Comment by nosuchthing | Hacker News Reader

Comment by nosuchthing | Hacker News Reader

Don't forget the total costs of running Bitcoin software:

Bitcoin's current estimated annual electricity consumption* (TWh) 63.23

Bitcoin's current minimum annual electricity consumption (TWh) 38.25

Annualized global mining revenues $6,705,703,327

Annualized estimated global mining costs $3,161,647,973

Current cost percentage 47.15%

Country closest to Bitcoin in terms of electricity consumption Switzerland

Estimated electricity used over the previous day (KWh) 173,240,985

Implied Watts per GH/s 0.125

Total Network Hashrate in PH/s (1,000,000 GH/s) 57,577

Electricity consumed per transaction (KWh) 465

Number of U.S. households that could be powered by Bitcoin 5,854,904

Number of U.S. households powered for 1 day by the electricity consumed for a single transaction 15.7

Bitcoin's electricity consumption as a percentage of the world's electricity consumption 0.28%

Annual carbon footprint (kt of CO2) 30,036

Carbon footprint per transaction (kg of CO2) 220.7

Source: https://digiconomist.net/bitcoin-energy-consumption

I see these stats all the time. What's the carbon footprint for a similar sized bank or stock exchange? How many people are employed? How much carbon do they emit traveling to work? How much money does it cost to employ all those people?

It might be worth comparing a transaction cost of 220.7 kg of CO2 to the average American's carbon footprint per year -- which is 16400 kg CO2. That's basically what the average American emits in 5 days. That DOES seem like a lot. I really doubt transferring similar amounts of money is anywhere near that. But I don't know.

If you want to get into travel and carbon emissions, it would be disingenuous to not include crypto's. I can't imagine a single bank's carbon emissions get close to the commute of even one crypto conference.

I'd further venture that the coordination cost of crypto (conferences and travel between individuals) far exceeds that of a single bank, and might rival that of the entire financial industry. This is probably a benefit of extreme centralization.

Bitcoin doesn't offer the protection and services provided by banks and stock exchanges, let alone the transaction volume.

Employment is a good point, as financial companies employ millions of people but then you would need to add in the additional metrics from companies and OPEX/electrical/hardware related to blockchain startups.

All of that is mostly irrelevant though, because the principle design of "Proof of Work" software is to maximize the inefficiency and operational waste of transactions as the network gains users and as time goes on, without any increase in network capacity. The other curious design choice is to decrease the economic output (production) as more work enters the network, which seems quite malicious, but few people have bothered to read and comprehend the design choices in "Satoshi's white paper".

If you're going to include employees, you need to do the same for bitcoin also, someone has to shepherd the miners.

I have no idea how many people might be 'employed' in the bitcoin 'industry' though.

Even without the exact figures it should be obvious that the inefficiency in Bitcoin is astounding. Consider e.g. that the Bitcoin network performs about 400K transactions per day while the Visa network performs about 150MM transactions per day. That works out to 375x. Coincidentally Switzerland consumes about 1/375 of the world's electricity. If the Visa network used the same amount of electricity per transaction as Bitcoin it would require all of the electricity used by the entire world.

Does the amount of electricity used by the Bitcoin network scale with the quantity of transactions?

Bitcoin can't easily increase the quantity of transactions, so it's hard to answer that directly. Bitcoin transaction rates are currently limited by the time to mine a block and the number of transactions per block. Technical and political barriers exist to changing either of those numbers. See https://en.wikipedia.org/wiki/Bitcoin_scalability_problem for more details.

some corrections - http://blog.zorinaq.com/serious-faults-in-beci/

Do mods not enforce copypasta rules anymore?

my response is admittedly whataboutism, but it's worth comparing to say, the dollar. The cheeky answer to "what backs the dollar?" is "guns, missiles, and aircraft carriers" but in reality it's "growth". The cost of the extant financial system isn't, say, the sum of bank branch construction & bank employees' gas commuting to work, etc -- it's the sum of all economic activity driving growth, which as of now is still inextricable from dirty resource extraction, conversion, and movement.

Which isn't to say it's OK to throw bitcoin mining on top of that, or that bitcoin can fix it. Just that we're on an unsustainable trajectory with or without it, barring an energy revolution or a very painful collapse -- at which point I suppose we can just plug the miners into the local fusion plant (or trade in ammunition and the chit of the local warlord).

what backs bitcoin though?

Worldwide trust.

Trust in what? Every currency is backed by worldwide trust in what the currency is backed from.

Trust in bitcoin.

Theres nothing to back it, if we go all Mad Max you'd have a hard drive with some 1s and 0s.

I suppose if we went Mad Max there wouldn't be anything backing the other currencies either. You might be able to pay the barter town entry fees with hard currency, it being a convenient token and all.

Trust that it's accurate and immutable. Which is backed in turn by economic incentives for miners (more accurately -- economic disincentives to trying to cheat). The former is denominated in bitcoin, and so represents the paradox of bootstrapping this system, but here we are (and this is why early adopters are rich now -- it was a seemingly insane risk to bet that those (positive) incentives would be effective)

The spot price on unregulated exchanges which are presumably operating fractional reserves, wash trading, front running, and spoofing the order book.

And don't forget 3 billion Tethers, likely being used to manipulate margin trades. (see "the bart" pattern, which is likely an indication of either Bitmex or Bitfinex wiping out margin traders with temporary price manipulation)

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066

https://amycastor.com/2019/01/17/the-curious-case-of-tether-...

https://omniexplorer.info/address/1NTMakcgVwQpMdGxRQnFKyb3G1...

I imagine people outside the United States have lots of reasons to avoid the United States government currency (or their own corrupt countries).

Given the atrocities governments commit, I don't see anything morally wrong with using a currency run on Electricity.

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