high bar.

[happytiger]

Fiat currency is a speculative gamble, and controlled by a specious and small number of players.

You could have said the same thing about it the early financial system as well.

What you have is a developed ecosystem and a developing ecosystem, and you’re pointing to the developed ecosystem and saying the developing one doesn’t have all the things. Of course it doesn’t. It’s developing. And it’s doing it in spite of the existing financial system trying to damage or destroy it periodically.

Let’s not confuse the technology innovation we’re referring for the mature ecosystem of a graduated and dominant financial ecosystem.

[acdha]

> You could have said the same thing about it the early financial system as well.

Only if you have no understanding of what the words mean. For example, most cryptocurrencies are fiat currencies - just exceptionally weak ones. The reason why using USD isn’t a gamble is that it’s linked to a massive economy with guaranteed demand.

> Of course it doesn’t. It’s developing. And it’s doing it in spite of the existing financial system trying to damage or destroy it periodically.

Ah, yes, this part of the sales pitch was bound to come up. The flaws I described aren’t some sort of minor growing pains, they’re architectural. After 15 years and billions of dollars, not having a progress towards fixing them suggests that telling people to ignore them and buy in anyway is not the way you fix design defects.

[sumeno]

But it's not an alternative to the financial system, outside of crime in order to do anything useful with it you have to move it back into the existing financial system.

[happytiger]

I literally just answered the question about energy use.

Crypto could arguably become a potential alternative financial system. Bitcoin by itself is not.

Crime is primarily conducted in USD (by volume). The purpose of financial compliance is not to eliminate crime but to manage it, and arguably the techniques we have used to create exclusionary financial systems have done more harm than good (better the terrorist you know in your financial system than the terrorist who doesn’t even use your financial system that you don’t have any awareness of, aka. The Patriot Act missed the mark).

Further, the existing system is working about as well as the war on drugs. Every recommendation I have read is to find ways to shore it up, rather than find new ways to conduct financial crimes oversight, and the primary recommendation for the resulting inevitable escalation is to build a gigantic skynet of information sharing that looks an awful lot like surveillance capitalism.

https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/...

I personally view Bitcoin as a runaway proof-of-concept. It’s rather insane how successful it’s become considering how it got started.

If we look at it from a product / market fit perspective, there is clearly a product / market fit. And that’s in the face of the intact existing financial system, Visa’s volume, the USD, etc. That’s probably a point worth considering.

[johnfernow]

The difference is that the existing financial system is used by about 3/4 of the world population (closer to 94% in developed nations) for the exchange of actual goods and services.

Bitcoin has significantly fewer users, but more importantly it is almost never used for the actual exchange of goods or services.

With my bank (and the accompanying infrastructure that goes along with it), my employer can deposit directly into my account, which I can then use to pay rent online (as opposed to physically traveling to their office), buy groceries at the store, and purchase nearly every legal good or service that is for sale, all while reducing the odds of me being robbed or losing money (e.g. losing my wallet.) If someone or some business scams me, I'm given methods of retrieving my money without confronting them in person. It also allows me to autopay all my bills so I'm never charged for forgetting to pay (and frankly I have very little desire to write and mail several checks each month or travel to various places to pay in cash.)

Credit cards, debit cards, direct deposit and money transfers are far more convenient than using cash, and aside from convenience, I imagine they decrease a nation's carbon footprint over using exclusively cash (due to less need to mint, print and transport physical currency, as well as travel in person to pay or receive payment.)

They do come at a cost of privacy, but if I wanted privacy for a specific purchase, I can still use cash for those specific transactions. While it may have a higher carbon footprint than digital payments, overall ink and paper tend to have low carbon footprints (though it's probably a bit higher for currency than it is for standard A4 paper.) Still, it's near certainly less carbon intensive than Bitcoin (per purchase, maybe not in total since billions of people actually use paper currency to buy things at least sometimes.)

Cryptocurrencies and their accompanying anonymity can bring about good things, so I'm open to at least considering their value — there are countries with authoritarian and oppressive governments, and there have been several democracies that have fallen to dictatorship before and that very well could happen again in the future. As such, being able to anonymously transfer money does have its value, especially in a world with CCTVs and facial recognition.

Cryptocurrencies, of course, also can be used for illegal services that are near universally considered immoral and evil. Currently, in most countries (even ones that aren't exactly liberal democracies), this is likely a much larger harm.

Balancing freedom from and freedom to is always tricky: neither authoritarianism nor anarchy are appealing — allowing personal freedom while preventing people from encroaching on other people's personal freedoms is difficult to achieve.

However, even if I were fully convinced that cryptocurrencies currencies were a net positive on society (open to considering the idea but definitely not convinced yet), I struggle to see how one with such a large carbon footprint is what should be used.

[adamrezich]

you really think that every credit card reader in the country, every ATM, every computer and piece of electronics at every branch of every bank, and all of Wall Street and everything, adds up to less than the sum total of Bitcoin mining in the country, in terms of energy usage? how could this possibly be the case? I'm not even a Bitcoin guy and this is absurd on its face.

[jcranmer]

Yes.

This article gives an estimate of about 2% of all electricity usage going to bitcoin mining. All data centers in the country combine to a similar ballpark in energy usage (another comment states 1-3%). Finance accounts for 20% of US GDP, so we'll be charitable, round up its usage of datacenters to 50%, to get about 1% of electricity from financial data centers.

There are about 6.7 million employees in the financial sector [1]. Assume everyone has a computer with a 600W power supply at full bore for 12 hours a day [2]. That comes out to about 18 billion kWh of electricity a year, which is (checks math) 0.425% of US electricity consumption [3]. Sure, I'm not accounting for all the PoS systems at every retail location in the country, but they're going to use far less energy than even the overspecced numbers I'm using.

So overall, this comes out to about 1.5-2% of US electricity usage going to the financial sector, less than Bitcoin mining. Also remember that magically switching everything over to Bitcoin would still require all those PoS systems, not to mention large fractions of Wall Street and bank branches and whatnot, so this isn't really a fair comparison overall. And some amount of the financial sector includes cryptocurrency companies already.

[1] https://www.bls.gov/iag/tgs/iag52.htm

[2] This basically comes out to a decently powerful computer being used at max spec for an 84 hour work week. A generous overestimate, I'd hope you agree.

[3] https://www.eia.gov/energyexplained/electricity/use-of-elect...

[lgleason]

Right, but the financial system is actually used by most people in the US. Bitcoin, a small fraction of that...and this figure does not include all of the energy expended to process bitcoin transactions.

[beau_g]

You are comparing the transaction cost of credit cards/banking/trade to the transaction cost + infrastructure cost of bitcoin. Credit card companies, banks, financial institutes have millions of employees that drive to work, HVAC in their offices, etc. that is not required with bitcoin. This is ignoring all of the rest of OPs point that preserving the dollar system has countless other external costs.

[ipdashc]

I would think those employees exist because people demand a whole bunch of services from the financial system, like fraud protection, chargebacks/disputes, customer support, and so on. If you stripped down Visa or whatever to its bare minimum of just processing online transactions, I'm sure it could do it pretty efficiently. Conversely, if all our money ran on Bitcoin, I'm sure most people would still want to interact with companies that provide extra services and support on top, and then you'd be back in the same place.