Bitcoin could cost us our clean-energy future
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The amount of power bitcoin is sucking up is truly astounding. There will eventually come a point where states are motivated to act against the network, and I'd consider it wishful thinking on the part of bitcoin investors/true believers that states have no real recourse. All that power comes from very large physical sources, which can be controlled with violence. Short of that, China could nationalize the miners and run a 51% attack, driving the price to zero. TLA's have sufficient resources to deanonymize transactions and enforce civil or criminal penalties.
People keep viewing bitcoin as this abstract cryptographic thing, but it exists in the physical world, and in this world sovereign states hold ultimate power. When major powers decide that bitcoin is not in their interest, they will end the experiment. The truest believers will be left holding the bag.
Would you say that the worldwide electricity consumption of Christmas decorative lights (2.3 GW assuming it's 3× the US) is "astounding"? Well, Bitcoin miners consume less than that: I estimate 1.7 GW based on my previous research bounding it to 0.6-1.2 GW as of July.
http://blog.zorinaq.com/bitcoin-electricity-consumption
Why do miners receive such a disproportionate amount of criticism considering that so many other energy uses are vastly more wasteful by multiple orders of magnitudes... Cars alone waste 95% of their fuel energy. The US wastes 61-86% of its energy: https://cleantechnica.com/2013/08/26/us-wastes-61-86-of-its-... But, no, the average HN reader seems more concerned by these miners using 0.01% of the world's energy.
In the future, we may eventually reach a point where the energy use starts becoming worrying, but we are currently very far from that point.
Why doesn't anyone complain that JPMorgan will "cost us our clean-energy future"?
The great thing about a financial system defined by open-source software is that true innovation happens every day. Already we see testing with proof-of-stake, lightning network, etc. that are vastly more energy efficient.
> Short of that, China could nationalize the miners and run a 51% attack, driving the price to zero.
A hard fork which renders nearly all existing ASIC architecture useless can defeat that attack. It would be a huge cost to China, with all that mining infrastructure go to waste.
What China could do better is to disable bitcoin traffic to pass through their firewall, and that would be a better attack, because then it would be chaos in the rest of the world, with really high difficulty level, which would take time to readjust because no new blocks would be mind for a while.
Then when difficultly readjust, they open the firewall again, and now you got all these China vs non-China btc transactions to consolidate.
This is a big concern of bitcoiners, and there are attempts to figure that out, but it isn't an impossible problem.
Keep in mind, Bitcoin isn't the only cryptocurrency, PoW isn't the only consensus algorithm, the current snapshot of the chain isn't immutable. In case of catastrophic disruption, the chain will be forked, that disruption removed, and business will continue.
> When major powers decide that bitcoin is not in their interest, they will end the experiment.
This is an issue for prisoner's dilemma. Major powers aren't a monolithic entity. The interests of Russia are vastly different from the interests of USA.
A LOT of world powers are interested in getting off Dollar as a reserve currency. This alone makes any decision on bitcoin between the world powers far from agreeable.
But even though the articles I've seen are pretty fluffy, they probably stem from an underlying issue that makes Bitcoin different from traditional, energy-heavy industry: The value produced is not directly connected to the energy expended in production. Bitcoin would work just as well with a small fraction of the hashpower it has today. Security is an issue, but surely it must be over-secured many times over at the moment.
Unfortunately no mechanism seems to exist to balance security vs cost, except for the crash-boom market cycle Bitcoin constantly goes through. How much hashpower is needed? The question is moot as there is no way to moderate it, and I'm starting to think that may be Bitcoin's biggest design flaw. (Market forces will certainly bring the energy cost of mining down one way or the other, but it's not clear how much damage will be done to Bitcoin in the process.)
How are you coming to this conclusion? In addition to the coinbase, miners earn fees, which are valued according to current market conditions (supply and demand)
https://www.reddit.com/r/BitcoinMarkets/comments/7hvj8e/dail...
If Bitcoin becomes the most valuable asset class in the world by two orders of magnitude (in 2020, assuming same rate), lots of crazy other side effect will occur.
Bitcoin isn't going to keep growing this fast. It'll go parabolic for a while, and then settle at a midpoint between where the rally began and where it peaked.
Bitcoin isn't to blame for cheap energy. If it is too cheap, take it up with the people selling it at that price.
Bitcoin does include a perfectly good mechanism to balance security vs cost: the transaction fee market. Users decide how much they want to pay in transaction fees.
The reason for the high electricity use today is the temporary block reward for mining each block. The block reward halves every three years. Once it goes away, the only thing funding Bitcoin's electricity consumption will be the transaction fees users pay. Obviously if Bitcoin does not provide enough value to users, they will not pay high fees. Electricity consumption will naturally go down to a level that matches the value people get out of the network.
Remember this next time you see an article complaining about Bitcoin's electricity use. I haven't seen a single article about this written by somebody who understands the difference between the block reward and the transaction fee market.
The beauty of the mining mechanism is that having transactions processed provides security at the same time. As long as users see value in having transactions processed they will be willing to fund miners with transaction fees.
However, you're right that users aren't paying for security directly. The fee market may not actually give miners enough revenue to ensure network security. When the block reward goes away electricity consumption will certainly drop (relative to transaction volume), but it may even drop too far to the point where the network is no longer secure from 51% attacks.
Even if fees were zero and block rewards didn't exist, people who had bitcoin would mine so that no one else could mine and trivially double-spend (and thus devalue their bitcoin).
The value of mining is based in no small part on how valuable bitcoin are since mining is what preserves that value by preventing attackers from destroying it.
What's worse, the needed amount of electricity to secure an amount of bitcoins is relative to how much energy an attacker can expend, not some constant value which will remain low.
Completely undeserved IMHO. Vastly more energy is wasted by sillier things. For example worldwide Christmas decorative lights consume 2.3 GW annually (assuming it's 3× the US), which is a lot more than Bitcoin (I estimate ~1.7 GW: https://news.ycombinator.com/item?id=15858966) and yet I don't see nearly as many news article criticizing Christmas lights for using so much electricity... Hence why the criticism is undeserved/unfair. If we can afford to power silly feel-good lights, surely we can afford to power a revolutionary decentralized permissionless censorship-resistant financial network.
Don't forget that one of the sources cited—Digiconomist—overestimates consumption by ~2×: http://blog.zorinaq.com/serious-faults-in-beci/
Here's the thing - Bitcoin hung the energy albatross around it's neck long back - First by choosing SHA based PoW, then the one of the early transactions in US being calculated using the energy required to mine those and then most of the sold equipment focusing on hashes per watts consumed.
No other industry other than automotive has tied itself to energy so strongly. So, it is quite disingenuous to not answer this criticism without devolving into whataboutism.
There has been a solution in form of Proof of Stake but that has it's own issue.
I am sure there will be more energy efficient PoW in the future, so let's wait and see if Bitcoin is going to cost the future or not.
That's not whataboutism, that's calling out inconsistent logic by detractors.
My point is that sometimes pointing out people's narrow-minded tunnel vision, in this case applying an inconsistent standard to something they dislike, is mistaken as whataboutism.
Now if I thought Bitcoin's energy usage was a bad thing, this would be whataboutism, but I do not.
Pron and Games didn't do that to themselves. Still I digress.
I can't see that it matters what the hashing scheme is, the work will always expand to use the available energy.
Only if we assume mining, in it's current BTC implementation, is the only acceptable PoW.
I think there are other PoW alternatives that could be used. And they'll be identified and implemented soon, in the next couple years, as people realize we can swap out SHA hashing for an algorithm that does something productive, and use the output of that algorithm to be the proof of work.
The amount of computing power in ASIC miners running today is quite large, and has grown quickly. If we think of those computing resources running something else, and verifying work across nodes, then this is quite possible.
I mean, are you thinking of something like SETI or Folding@home? Those are arguably useful, but there's a ton of scope for playing around with the problem scope and developing new variants that might require far fewer resources but remain useful -- and that's a good thing! But it surely makes them less usable as PoW systems.
We could prioritize computing problems by increasing the reward for working "more important" problems (find asteroids that are going to hit us?).
PoS, an alternative "work" scheme, relies on staking and risk of losing coins to stop bad actors. The person who gets to mine the block is still hashing and creating the block.
Ethereum, as an example, started out with PoW but soon moves to PoS. So, it is trying to avoid a situation like Bitcoin were highpowered hashing (a word coined by Satoshi) and electricity is in focus.
Somebody mentioned the use of SHA as a specific problem, as if a different hash function could be better. My point is just that any work function at all would be just as bad.
PoS sounds worth investigating.
If anything -- it'd even make more sense for BTC companies to use solar since costs are a LOT cheaper.
Edit: To expand on the last claim a little, I was thinking of this: https://dothemath.ucsd.edu/2011/07/galactic-scale-energy/
The graph of Earth's surface temperature assuming 2.3% yearly growth in energy consumption is... illuminating. Basically, in a bit over 400 years, the surface temperature on Earth would reach the boiling point of water, not due to the complex effects of climate change, but simply because the amount of waste heat generated by energy production and usage will exceed the Earth's capacity to dissipate into space. Obviously disastrous temperatures would occur rather sooner. Unfortunately our societies hinge on constant economic growth, which, in turn, seems to hinge on growing energy usage.
Unless we build nuclear fusion reactors, which seems quite likely on the 400 year time scale you're talking about.
But this is not a problem- it's well known that nuclear fusion reactors on Earth would burn much hotter than the temperature at the sun's surface. The average temperature of the Earths surface can exceed the average of the suns surface no problem, as long as much of that is concentrated in small areas- namely, the spaces occupied by the reactors!
It could be used for carbon neutral or negative fuel production, for example, to keep things like planes in the sky and world travel cheap without harming the environment.
Now, we then get that as t --> big transaction costs = cost of energy because spending more energy than you make on Bitcoin loses money. People should be incentivized to reduce their transaction costs by going off-chain, using a POS chain, or other means.
This isn't a problem. It shouldn't be an article.
edit: global energy consumption is 110,000 TWH [1]
0. https://www.eia.gov/electricity/annual/html/epa_01_01.html
*edit yep math's wrong. It's still a shitload of power and worth writing about.
If it gets to 1% -- 1100 TWH -- then sure, it'll definitely be worth discussing.
Edit: gah, embarrassing error. It's late.
-typed in the mid-winter warmth of x3 GTX 980 Tis running NiceHash
Several big Bitcoin miners are setup near or just being powered by hydroelectric dams or other renewable energy sources. And all of them of course target low costs, which a lot of times means that there's an oversupply of power in essence helping in some cases use energy that would go to waste otherwise.
You have to compare the gold or bank industry's to Bitcoin's mining emissions. Gold is constrained by the gold mines positions, uses oil a lot, unless someone does a proper study, all this articles are just sensationalistic articles by clueless journos hunting pageviews and likes.
Sidenote, funny how this is filled under "Currency Manipulation"
Energy is really fungible, one of the most fungible commodities. Hydro can easily substitute for coal, oil, gas and nuclear elsewhere. This makes your defence especially weak.
Almost by definition, cryptocurrency requires spending useless energy. In electronic transactions as they exist today, you essentially only have to update the tables in two institution's databases (plus all the replication and backups that entails). A cryptocurrency requires everybody to record their transaction--and do a bunch of useless cryptography to to ensure that they do so.
Asking how much emissions it costs to mine the gold or grow the cotton to satisfy my paycheck is misleading. Exactly 0 joules were spent: no gold needed to be mined, nor coins minted, nor dollar bills printed to satisfy the electronic transactions to decrement a number at my employer's bank and increment the number at my personal bank appropriately.
I am not sure about Chinese miners being near hydro-electric some may be and some may be not, but over all its complete waste of energy.
When it comes to energy efficiency nothing beats centralized. I do understand the motivation behind decentralized, but you pay the price!
Hopefully Proof of Stake with reduced power consumption becomes a norm, but I am skeptical.
Think of all the banks, branches, employees, servers, dirty investments, the works. I'm pretty sure BTC would pale in comparison.
On a side note, I've heard similar wild claims be made about the electricity used per Google search.
For example, Bitcoin seems to provide independence from the Banking Establishment, which alters what sorts of activities are funded.
Industries such as the Military Industrial Complex, Big Agriculture, & Big Pharma has largely been co-opted by established interests. Public Relations is utilized to convince people to adopt philosophies that are friendly to these industries while not looking out for their own interests.
On the surface, there seems to be a dialectic between decentralized (Bitcoin) & centralized (the Establishment) forms of control.
It's easy to see the possibility for media outlets or NGO's are nothing more than fronts using the "greater good" as an argument to advocate for the interests of their benefactors. Edward Bernays describes this technique in some of his books.
Bitcoin is not "Money 2.0" but is a necessary stepping stone.