There's no net-value created by doing the 'mining part' - in fact, it's a value-destroying activity.
Why waste electricity doing nothing?
Generate electricity that others can use, sell that, and pay for research.
You don't understand where cryptocurrencies derive their value from if you're saying this. Mining is what give cryptocurrencies their legitimacy, it proves that a digital file is scarce (important for information used to account for wealth/scarcity) and second it proves that the payment hasn't been double spent.
The traditional financial / political system, these processes are obfuscated or inefficient because you need lawyers, judgers, armed guards, vaults, auditors etc etc to preform the same task: to ensure that FedWire isn't inflating the supply, rolling back a payment.
If you accept that a bank vault that has one guard is made more secure by adding another guard you must accept that adding miners to a PoW chain makes it more robust against attackers -- this is the value.
'Mining' does not give them 'legitimacy', it's just an odd by-product of how some of them are structured.
And frankly - that 'mining' consumers power and resources is a total waste. There could very well be other, less wasteful ways accomplish the same thing.
Certainly 'Kin' is not 'mined' - they just arbitrarily create and dump them as they please.
Driving a cash truck to merchants, to pick up cash, to take back to a bank, to be counted by a physical machine, to update a database in a bank server is also a 'total waste'.
Just because the waste is hidden in the old financial system doesn't mean it's 'less wasteful'
Ce qu'on voit et ce qu'on ne voit pas
'Mining' is an arbitrary answer to handing out block-chains.
They could give out Bitcoins to whoever solved specific math problems for which 'computing power' doesn't matter.
They could give new Bitcoins to completely random people.
The 'mining' paradigm is utterly wasteful because it wastes resources for no reason.
The could have issued a 'big block' and than have been 'done with it' - no new Bitcoins.
The level of religious support for this stuff is hilarious.
> 'Mining' is an arbitrary answer to handing out block-chains.
No it's not there are many ways to mine a coin and reach consensus, Proof of Work has been the most sensible one - as staking electricity is fundamental and universal.
> They could give out Bitcoins to whoever solved specific math problems for which 'computing power' doesn't matter.
They?
> The 'mining' paradigm is utterly wasteful because it wastes resources for no reason.
Ethereum uses a mining algo to process Smart Contracts. Other currencies like sia, use mining to process decentralised storage. Utterly wasteful is an overstatement. There are plans to move Ethereum to Proof of Stake where mining coins will become incredibly difficult and uneconomic and will reduce the power consumption problem.
> The level of religious support for this stuff is hilarious.
Your poor understanding of the topic made me chuckle
Mining also serves as THE first-known solution to the byzantine generals problem, which is a problem in every decentralized system that needs to agree on the canonical truth. What less-energy-consuming system to solve this problem would you suggest instead?
Yeah, this costs energy, but it's sort of like expending energy to shoot ammunition at a wall constantly in order to know right away as soon as any weakness is discovered.
What is the price of being unable to be hacked (see: Equifax)? Right now, that price is "mining energy expenditure."
Crypto-currencies are entirely unecessary for this.
I pay most of my bills 'digitally' with 0% transaction charge.
'Friction' is ultimately derived from 'regulation' - which is a necessary condition when dealing with real money across an economy.
One could argue there is 'too much regulation' - that said, without it, the economy would crash instantly due to mass fraud, corruption, embezzlement, tax avoidance etc. etc..
Irony: the moment 'Bitcoin' is important enough to be considered a 'real currency' by governments - 'poof' it's under regulation and loses a great deal of it's value in this area.
The 'solution' to e-currency is not Bitcoin, it has too many downsides for practical purposes. It's a great intellectual exercise, and something good may come of it, but 'it' is not the solution.
Now if they were getting the electricity by burning coal, a case could be made that the environmental harm outweighs the benefit. But getting it from a renewable source also expands the economies of scale on that renewable source just a little more, so it's a win across the board.
If you have something more useful to do with the wind-generated electricity, the same thing would apply. But thanks to the limitations of the grid and the intermittency of renewable energy, that may not be the case. In that case, mining cryptocurrency may be the highest value thing you can do with it.
Wow, how convenient that the thing you like is the single "highest value thing" that anyone can do with energy.
You are in a filter bubble of people patting each other on the back for wasting energy. You've been rewarded for cryptocurrency speculation for so long that you've forgotten what productive work is.
Do you agree with the general principle that when the heuristics you are using, generate erroneous conclusions, it's a good idea to re-evaluate those heuristics?
Can you read what you've just written and see how mad it's become?
The converse of what you've said is that making CPUs destroys value, and by implication Moore's law and the whole process of technological improvement is destroying value.
This is even worse than the Bastiat "broken window fallacy": http://bastiat.org/en/twisatwins.html
But I was waiting for someone to bring up the broken window fallacy. The answer is that the unspoken assumption on which it is a fallacy is that resources in the economy are otherwise optimally employed. Back when it was coined, that might have been close enough to the truth to be a useful approximation. Today, it's very much not.
I don't think this argument has become particularly constructive, so I'll let you have the last word, but I suggest instead of just pattern-matching what you think I said to something you've heard somewhere else, try stepping back and just looking at the facts as they are.
This is like saying hurricanes create value because they create demand for construction
A lot of money can change hands, and a lot of people can 'do stuff' with nobody being better off.
Take for example how the GDP is measured: the total value of 'everything produced and sold' PLUS government spending.
Get that: it does not matter how the government spends - it counts towards GDP.
A government could borrow $1 Billion dollars - and literally burn it - but the 'GDP' would be +$1B Billion that year. That doesn't mean $1B in economic value created ... it just a number on a page.
The 'innovation' created from 'more advanced tech' to do something entirely useless is not really 'value creation'.
Now - if those 'advanced shovels' end up being used for other purposes, you might argue there is 'value creation' - but no - this is not right.
Why? Because of the distortionary effects of the impetus of the innovation in the first place.
If there is a 'real reason' to make 'better shovels' - then they will get created for that reason. But because they are being created for a non-reason - i.e. digging holes and filling them, well, it's a misallocation of resources.
If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways.
It's pointless to invest in things that have no value, because there might be indirect innovation elsewhere - just use the money for rational, value creating things - it's much more efficient.
Actually no, it probably wouldn't. Most likely, the money would be hoarded and the people would be eking out an existence doing some miserable make-work. The unspoken assumption behind your position is that all resources are currently being used fully and optimally. Unfortunately, this is very far from true.
That's incorrect; GDP is the total cost of everything produced and sold. Government spending isn't added (if it was, there'd be a substantial double counting, because a lot of things produced and sold are bought by government.)
(More precisely, it's private consumption + private investment + government spending + government investment + exports - imports.)