Bitcoin’s energy usage is huge – we can't afford to ignore it

You want the proof of work to remain difficult for a PoW scheme. We have pretty good assurances that mindless cryptographic hashing is difficult; ASICs accelerate it considerably, but don't lower the Big O complexity of the problem. On the other hand, people keep searching for algorithmically faster ways to simulate protein folding, not just ways to hardware-accelerate existing algorithms. If one group of folders were to discover superior algorithms for searching the potential energy surface, that would be beneficial to science but potentially disastrous for a currency based on protein folding problems. For that matter, the overall incentives might make science worse off if ProteinCoin encouraged superior algorithms to be kept secret, for PoW advantage, instead of publishing advances in the open scientific literature.

One can only assume the energy cost is negligible per transaction compared to bitcoin though, simply because if you scale up the transaction volume of bitcoin to what a real economy would need it's more than we produce.

all of these surely have a substantial eco footprint - money production, for both paper and coin - armored cars picking up cash and bringing to the bank - physical locations, banks, check cashing places

The cost per transaction would be interesting in real terms.

What's the comparison between:

- Manufacturing physical currency / Manufacturing the hardware to mine coins - Cost to run POS systems in retail outlets / Cost to run bitcoin network - Cost to run global fiat exchanges (i.e. wallstreet) / Cost to run global bitcoin network

Obviously you could drill down as far as you wanted. I'd imagine it would be quite difficult to draw up such a detailed comparison though.

Financial transactions are more than just exchanging pieces of paper in person.

https://www.coindesk.com/microscope-real-costs-dollar/

Looks like data was taken from places like: https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ba...

and rest of the numbers were taking into account of how much each note costs to make.

"The Euro publishes sustainability statistics on their currency, and according to latest estimates, 3 billion banknotes printed in 2003 had an equivalent energy impact of 460,000 60W bulbs switched on for a year, which equates to 240 million kWh, or 0.87 million GJ. With circulation now at 15.8 billion notes, this would scale up to 4.6 million GJ (European Central Bank, 2007). To get to a global figure, for the purposes of this report, I will be multiplying this figure by a factor of four (i.e. a proportional share of global M0/M1 money supply). Therefore, we reach a figure of 18.4 million GJ, which would correspond to almost 3.07 million tonnes of CO2 equivalent."

This is just making a bank note, nothing about cost to distribute (guarding money, banking system, credit system).

> Of course, VISA runs call centers, offices, and a whole lot else on electricity as well, which isn't counted in this comparison. But those hardly matter due to the extreme difference between the two figures.

--- I think this absolutely needs to be counted, because it is an operating cost of the entity. With bitcoin, there are no call centers because by design, the transactions are irreversable.

When pitted against the total cost of financial institutions, which all independently hold massive amounts of customer data, which should be considered a liability due to the recent issues with consumer data here in the West. This further increases the operating costs of each institution because they are running servers to house account data.

Imagine a global, catastrophic EMI event. Even a temporary one would cause introduce to these systems (like visa), a higher likelihood of race conditions where accounts will not reconcile, causing a higher cost to converge.

Bitcoin does not necessarily have this problem.

If we are truly worried about the future costs of running financial systems, maybe we should also add liabilities into the mix.

Why not create one big bank that can issue its own tokens that any bank will accept? We can call it a "central bank" or something. And then maybe after many years we can decouple the value of these central tokens from the value of bitcoin, instead allowing the central bank to control the total supply of tokens based on some kind of "monetary policy" to keep prices stable.

Sounds good. The future of crytocurrency is bright indeed!

Money supply would then be equal to how many miners there are without adding a difficulty, and the amount of bitcoins would go through the roof. Difficulty was clearly added as a solution after this to keep the money supply stable.

Note I didn't say it's necessary to waste electricity to have a stable money supply, only that the reason Bitcoin does is because it keeps it's money supply stable.

That, however, does not change the fundamental issue - the severe underpricing of emissions-heavy power generation. The externalities that the author is so worried about (in the form of climate change) are not priced into the going rate for electricity. Blaming bitcoin miners is silly - if I pay for my power, I should be able to use it however I see fit. The alternative leads to absurdity, such as a law that states your aircon may be set no lower than 22C in summer, as anything more would be "a waste". I pay for it, I use it, bugger off.

The external social cost of electricity generation needs to be internalised into the private end-cost - a carbon tax or an ETS. Pick one, follow through, and stop blaming rational agents for acting rationally.

EDIT: Spelling