Bitcoin Miners on Track to Use More Electricity Than All of Argentina
fortune.com
fortune.com
Just an example: The poorest 5 percent of households use 247 gallons of gas per year, on average. The richest 22 percent, with incomes over ten times higher, each use about four times as much.
The basic issue is as wealth increases people spend more on services which have lower energy needs than say food. A cheeseburger takes not just energy to cook much energy to manufacture. An account on the other hand uses much less energy per dollar spent.
If you see it as an alternative to paying nothing (we wipe the slate clean and then consider each system by comparing it to that) the rich will still pay by far the most.
If you are concerned with a minimum form of income, you can always give a certain amount of credits to each person at no cost to them.
* "Quebec's hydro surplus to lure companies into data hub initiative"
https://www.theglobeandmail.com/report-on-business/industry-...
* "Chinese bitcoin miners eye sites in energy-rich Canada"
https://ca.reuters.com/article/businessNews/idCAKBN1F10BU-OC...
Bitcoin cannot, on a very fundamental level: energy expenditure for mining must at all times be so high that an attack is financially unattractive. So energy usage has to increase linearly with the market cap - and completely independant of how many transactions there are.
Physical fiat currency might be a different story, but bitcoin doesn’t address the problem of physical money so it’s not really relevant.
https://hackernoon.com/dummies-guide-to-bitcoin-energy-use-5...
Do you have any good easy to understand descriptions of proof of stake you could recommend to a layman like me?
With PoS, the more coins you tie up, the more chance you have of 'winning'.
That's my understanding anyway - someone more knowledgeable, please feel free to correct me!
Proof of Stake says that instead of distributing the work queue proportionally to the computing power you demonstrated to have, it does it proportionally to the amount of currency you have saved. It similarly prevents the attack where one could create infinite personalities to get in line, with different trade offs. In particular, beside the energy savings, it can be a much more scalable model, where you don't have to wait 10min in average for someone to solve the hard problem and instead you can know right away who are the next people eligible to generate the next blocks.
Doesn't this have an inherent disincentive to new people joining and using the network? Sorta like the poor stay poor, the rich get rich?
Not everyone would want to do that, so there's usually a mechanism to indicate you want to be eligible to do so, depositing your coins or similar.
That's for block rewards - nothing prevents a blockchain currency to be designed to generate inflation and add interest on everyone's investment - some do exactly that.
The inflation rate and actual utility of the currency are important factors too - if most of the currency is already distributed and the inflation is low (thus block rewards are low), the richer don't get much richer. If the utility is high, redistribution occurs more naturally as well.
Perhaps the inflation is not low but there are other distribution mechanisms that distribute currency based on utility in a higher rate than block rewards (for example on steem, of all newly minted coins in a block ~5% goes to the block creator, ~65% goes to content creators, ~6% to commenters, ~17% to curators and 7% as interest to those that have commited their stake in a long term deposit).
But yeah, in the end it indeed is a factor which is one of trade offs I mentioned, but there are ways to combat it.
Other non-mined coins would never have taken off because they would never have gathered the critical confidence/interest that Bitcoin did. Only after PoW paved the way could others have any faith in DPoS or other coins.
I think this makes sense. Wouldn't it be beneficial if economic activity scaled with energy availability? It also creates a direct incentive to develop and utilize the most efficient energy sources possible, without regard for the politics between various stakeholders (hydro vs oil vs coal vs wind vs solar, etc).
This isn't how fees work. Fees are based purely on supply and demand. The payer sets their fee level when they create the transaction, and it's up to the miners which transactions they will include. Since there is always an excess of transactions, the miners typically select transactions to maximise their payoff.
If miners were to "lower their fees", they'd be accepting low-fee transactions and excluding high-fee transactions, which makes no sense for anybody. The miners would be getting less money than they could, and the people paying high fees don't even get any better service for it.
There is never any financial reason to mine blocks that have empty space if there are fee-paying transactions available to put in that space.
If costs go up (eg energy becomes scarce) the minimum fee also need to rise. Each "unit" of economic activity using the currency will be more expensive when energy is scarce than when it is abundant. This is a natural feedback loop.
If costs go up, mining activity drops. Miners can not increase transaction fees. All they can do is accept the fee they're offered or not.
If they're mining blocks at all, they want to accept the maximum fee that is offered. If they say "you guys aren't paying enough, I'm going to stop mining", then other miners will just get the fees that people are offering instead, and when the difficulty adjusts downwards, the miners that stopped mining might start mining again.
It is just like I will not pay $2000 for a cheeseburger. I am not going to advertise that, I simply will not buy it. There is some maximum price that I set for myself.
However, the role of difficulty adjustments is a better point. As energy costs rise there could be two (non mutually exclusive) effects:
1) Fewer transactions are made with higher fees
2) Mining slows down, leading to a difficulty decrease, leading to less secure transactions
Less secure transactions means waiting for more confirmations to get the same level of confidence there will be no double spend. Is this not another, less extreme, way to slow economic activity in the face of increasing energy costs?
Supply and demand drives prices, but it does so through individual actors setting prices they are willing to pay/accept (or by algorithms that have been setup by some human who set up the rules by which it will set prices).
They're not "lowering their fee". That's not how it works. They might stop mining altogether, but it can never cost more to include a transaction than not to include it, unless including it pushes out another transaction that pays a higher fee.
So a miner will never reduce the cost to include a transaction into their block, even when they aren't getting enough to fill up the block?
>They might stop mining altogether
Maybe, but any market can experience short term irrationality. Maybe it takes them a few hours to stop mining in which they lose money. Or maybe stopping operations costs enough money that the miner won't stop even at a small loss, at least for some amount of time.
Sure, if you want to twist the wording like that, they "lower the fee" to the point where they can fill the blocks. But they're not really "lowering their fees". They don't even have a concept of the fee level they're "charging". They can either accept the fees that are available or not.
If they are mining at all then they want to accept the best fees that are available. There is literally no rationale for them to be mining non-full blocks when fee-paying transactions are available to put in the blocks. It's not like it costs more to mine a larger block. The cost to mine a block is fixed, so you may as well get as much fees as you can find.
Couldn't the same be said of a brick and mortar store? They either accept the offers they are given or they don't. That for some item they only accept offers of exactly 9.99 (plus tax), rejecting not only lower offers but higher offers, doesn't change that the interaction can be described in the same fashion.
All the rest also applies to normal supply and demand. When you do a production run of some item, the cost tends to be fixed per item. Doing another run at a different time may cost different, and it is possible for something extreme to happen (factory accident), but in general the cost of production of a single run is the same.
I see nothing about this that would void basic economic reasoning, where things like 'reducing fees' happens in certain conditions.
When there's an increase in blocks, Bitcoin increases the amount of mining required for a block, to prevent an increase in the supply of blocks.
Say the cost to mine falls by x (cheaper energy or some others amount), and x < f(t). x - f(t) < 0. The decrease in cost is less than 0, meaning the cost effectively increased since it didn't decrease by the amount needed due to the built in difficulty increase.
Normal economics works this same way due to scarcity, though the default change in cost into the future is far less sure of a thing. Take mining gold. Given that gold is mined from the cheapest to mine spots first, the more gold you mined, the more the cost of mining the same amount of gold. Maybe a new mine filled with easier to mine gold is found, maybe a current mine runs out of gold much sooner than expected, but it works in a similar manner.
if crypto is here to stay, wont more efficient mining hardware, potentially more efficient software, and things like recent advances in solar relax these fears in reality?
Journalists aren’t supposed to have a stake in the subject they cover. That’s the point. Not having a stake in cryptocurrency is “disinterested,” not “self-interested.”
and even if the article is written out of self-interest, does that somehow make its conclusions incorrect?
Just by the simple mechanism of people seeing an opportunity to profit and buying hardware and turning it on.
Consider: Modifying a transaction block from, say, 3 days ago, is practically impossible, because it would require burning the same amount of energy the entire network has burned over the past 3 days in an instant, before the network invests even more energy adding more transaction blocks. Forget about trying to modify or revert transactions from more than a few days ago.[a]
The energy invested in Bitcoin is securing the transaction history.
There is value in that, no?
[a] Edit: I mean modifying a transaction right now, without forking the blockchain. Please see maxerickson's comments and my responses below.
You also don't have to do it all at once, you just have to be faster than the network (If the private blocks are calculated 10% faster it only takes ~10 days to go back in time 1 day). But of course this attack isn't practical, actually executing it would demonstrate that the public network was a farce.
Of course, but I don't know how anyone could be a lot more efficient that current miners, who are in a rat race to increase the efficiency of their mining operations. They probably think about energy consumption every waking hour of the day.
> You also don't have to do it all at once, you just have to be faster than the network (If the private blocks are calculated 10% faster it only takes ~10 days to go back in time 1 day)...
Of course, but by then the Bitcoin network would have invested ~10 more days of energy into the network, and now instead of being one day behind, one would be ~10 days behind. One would have a different, forked blockchain far behind the original one, with no hope of catching up.
If one wants to modify a transaction from a day ago over time, one must burn at least one day's worth of Bitcoin network energy consumption much faster than the network, in order to keep up with the network. If one wants to modify a transaction from a day ago right now, one must burn at least one day's worth of Bitcoin network energy consumption in an instant.
PS. Note that I mean without forking. SORRY if that wasn't clear in my earlier comments!
This is why the demonstration would fracture Bitcoin; it would reveal the hidden mining power and second there would be a bunch of discussion of ignoring the higher cost chain and sticking with social consensus.
(that's why it is a "chain", the head depends on all previous values)
Yes, of course. In fact, at any point in time there are always multiple blockchains, one for every miner burning energy to add a new block.
However, only the longest blockchain (with the greatest proof-of-work) is valid. As soon as there's a longer valid blockchain, the miners discard their individual work-in-progress blockchains and switch to the one with the most proof-of-work.
That longest blockchain is the Bitcoin blockchain. That is the blockchain one would have to modify to alter the transaction history in the Bitcoin network without forking.
FWIW, I don't think we disagree; I feel like we've been talking about slightly different things until just now.
It naturally flows from there that as long as you can calculate blocks faster than the network, you can rewrite past transactions, with the speed difference restricting how far back you can rewrite.
There's no need to do it in an instant and doing it in an instant isn't any different than doing it more slowly (other than the amount of hidden hash power revealed).