Bitcoin Energy Consumption Index
digiconomist.net
digiconomist.net
What gets neglected is that the Bitcoin algorithm is inherently wasteful. By its very design, it results in an insane amount of duplicated, pointless computation.
The question isn't whether something like Bitcoin can provide any value. The question is whether we have better options. And the answer is: we do, by far. From proof-of-stake (like Ethereum is moving towards) or trust-based models (like Stellar), technologies exist that grant almost all the benefits of Bitcoin at tiny fraction of the environmental (and monetary!) cost.
I give Bitcoin credit for being an interesting "first answer" to an extremely hard problem. But it is in no way something that we should be doubling down on.
I mean, unless it's a dedicated power generating station, you're still using renewable power which is not used by someone else and overall we're supplementing that with coal and others.
[1] www.electricitymap.org
Thousands of years from now, when humanity builds its first Dyson sphere, I would like to believe the collected energy will be used for purposes like making everyone's life long and prosperous, or propelling great starships across the void - and not just to secure the Bitcoin network.
What you're describing is basically Libra with slightly better entities backing it. Transactions can be reversed by those "trusted entities" with no recourse by you and at no cost to them. At least with PoW and PoS (to an extent), attempting to reverse transactions has a cost.
Speaking of PoS, were the issues with PoS ever solved? Specifically the "nothing at stake" problem. The Wikipedia page[1]'s list of implementations makes it sound like it's not at parity with PoW in terms of security.
The good thing is that you don't have too! You are not forced. If I send money to a friend or familiy, I don't need a third party.
A third party could be either a bigger financial company or just a trusted third party in a specific domain both people trust (and make a 2 out of 3 multi-sig with it, and if I get delivered what I want and the other side receives the payment, the payment processor has nothing to do, but could in case there is a dispute)
I agree with some of the sentiment of the article, bitcoin's energy consumption is something to keep an eye on and if we can seamlessly move to an algorithm that's greener then so be it but you have to realize the tremendous amount of good that bitcoin is doing for the world and will likely continue to do as it becomes scarcer and scarcer, don't knock a technology that can single handedly lift a continent like Africa out of poverty.
*edit: Nothing like defending bitcoin on Hacker News and getting downvoted to oblivion, hey rather than downvote why don't you point out exactly what you disagree with so we can have a discussion
Countries that don't have reliable forms of currency also don't have reliable power or internet access.
I agree the infrastructure isn't there yet but problems with national currency is a government issue, infrastructure issues can usually be solved but governmental issues tend to be a lot harder and all countries that rely on fiat currency are subject to inflation
You can tell that Bitcoin, and its advocates, are from developed countries. No one who has lived in a developing country and seen crushing poverty would make such arguments.
The bitcoin guy is not going to accept 1 Zimbabwe dollar to 1 USD any more than your black market dealer who has USD. The real currency conversion rate is the problem, not the act of obtaining actual hard currency.
yes, there are a lot of fungible ways to transfer hard currency over the internet... once you acquire it.
again: acquiring it is the hard part, because nobody wants to trade a zimbabwe dollar for a USD.
Bitcoin does nothing to help your zimbabwe dollars be less worthless than they are in USD, therefore they don't help the currency conversion process at all.
Yes, the causality of "create too much money -> inflation" is plausible (but note the emphasis on "too much").
However, we live in a world of endogenous money, where money is largely created by commercial banks in the form of loans to private entities. When prices increase, those loans get bigger. So there is also the causality "inflation -> create more money".
At the same time, there are other factors that can drive inflation, such as workers and companies exercising price setting power (which Econ 101 likes to pretend doesn't exist, but plays an important role in the real world).
So yeah, the causality that you're casually throwing out there hasn't actually been proven as the driving factor here.
At the same time, the widespread belief in it and similar misunderstandings causes us as a society to make extremely damaging macroeconomic policy decisions, in particular the decision to attempt to fight recessions using monetary policy instead of fiscal policy.
We had 4 years with 4x the reward, 4 years with 2x the reward, and about 3 years with the current reward, which makes for 1/(4x4+4x2+3) = 1/27 inflation.
The Bank of Canada found that a Bitcoin based economy would have the same amount of drag as a 48% rate of inflation [1].
A 2% rate of inflation is trivial in the near term, and in the long term encourages productive allocation of capital. Inflation literally only matters to people sitting on cash -- and that's the point! If you invest it in anything inflation stops mattering and the constant-dollar return starts to matter.
[1] https://www.bankofcanada.ca/wp-content/uploads/2019/09/swp20...
"If you have cash, you should gamble it by investing it in stocks or business."
but that's risking the money I earned. I don't want to risk it, I earned it, I just want to save it and not have it evaporate over the years.
We at least know the names of big corporations. Otherwise "we're forced to play the BitCoin game which just consolidates power to big anonymous holders and leaves a lot of people all over the world left behind".
85% of the BitCoins have already been mined. It's beyond the reach of people to participate in mining. What's left is pure speculation, based on the available supply. There's also a "culture" of HODL which means the actual exchange rate is determined by very few (big) sellers.
Wouldn't it be better if your money (that was BitCoin <sic>) increased 2% a year instead of decreased 2% a year?
After all these years of growth, Bitcoin's market cap becomes its own unique edge. One simply cannot transfer significant amount, say tens of millions of dollars, easily in any other crypto currency.
The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
On the contrary: the purpose of private banks is almost exclusively for billionaires to move their wealth around, while externalising costs to all of us. Many financial market interventions in the past are the society bailing out billionaires who bet irresponsibly and cannot bear reducing themselves to millionaires.
Compared to a free domestic ACH or wire?
Internationally you have to pay exchanges on the receiving end >1% fees to convert it to something you can actually spend.
I'd guess you'll lose far more than doing the same with gold, because the market slippage due to lack of liquidity far exceeds the cost of those vaults, banks, and guards.
A trade of $10M, or 1250 bitcoins, would move the market by 6%
Is it though? Gold in vaults easily outstrips the value assigned to all bitcoins and I doubt these vaults use even 1 Twh/year. Vaults are only environmentally expensive in construction. And since we have a surplus of vaults and bunkers (from digitization of stock trading and the end of the cold war, respectively), the only cost is protection. A few guards and some cameras and high security doors can protect >$10mio worth of gold, probably not using more energy than a few households. Managing a farm of ASICs for Bitcoin generating that amount is probably more labor intensive.
That's only because Bitcoin is still relatively insignificant blip in the world of trade, mostly a pastime for gamblers and scammers. It's footprint is actually absurdly huge compared to value it provides.
The real problem is scaling. Vaults, guards, banks, lawyers scale somewhere around O(n) to O(n logn) with the size of the market. Bitcoin's proof of work - the means of securing it - scales, to the best of my understanding, as O(n!) with the number of miners. That's not something you can run a global economy on.
there really aren't any significant (legal) north american/european transactions that occur in BTC
Many server, VPS and web hosting services accept Bitcoin.
You can buy giftcards for many sellers with Bitcoin.
And there are Bitcoin-funded debit cards.
I might order a raspberry pi from The Pi Hut and a hammock with 50% off for paying with BTC at another site.
I thought the world would switch to proof-of-stake coins and gradually make bitcoins harder to use.
if proof of stake were implemented with the same security guarantees as proof of work, the bitcoin utxo set would be migrated over to it.
But that's just me.
Note the very, very different scale of those charts.
[1] https://goldprice.org/de/gold-price-history.html [2] https://en.bitcoinwiki.org/wiki/Bitcoin_history
edit: clarification
I dunno why anyone still has faith in eth as a concept, it's a garbage programming model, it's a garbage developer, who has failed for an inordinate period of time as measured by the crypto community. he's just trying to pump up his holdings.
(many of these deficiencies would have resulted in monetary losses for the developer himself, had he not used his central authority to roll back the blockchain. Literally anti-"crypto as a philosophy". So much for "code is law" and all that.)
https://news.ycombinator.com/item?id=14691212
He's 2 years beyond his 2 year worst case scenario and he has zero progress. And in the crypto community 4 years is a ridiculous period of time to be behind schedule. It's time to state the obvious: he fixed the broken script model that Bitcoin refused to fix, but he is incapable of adding anything significantly novel.
4 years of failed promises? With at least one rollback from a central authority? time to look elsewhere.
Otherwise, the obvious question: where is the Proof of Stake that he promised literally 4 years ago? How many more years out is it right now?
(nor is the "never increase past X amount of currency" even a good model. real currencies need to match issuance the amount of demand for currency... potentially even negative at times. And someone needs to do that. Otherwise, the currency will be subject to a wild amount of inflation/deflation... just like all previous hard currencies.)
Gosh, we could call that a "central bank". And electing an unresponsive 17-year-old as central banker is just about as dumb as it gets.
He is already making central banking decisions... just ones that the majority of the community (ridiculously) agrees with (throttling the amount of currency issued) because the community is centered around deflationary gold-bugs rather than actual maximalists.
https://coinjazeera.news/vlad-zamfir-looking-for-new-drugs-t...
With proof of stake if you get out of the bunker and are presented with multiple competing chains - you can’t decide which one is genuine and which is a malicious fork. With proof of work it’s trivial and that’s where value comes from.
maybe you're fine with that, i'm not and everybody who values bitcoin aren't either. it's the kind of thing that PoW solves and PoS doesn't. every PoS system i've seen just obfuscates this glaring hole instead of admitting that there's no way around it - you can't know which chain is genuine without trusting third party. in Bitcoin you can, or at least it is trivial to detect when something malicious is happening. and i'm not talking about correctness here, correctness is trivial, you don't even need to bring it up.
It's not like your node would copy their validation and just agree with what they agree. Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx. But it should make you overthink whether that node is trustable.
Trusting nodes is a "reliability rating thing" it doesn't really affect the consensus decisions because Tx are either valid or aren't. The consensus that must be found is only about the order of Tx. If the majority of the validators say Tx X was first and therefore Tx Y is invalid (attempt to double spend) but your node got Tx Y first then its totally fine to flip the order of these two since both are valid just not at the same time.
"Voting" which nodes you trust means you trust them to be reliable/fast and not controlled by a single entity or controllable by a single entity (gov.) So with a clever trust list you help decentralize the network and help that the network runs on the most reliable nodes. You don't change the rules or allow other to change the rules. You can even make mistakes. You can choose some nodes that turn out to be not reliable/fast or even actively malicious. It has no fatal effect and can be corrected as soon as it is detected. Only if everyone would select over 20% "bad" nodes it could halt the consensus. Still would not allow a single false Tx or a single Tx reverse. It would just stop until some nodes remove the bad actors form their trust list.
As your quotes says "...run by different parties who are expected to behave honestly most of the time." The "trust" you give them is very very very limited.
because i don't want to trust anyone. XRP is not trustless or decentralized enough.
> Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx.
as i said - validity is trivial. i asked you to not bring it up but you did anyway.
> majority of the validators say Tx X was first
"majority of validators" is not something you can reliably even define for yourself because you don't know which parties have colluded with each other. this consensus model fails on every layer.
> Only if everyone would select over 20% "bad" nodes it could halt the consensus.
i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
i want universally objective measure by which i can compare competing chains. if your protocol doesn't provide it without having to trust third parties - it's a failure.
And yet you trust the Internet to get packets to HN. You trust the government to administer the roads, the schools, the army, the police, the firefighters, and so on for days. The FDA to verify your drugs, Agriculture to verify your food.
You trust so many people every single day to make it through from breakfast to dinner, and yet this is where you draw the line for some reason you can't really quantify.
Yes, that’s where I draw the line today. Governments used to challenge our right to free speech and even right to live free - we don’t accept that anymore. In my opinion it’s time to untangle governments and money. You’re free to disagree of course and you’re free to entrust all sorts of strangers to make all sorts of decisions in your life, just don’t expect others to do the same.
You already do though. You're just entrusting a different set of un-elected un-accountable strangers with no economics degrees with your monetary policy -- the Bitcoin Core team. And the PRC where over 50% of the hash power is located. They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part. Your government is accountable to you, the core team, to themselves.
If you tell me they wont then you're trusting them not to unless you can point to a math equation preventing them, I guess.
You're describing a libertarian pipedream that can't exist.
no i don't. they just happen to maintain the reference implementation.
> And the PRC where over 50% of the hash power is located
no trust involved here either.
> They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part.
no they can't and the fact that you think this means you have zero understanding of how bitcoin works.
> If you tell me they wont
i'm telling you they can't. bitcoin is defined by consensus rules and releasing a binary that breaks those rules or mining blocks that break those rules doesn't change bitcoin.
You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded. If Tx X was actually first but Tx Y reaches majority this simply means that either Tx X was not relayed fast enough to all the nodes OR it could mean that a lot colluded nodes voted for Tx Y.
Either way the consensus can "fail" because of technical reasons (slow relaying) or "fail" trough colluded nodes both "fails" do not lead to changed rules. No invalid Tx can happen this way. No Tx can be reversed this way. The whole situation can only ever happen if 2 Tx are valid signed but try to send the same funds (double spend attempt) and are inserted into the network nearly at the same time. Only one Tx will be processed. Enough colluded validators could effect which one but its completely irrelevant. Who cares which Tx of a double spend attempt is processed?
If you try to pay 2 persons with 100 bucks each by placing just one 100 dollar bill on the table in front of them, you don't know which one is gonna pick it up but clearly you have not fooled anyone into thinking you payed both.
>i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
You completely misunderstood, you don't have to choose "correct" validators to make it work correctly it can only work correctly! Bad validators don't "hurt" they just don't contribute.
Assuming 50% of all validators are bad and suddenly start censoring Txs or reordering non final Txs that would have the same effect as if these validators would just shut down. It does NOT produce a wrong output. Worst case is that the network halts and that is wanted because if 50% go offline at the same time there is probably something seriously wrong like a global internet collapse. Something humans have to fix first before resuming.
>i want universally objective measure by which i can compare competing chains.
By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point? Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
51% attack exists for all cryptocurrencies. don't try to substitute "colluding 51% of selected validators" with "colluding 51% of global hashrate", you're being disingenious.
i don't have any trust in miners, all they do is send me block signatures and if the signature satisfies proof of work requirements i can be reasonably certain one would have to burn some amount of energy to override that.
you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
> You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded.
80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
> By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point?
universally objective measure is proof of work. you can't fake it without burning similar amount of energy.
> Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
Well I call that trust. You trust miners/mining pool operators to act by the rules. And even if they do you still could be on the wrong chain because of network problems etc. If you only see one chain you don't even know if there is another chain. Hence the waiting for several block for confirmation.
>you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
Consensus isn't PoS there are no chains You don't have to trust any third party you can run your own node and validate the Tx in real time and confirm everything yourself. If the network and your node node would "fork" you would instantly know something is wrong (most likely something with your node).
>80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
Well how about you read the documentation? Why arguing with me if literally all you arguments just show that you have never read how consensus works but you still wanna tell me why it does not work.
BTW Validators use public-key cryptography to communicate with each other and they know exactly which validators is online. That of course doesn't help at all against colluded validators. But then again like mentioned many times now, colluded validators can not trick any node into doing something wrong. No matter how many. Literally all validators could not trick your own node into accepting a Tx that isn't valid or to revers anything. It's like if suddenly all calculators except yours would calculate some things wrong. As long as you use your own to verify results you can't be tricked.
>who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
The answer to all these question is literally the consensus algorithm. Please just go an read how it finds consensus. I can only give some short answers but to fully understand you must read the documentation.
>who decides what's final? In short very simplified: Everyone who wants tells everyone who wants to hear, which valid Tx they would include in the next ledger. Everyone listens to who they want to listen to and skip the Tx that aren't suggested by at least 80% Everyone now has a bunch of Tx that they validated and they know most others agree on. That's it. That's final. Skipped Tx will be proposed for the next ledger.
Since everyone can say whatever they want but also everyone can just ignore what you say, colluded validators can tell sh*t all day long. You could even spin up 1000 Validators (way more thane 80%) and let them all propose wrong Tx. No one would care because no one has a reasons to include invalid Txs ever. An attacker would need to collude existing validators that others already listen to. But as soon as they propose Tx that are not valid everyone would stop listen to them. So you would need to collude over 80% of the existing validators then you could propose a wrong Tx AND reach 80% agreement. Problem is all other not-colluded validators would simply stop and all nodes that validate Txs them-self like the node of an exchange or a node run by a bank etc. they would all stop as well because even majority can not overwrite their code.
You end up with a network of colluded validator that make forward progress but no one listens to them anymore. All the honest player have detected that something is wrong and halted after the last correct ledger. Technically there is now a fork. One chain is halted and one is obviously wrong. Not exactly hard to pick the right one in this case.
>how much does it cost to bribe them?
Who knows? But how much is halting the network worth? It sure could cause damage (trades stop etc.) But it will not case wrong behavior so you can't exactly make money with this like with double spending. You could short and hope the price would drop because of the halt. On the other hand surviving such a large scale attack could also push the price way up. The XRPL never halted but the XLM ledger did (not because of an attack) a few month back for like 2h. It has no visible effect on the price.
>how do they know they have quorum to make such decision?
They don't. Consensus is reached not decided see above and documentation. They only decide if a Tx is valid and they use math to do so.
>what if there's a network partition and two quorums have finalized two chains?
That can not happen because nether partition could reach 80% agreement. The network halts in such situation for as long as needed rather than splitting.
>that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
It's still not PoS why are PoW supported always coming up with flaws in PoS lol I already know PoS is flawed but so Is PoW.
this is the key thing you don't understand, i don't even need to respond to the rest of your message because of it.
with PoW even if i see only one chain i can absolutely objectively detect if something cheesy is going on by observing the difficulty of that chain. no network connectivity required. no comparison with other potential chains required. until you understand how is that different from PoS there's no point in discussing benefits and tradeoffs between these systems.
Detecting if something is cheesy in the chain is not enough. The chain you see can be totally fine nothing cheesy you could "objectively detect" yet the chain you don't see is longer and everyone will switch there. Your "objectively detected" nothing is totally pointless in this case.
Or what about Tx censorship. A valid Tx with reasonable fee isn't included because miners/mining pools colluded to not process that Tx. You objectively detected nothing because everything on the chain is completely correct. You can't detect what isn't there.
You still come around with PoS lol dude I never in the whole thread compared PoW to PoS. PoS is totally irrelevant. If it would not exist PoW would still have the same flaws.
No. No it can’t. No it can’t without somebody spinning up 100%+ more hashrate. And in PoS it totally can because there is no objective truth measure attached to it.
And again, 51% attacks are not solvable in principle and all your criticisms are basically “but what if your chain gets 51% attacked?”. Well duh, 51% attacked system gets destroyed, no matter if it’s PoS or PoW, the issue is that PoS gets destroyed in many more scenarios, not just the equivalent of apocalypse.
And you did bring up PoS multiple times. If you didn’t - we would t be having this conversation at all.
Ok bad example because the soviets weren't known for their environmentalism, but you get my point. Once a problem becomes big enough scale that it affects us all regulation is justified.
The disconnect in people's mind on this question seems to be motivated by either their ignorance or their biases.
Proof of stake is promising, but it hasn’t rolled out yet. It’s possible that the migration leads to unforeseen problems, or fails entirely.
The trusted models like Stellar aren’t operating at the same financial scale as Bitcoin. The question there isn’t technically whether they can handle the transactions per second, but socially whether they are as resistant to censorship as Bitcoin is.
In the end, more people want Bitcoin than want Ethereum or Stellar. And people are willing to pay a lot of money to get it, money which in large part goes indirectly to miners’ energy expenditure. Perhaps, in the long run, the more efficient consensus mechanisms will prove superior to proof-of-work. But it hasn’t happened yet.
This is an accident of history more than anything.
I think the distribution will look different once the monetary cost of Proof of Work starts to impact the Bitcoin ecosystem.
Ever heard of the bullshit asymmetry principle?
Anyways, to answer your question: High cost of mining in gold is what limits the supply. High cost of mining in a cryptocurrency is not needed to limit supply.
this is a bit backwards, high cost of mining is not needed, it's a consequence of demand in higher supply
analogy does hold: there is demand for gold which causes certain amount of mining which has environmental impact. there is demand for bitcoin which causes certain amount of mining which has environmental impact.
of course no analogy is perfect, bitcoin has another aspect with feedback loops to mining and demand - security. the more mining happens, the higher ledger security and the more valuable it is.
it's still completely misguided to think that bitcoin mining is some process done for no reason - it's integral part of what makes bitcoin valuable. and the more mining - the more valuable bitcoin is.
lastly, blaming energy consumers in environmental impact is wrong too, it's producers that use environmentally damaging means for energy production who should bear the blame.
Stellar is attractive to me precisely because it works with society, rather than against it. It uses the trust relationships already built into our social systems and institutions. It's true, I don't trust Chase individually not to screw me over. But I do trust 50 independent organizations (including government, private individuals and corporations) all checking each other's work. You get 98% of the benefit of Bitcoin with thousands of times greater efficiency.
The only scenario where this stops working is in a complete societal breakdown, and frankly that is not a contingency most reasonable people plan for.
Is hypothetical resilience in the face of an anarchist fantasy really worth millions of tonnes of real carbon being pumped into the atmosphere?
You say pointless computation. I say layers on layers of security protecting the most sound monetary policy in human history
That's a political opinion. But regardless of its validity, I'm not convinced that this justifies a single Bitcoin transaction producing as much CO2 as 700,000 Visa transactions.
A Bitcoin transaction on the blockchain is layer 1. A visa transaction is layer 3 or 4?
Lightning network is layer 2 and you could have >700,000 transactions in a lightning channel before settling on chain, so there you go Bitcoin layer 2 is more energy efficient than the common financial system layer 4.
Think about it from the opposite direction: trust is a ridiculously effective optimization of group dynamics, and humans come equipped with it by default. It allows us to engage in trade and cooperation without paying the cost of perfectly, mathematically, enforcing the rules. It takes a problem that would be O(n!) and reduces it to something on the order of O(nlogn), at very little loss in the optimality of the result. Taking this shortcut is a no-brainer, it would be immensely stupid not to do it.
It so happen that historically, we took that trade-off and built a civilization on it. It worked well. It works well*. And what bitcoin does is trying to make our economy run on O(n!) overhead, because some individuals think that a political ideology based on not trusting other people is somehow a good idea.
I hope we recognize this rather sooner than later, such that we can stop wasting so much energy.
They are. How else do you think miners pay for their electricity? And so far it seems like the users are happy to pay what it costs. The fact that you don't see the benefit doesn't mean there isn't any for them.
With speculation on currency (it's the primary use of Bitcoin) and theft - the latter less so, given the very high centralization of hashing power, but it was and still is common for a wannabe Bitcoin millionaires to run mining software on computers and electricity they do not own or pay for.
Define “common” and provide sources for your claims please.
If we assume max 7Tx/s 1 block can hold 4200 Tx One block gets the miner 12.5 BTCs that's a 0.003 BTC "subvention" per Tx that would otherwise have to be pais as fee.
In other words the cost is paid by inflation which hurts most who holds and not who uses it. People don't care about a little inflation because the price gains where way way over that. But in the long run this system can not work. Every halving requires the BTC price to at least double (assuming the same mining cost). Problem is mining cost goes only up the halving is finite it goes to zero blockreward. Since the price can't go to infinite it's obvious that this system has to crash at some point we just don't know when.
I haven't checked the math, but this article says the block reward is ~$45 per transaction, vs ~$0.70 in fees:
https://cryptoslate.com/each-transaction-costs-the-bitcoin-n...
If that is the case, it seems likely there will be a devastating crash next time the reward halves.
Price is measured in USD and USD is inflationary so its purchasing power drops and BTC needs double the purchasing power not double the USD "value number"
The reward being constant would in the long run reduce the margins used as profit but also stop the re-investing of said profit to creating new hardware (ASICs) etc. That would stop or slow down the growth of hash/energy ratio which would make 51% attacks cheaper over time if we assume all other hardware on this planet keeps getting better and more.
Also keep in mind that BTC "only" doubling ever 4 year would significantly under perform most peoples expectation so if it's even lower, interest probably goes down rapidly as well which could trigger the collapse.
And mining costs have gone down before. It's when bitcoin's price falls making mining unprofitable, so some miners stop, which lowers the difficulty, which makes mining profitable again at lower level - mining costs decreased to match the price.
That true, mining cost can go down and it did but in the long run it can (must) only go up.
If we assume after block reward is gone or very low, fees pay miners less so most miners stop and difficulty is adjusted then we have a imminent 51% attack risk. Low difficultly, bankrupt miners, mark flooded with cheap mining hardware and suddenly drooping energy prices are the perfect conditions for such an attack. Once attacked the price drops pushes more miners out of business and attacks are even cheaper. A crash is inevitable.
And no, it's not word juggling, the value of money comes from the people who exchange things for money. Here they exchange either electricity, or USD for it. Miners are paying their bills by selling virtual tokens, if those tokens didn't have any value for anybody, they wouldn't be able to sell them. Whether the token comes from block reward or transaction fees doesn't change anything on the fact that somebody gave up USD to get the token.
> Bitcoin pays itself by "printing itself"
Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Only suckers take positions in a rigged game, short or long.
> Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Obviously that math is defined by people, so you're just pointing at it and pretending otherwise. The Bitcoin Core team can just change the printing rate any time; their lack of action is defacto action. Rather than an elected group of economists you've got a bunch of un-accountable, un-elected people with zero experience in the economics space shooting from the hip.
You don't seem to understand where the value from new minted BTCs comes from. How they are exchanged is completely irrelevant. Mined BTCs change the supply and that changes the price of all other BTCs. Any additional BTC makes all other BTCs a little bit cheaper/less worth. And that is where the value form the new BTCs come from.
Printing controlled by math avoids hyperinflation like I said above. Printing isn't the problem, that the printing stops is the problem. Or that the whole system was self fueling in the first place.
Proof of stake doesn’t work and trust based models are the very thing bitcoin is designed to save us from.
If you have ideological bias here I won’t try to convince you, only time will.
Energy consumption would be dramatically less if ASICs weren't a thing. In hindsight it is obvious they would be built but give me a break.
What they accomplished was a decentralized balancing of power based on economics, crypto, and distributed computing. It is beyond remarkable.
So tell me, what is the carbon footprint of FedNet and all of the banks clearing the 3,000 tx/s demands and their collective datacenters...
What, you thought what we had today was free?
Are you aware that these numbers shared are not even 1% of the worlds consumption of energy or a quarter of what the us alone uses in merely datacenter costs!
I hate these fud charged articles with no balance, basis, or actual science.
(a) whataboutism is a logical fallacy.
(b) If every Visa transaction took 625kWh, it would use 38X the entire world's power generation capacity and 3X the worlds entire rate of e-waste generation. Just Visa, not MC, UnionPay or Amex. Visa is literally 700,000X more efficient, and getting more efficient as technology does. Bitcoin becomes more wasteful as technology improves.
> I hate these fud charged articles with no balance, basis, or actual science.
A study from Cambridge University backs it up and is linked. Just because it doesn't agree with your preconceived notions doesn't make it "not science" all of a sudden. You could just be wrong.
This isn't whataboutism. There is a system being used. Contrast it with what currently exists.
> Bitcoin becomes more wasteful as technology improves.
You misunderstand hashing difficulty.
This guy is a known troll spreading FUD. Look at all of the links he has posted. It is not science.
Stop embarassing yourself and read a layer deeper into the people writing the articles.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
Koomey says that de Vries’ work is “fundamentally flawed” because it backs into bitcoin’s power consumption by estimating miners’ revenues and expenses. “Any time you do that, you introduce multiple layers of error and uncertainty. It’s a completely unreliable way to do the analysis, and no credible energy analyst would ever do that.”
But of course you prefer this digiconomist spewing FUD as a hobby and winding folks up:
"Digiconomist's index has emerged as something of an authority recently. The index was developed by Alex de Vries, a 28-year-old consultant for PwC with a background in data and risk analysis who now specializes in blockchain, the technology that underpins bitcoin. He founded Digiconomist as a hobby in 2014 and acknowledges he has no previous experience in energy economics"
https://www.cnbc.com/amp/2017/12/21/no-bitcoin-is-likely-not...
Jaw dropping.
Converted to Telsa Model S miles as per https://en.m.wikipedia.org/wiki/Tesla_Model_S
Comes out to about 2000 miles or 3200 kilometers for one Bitcoin transaction.
Astounding.
I have some rather left-leaning friends, vegans and all, who recently mentioned they were going to take a punt on Bitcoin.
Might have to show them this.
You cannot stop bitcoin.
Edit: You would end up burning even more if you tried to stop it.
You have to tax the clean coins too, otherwise buyers will just exchange dirtycoin for cleancoin before cashing out.
That said, it's not enough - because the market isn't some NP-complete-problem-solving magic oracle. It's just a greedy optimization algorithm. It's very prone to falling into bad local optima. We know that for a fact, that's the basis of most regulations around markets. Left unattended, the market would happily prioritize mining Bitcoin over producing food, as running Bitcoins in circles is more profitable than selling grain - up until there's an actual shortage of food and the market self-destructs.
You can of course tax the energy producers, but that does not prevent fraud on it's own - see oil tankers converting gas pollutants to water and causing even more harm.
Yes. "Clean/dirty energy" is a shorthand for clean/dirty energy sources.
> You can of course tax the energy producers, but that does not prevent fraud on it's own
Sure. Taxing emissions is a necessary but not sufficient component of a sane energy policy.
So how do you make sure you are not getting dirty energy ?
You purchase electricity with clean production guarantees.
That doesn't necessarily mean the electricity you use comes from that, or any, clean source, but that clean sources are used to contribute to grid supply equally.
If that's not actually happening then we can call that fraud, but that's a separate issue.
Are you claiming you were not aware of this?
In the spirit of Hacker News, would you mind expanding on why you believe that to be the case?
We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
> You cannot stop bitcoin.
See the way bitcoin works is anyone who wants to run a node on the network can just start without asking anyone for anything, or even letting anyone know they are starting. There is no door you can bang on to stop new users from joining. There is no server you can bring down to prevent people from joining.
> It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
This kind of comparison is flawed: Tesla was made for efficient mileage from electricity, but Bitcoin never aimed at transactions that require little electricity. You could compare an electric kettle to a smartphone and say that electric kettles are really bad because you could talk on the phone for 50 years instead of boiling water for some tea. ( If you don't believe me or don't get it, I don't have time to try to convince you, sorry. )
> Edit: You would end up burning even more if you tried to stop it.
Based on the above and other properties of bitcoin, it would not be cost free at all to try and stop it. I am convinced that the costs related to attempts to stop bitcoin would be much higher than the costs required to leave it be.
> We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Yeah I'd too appreciate if the debate here was more than yeah just tax it bro, they gotta cash out bro
If you actually cared to check [0] you would see that this claim is coming from estimating mining revenue and then sending 60% of that revenue to mining costs. That calculation is actually:
Mining revenue(in USD) * 0.6 / 0.05 / amount of transactions = KWh per transaction
Embarassing!
[0](https://digiconomist.net/bitcoin-energy-consumption#assumpti...)
And all of the 80704290.84 Petaflops, consume 73.12 TWh to repeatedly calculate SHA256 ! What could be the world's most powerful network does absolutely nothing but crunch hashes billions of times to discard almost all of the results anyway. Sheer waste of computing power.
Just because it's a higher number, it doesn't mean it's equally useful.
The bitcoin network asics reach exactly 0 petaflops. Why? Because they cannot do any floating point operations. They can literally do just SHA256 hashes, nothing else.
The "worlds most powerful network" simply cannot do anything else than this. It's effectively just an expensive set of electrical heaters.
There is simply no other known way of implementing a decentralized, censorship-resistant, robust digital currency. Without PoW you lose one of these properties.
Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. There are many other unsolved problems. That's why Ethereum is years behind schedule in designing and deploying PoS.
Replacing PoW with a useful algorithm (eg. protein folding) loses decentralization (a central trusted authority must verify/sample who performs the work correctly).
Trust-based systems (Stellar, Libra) lose censorship-resistance.
A "dumb" PoW is literally the only practical solution.
If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.
It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Don't fall prey to the scary comparisons BECI employs to mislead its readers.
Global warming is critical, but there are other energy wasters much, much bigger than Bitcoin miners.
Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. A recent paper by Stoll et al. estimated CO2 emissions as being comparable to what a single city like Las Vegas emits: https://mobile.twitter.com/zorinaq/status/113943906857019392...
Which happens to be one of, if not the largest hydroelectric dam in the world.
> Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants.
Which means that this renewable energy is no longer available for other uses.
And the global warming argument is a many times debunked hoax - if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable. Except in the other cases, the benefits go to the single entity that owns the business, whereas with cryptocurrency every participant benefits from the stronger network. Global warming is caused by using fossil fuels to make electricity, mining crypto doesn't require fossil fuels. There are other ways to make electricity, let's focus on them.
I'm sorry, but you got this backwards. If bitcoin becomes a relevant part of the world economy, then it HAS to use a relevant part of the world energy, because consuming energy for PoW is the only limiting factor against a 51% attack. So, either Bitcoin is irrelevant - and thus its power usage is a literal waste - or it's relevant, and then its power usage has to become relevant in terms of global warming.
51% attack, double-spend to get free electricity.
This is useful even when it makes an apparent loss by damaging trust in the currency: If you are, say, the USA president and you’re at war with Iraq, and Iraq uses bitcoin, you can outspend on energy until they surrender.
Unless the whole world uses bitcoin, but then the first few nations individually face the same problem, regardless of who else actually uses bitcoin — gotta keep the USA and China happy at the same time! (The EU isn’t integrated enough to do that sort of thing yet, but is a similar sized group).
Right now, 51% needs the cost of one very large power station from when you start until when you win — large nations, the sort with global ambitions, can spare a lot more. In the previous example, that’s close to all the power Iraq produces, but 5.4% of the USA’s output.
Then there’s the fact that most countries like being in charge of their own currencies as the ability to create or destroy units is a useful economic lever.
> The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
Or it’s speculation, like so many other things before and probably yet to come.
And 51% attack has the designed side effect that all other people stop using the currency - they may keep following the previous fork without the double-spend - as shown by ETH and ETC. You'd also need some way of forcing all participant to stay with the now corrupted currency. Otherwise the attacker who performs 51% attack will gain the ownership of a network that immediately becomes completely worthless.
That’s my point. That is literally the point. That is why it is a bad thing and why no sane nation would ever allow it to become their main currency. It is an attack surface. It is a vulnerability to your economy.
If you have unlimited money then yes. If you devalue your money every time you try to outspend more then no, since you're actually bleeding money.
You cannot simply throw more money at mining, the difficulty adjustment would destroy you very soon.
I see no benefit in a decentralised currency: gold is one (anyone can mine it) and there’s a reason we moved away from it.
I don’t buy that bitcoin is either decentralised (they who control the algorithm steering committee control the currency); trustless (why should I trust irreversible transactions? Why should I trust those who wrote my wallet? Why should I trust those that wrote my mining app?); nor robust (the domain of money is law, not logic, so always subject to government interference; the price is currently highly volatile; and apps always have bugs yet to be discovered).
And I'm sorry, I won't address your other points.
Let’s say I buy a widget. How can I trust that the widget will arrive? That it will do what widgets do? That it will not break? None of these are payment issues, but they might call for a refund. How can I get a refund? How can the refund system be resistant to abuse?
The answers we currently have are “the law”. If the law functions, I don’t need a trustless currency.
Bitcoin processes 10 million transactions a month (300k/day) and it's generally been growing over the years: https://bitinfocharts.com/comparison/bitcoin-transactions.ht...
Where can I get best details on this? Which papers? Thank you!
But they aren't, and the whole exercise is comparable to trying to repeatedly solve ever-larger NP-complete problems by brute force. Something no technical person in their sane mind would consider a correct course of action.
And just like we use good enough polynomial approximations to get near-best solutions to NP-complete problems, we can do the same for running economy. Trust is not a liability. Trust is what makes economy efficient.
They are not.
Then Ethernet came. Anyone remembers the dumb hubs? when a computer wanted to send a message, the hub actually broadcasted it to all computers in the network... so inefficient, and yet, it served its purpose.
Later, came the network protocols. There was this protocol used for discussion groups/news, remember NNTP? wasteful, because nodes had to download / replicate the full history of posts. But still... served its purpose for its time.
Then came a messaging protocol, SMTP, very useful for sending "electronic mail", very convenient. But people started sending binary data files on it... by converting it to text (UUEncoding anyone?) so wasteful and inefficient. But it is still being used.
So, bitcoin for me is just that early system, that early test that shows a way to do decentralized, censorship-resistant, digital currency. Humanity will find more efficient ways to do it (and maybe they won't be used, as with Email) or at some point in the distant future, the power side of the equation won't be relevant (renewable energy? nuclear? who knows). But for me, that does not change the fact that bitcoin proposition is a stepping stone for society that sooner or later will change the way people transfer value.
https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles
Zawinski's law of software envelopment (also known as Zawinski's law) comments on the phenomenon of software bloating with popular features:
Every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.
Can't we all just agree that what is a valuable use of someones watts or petahashes per second is a subjective choice? That people are free to value their resources as they see fit? You personally might not value securing Bitcoin network, but many other people find it valueable and it is perfectly fine in a free country to allow them do what they please if you are similarly allowed to do what you please (no one forces you to buy Bitcoin miners)?
The problem is the impact these things have on the rest of us when we ourselves have no interest in bitcoin.
If bitcoin existed purely inside a virtual world — say, if coin miners were a virtual good that WoW players could buy which made WoW money appear in their inventory according to similar rules but without the actual hard work of computing anything beyond a lightweight O(num_players) random number generator on the server, then it stops being anyone else’s problem.
I am pretty sure that the best consensus the western world has come up with is that if there are any externalities, they can simply be taxed in like for example a carbon tax. But telling other people what they should and should not find valueable as if you have some sort of ultimate authority on knowing what is valueable, well, I hope you can already see what is wrong with that. Value is subjective. As in, other people have a right to decide for themselves.
Yes but too little to bother about. Transportation and inefficient heat management are the only common ones that matter.
> they can simply be taxed in like for example a carbon tax
On that we agree. I believe car fuel is taxed appropriately in the UK, but in general these externalities are not properly accounted for. If they were, it would be a different matter, but they’re not.
Also christmas lights do consume huge amounts of electricity comparable to energy budgets of some countries. https://www.igs.com/energy-resource-center/energy-101/how-mu...
Thank you for the link, I will now update my world model to include that data.
- A single bitcoin "transaction" can actually have thousands of inputs and thousands of outputs. So energy "per transaction" or "transactions per second" is not analogous to a typical monetary transaction.
- Bitcoin does not compete with literal credit card transactions (although some use it like that today). I'd compare Bitcoin on-chain transactions with how nation-states settle their central-bank ledgers with gold. Gold is the best comparison to Bitcoin because trading in hard gold is "final". Credit card transactions happen on a higher level in the financial stack. As does cash. As do bank transfers. All of these bubble down into interbank transfers that eventually settle on the base layer of central banks. So compared to shipping and securing gold, Bitcoin is quite cheap!
- Adding to the above point; if Bitcoin succeeds in beind "adopted", it would not mean we no longer use credit cards. Credit cards would just port their underlying mechanism on top of Bitcoin instead of fiat moneys.
I’ve been long on Bitcoin, but I am exiting my position over concerns about the environment impact. I don’t think it’s plausible that a proof-of-work based blockchain can be anywhere near as efficient as centralized ledgers are. If any of the proof-of-stake based solutions ever gain traction, maybe I’ll participate in those.
Yeah, no one ever claimed that they would be more efficient. If you have invested assuming the efficiency is the main goal, you have been misled. What they do provide is efficient decentralized ledgers, which is a whole other game completely.
Example that leads me to believe central banks still settle gold: https://www.bullionstar.com/blogs/ronan-manly/bank-of-englan...
People don't need to stake money, just create a multisig transaction with a peer and having a transaction signed by the other peer to get their money back when they want to close the lightning channel. They can get extra fees for enabling transactions, though not that big amount.
I haven't heard the tagline "Bitcoin - it's cheaper than moving around gold on warships" yet. So far, Bitcoin has always been advertised as a new form of internet payment and a new decentralised currently for everyday use.
It's also the very point of cryptocurrencies that there are no intermediate agents, like central banks that could make up the lower levels of your stack.
So the usage patterns that Bitcoin was marketed with absolutely put it in competition with visa transactions.
I wish it were labelled cryptoasset instead of cryptocurrency.
In the long-term, the objective nature of Bitcoin should prevail and we'll assess its benefit by whether it is a successful store of value.
Not to mention, a single transaction can power an infinite amount of (wash) transactions thanks to 2nd layer stuff like the lightning network. So it'd be similarly misleading to try quote in terms of that.
So the correct unit would be power usage, per block or time unit.
If each block takes 10 minutes, and the miner network indeed draws 73 TWh each year, then that works out to ~1.4 GWh per block.
I get what you mean, if you decide not to make a transaction, the energy still gets spent but the more you use bitcoin the more valuable it becomes which incentivizes miners to keep mining. Also someone elses transaction will just slot in to fill the gap left since there is a very limited amount of space for transactions which is always fully utilized.
With enough people using the second layer network, each "settlement" could mean finalising hundreds of transactions for thousands of people. This second layer network acts like a caching layer, and consolidates many transactions into a single transaction (put into very simple terms).
[1] Combinations of inputs and outputs.
See Ramez Naam (co-chair for energy and the environment at Singularity University) for more on this friendliness to proof-of-work. This is a good intro: https://www.preposterousuniverse.com/podcast/2019/09/16/64-r...
1. Calculate total mining revenues, across all miners in the Bitcoin network.
2. Estimate that, on average, miners spend 60% of their revenues on electricity. (I believe the origin of this number are the calculations in this paper [0]).
3. Find out how much miners pay per kWh on average.
4. Convert the costs into a consumption.
There is some discussion of the origin of the assumptions, and some criticism and validation here [1] and here [2] respectively.
[0] https://www.cell.com/joule/fulltext/S2542-4351(18)30177-6
Specifically, see the calculations using Antminer S9 in Table 2.
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
The amount of power used is proportional to the value of the reward for successfully mining a new block, which happens about every 10 minutes (12.5 BTC or about $100k).
If the value of BTC goes up miners will increase their spend and more power will be consumed per block mined, and if the value goes down so to will the power used.
Regardless of the power used for mining, there is a fixed transaction capacity in the network.
"Getting rich" at cost of the environment (extremely high resource consumption)? No thanks, I'd rather leave that world for future generations.
At least with bitcoin you could theoretically throw up a pile of solar panels and directly convert that clean electricity into money.
example: if you aren't getting X Mh/s @ $Y kw/h, it isn't profitable?
I'm more worried about humanity having a future.
In other words, you should mine if you're in China where you can get those rates
https://www.theguardian.com/world/2019/jul/12/chinese-police...
http://www.scmp.com/news/china/society/article/2143758/chine...
https://www.ccn.com/chinese-police-seize-600-bitcoin-mining-...
http://www.scmp.com/news/china/society/article/2108486/four-...
https://kyc360.com/article/bitcoin-causes-electricity-crisis...
you'll never find a systematic article on it, but these aren't the first or the last incidents.
they also pay much lower hardware costs than the US does, because it all happens off the books. Chinese mining farms with internal hardware/super cheap power are nothing new.
china doesn't and never has played fairly in terms of hardware or power costs. crypto as a whole has been embraced because it's a good system to move value past chinese capital controls, you just are getting your beak wet as that money moves.
just like those 2 million dollar houses in vancouver or whatever. Sure, it's great to be trading in that current, or providing property management services, or to be holding the asset as it's pumped up by that money moving under the chinese capital controls!
Greed creates waste in all venues.
Further, fiduciary duty of corporations to maximize shareholder profit has led to almost every environmentally harmful exploit of externalities. I'd argue that the stock market is fundamentally responsible for 99% of all pollution.
Bitcoin does not eliminate the idea of fiduciary duty. Bitcoin holders still expect bitcoin loanees to trade and operate in their financial interest.
What is the emission cost of the system which enables this functionality?
bitcoin numbers don't include the off-chain stuff either, lol.
Bitcoin energy is literally expended on a massive, inefficient mainframe that processes a couple hundred transactions a second. That's all - everything else is additional to that.
Tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges, etc.
Obviously the purely digital systems consumes more compute, but I think you're discounting many of the true costs of the existing system.
If you think that tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges are there just to prevent erroneous trades...
It seems that you are discounting a vast amount of things that the system does besides preventing the execution of erroneous trade.
We're talking about just keeping track of who owns what amounts of a commodity. That part is using terawatt hours per year! I am very doubtful that the "keeping track of who owns what amounts" part of the stock market is anywhere near that.
Determining who has the rights to make changes to what data, auditing changes, auditing ever-changing access control rights, systematically changing these rules to adapt to technological advancements, etc. is the function which Bitcoin accomplishes that you are discounting from your perceived cost of the traditional stock market.
It's less obviously a problem if the blockchain is able to function as a "trust anchor" for additional protocol "layers", e.x. Lightning Network.
TBD whether that actually works in practice at scale, but I believe it's Bitcoin's only hope.
Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Is Bitcoin figuratively, and almost literally, a tire fire?
My opinion is that if you find this outrageous then you don't understand the core principles of Bitcoin. The difficulty of mining a block on the network goes up with the amount of mining being done to maintain a constant block mining rate.
There are massive bitcoin mining warehouses in China, and for each one that opens all of them are less effective at mining, but still consume the same amount of energy.
So, yeah, it's pretty much a tire fire.
Edit: to add to this, many industries can use technology to produce more value with less energy. Bitcoin is fundamentally unable to do this for the same reasons I mentioned above. When bitcoin specific mining hardware first came out, it briefly gave an advantage to the first people to have it, but then the advances were completely neglected when they became widespread.
If (and big if) bitcoin is able to replace a significant fraction of the banking industry it will be extremely efficient in comparison. Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
Wires cost me $50+ because of intermediary banks, even if I don't pay anything at my own bank, someone is getting a big cut.
Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human, so it seems like the human labor in the banking system is a regulatory issue, not a technical one.
I'm curious - what did you have to write? Is it just part of proof of identity, or something more?
The infrastructure required for functional cryptocurrency usage in society is far smaller than for traditional money, so with enough adoption to supersede fiat, there would be efficiency gains.
Remember, we used to need the phone network to connect to the internet. 30 years later, the trend is reversed and it's telephone that we layer on top of the internet.
The article actually answers this to some degree. See the following graphic: https://i.imgur.com/8TdKevG.png
So I don't think "mining gold" is an appropriate analogy.
EDIT: Case in point: how much did it cost for Visa + Bank to increase a credit-card from $500 credit limit to $2000 credit limit? $1500 of credit appeared out of thin air.
The first credit limit increase "from scratch" costs hundreds of billions of dollars in creating a system of legal compliance, accounting, communication, internal and external risk management, executive compensation, regulatory oversight, credit ratings, cybersecurity, salaries of millions of workers, building public trust in the credit system, writing and passing legislation, even Fed responsibility of building and maintaining a fiat currency.
The second credit limit increase once this system exists is essentially free.
To what extent do these costs need to be accounted for in creating an accurately comparable 'per transaction' metric? By replacing much of the logic with 'just math', Bitcoin has the potential for a much higher theoretical efficiency than the current banking system. Whether market penetration will ever reach the current banking systems levels - and function without replicating these same structures - is certainly highly debatable and for many of the above items implausible.
Bitcoin transactions in isolation are also essentially free - it's the maintenance of the system which keeps it secure and trustworthy that is expensive.
As such, the question is interesting: how much energy required to produce one new ounce of gold? vs one bitcoin?
From the US Mint's financial statement [1]:
2017 cost $13.5 million dollars in "Communications, utilities, and misc charges", which presumably is the bucket that electricity bills falls under. There's no breakdown of overhead between currency coinage production and bullion/numismatic production, but the manufacturing obligation suggests that currency is roughly ⅕ of their total costs, which suggests that we might ascribe about $3 million in utility cost to produce coinage. The coins themselves were worth about $870 million, which suggests about 250 kJ (or 0.07 kWh) per $1 of coinage if we assume the Mint pays $0.05/kWh. I'm not including the energy cost of metal production itself, because I don't want to spend the time to track down that information.
[1] https://www.treasury.gov/about/budget-performance/CJ19/23.%2...
Neither is Bitcoin, so it should be a perfectly valid comparison?
With something like lightning network, a single Bitcoin transaction can facilitate millions of 'lightning' transactions.
Can you name a better metric that we can measure?
--------
With regard to the Lightning Network, it seems that it requires a bit of supervision to be secure. https://themoneymongers.com/lightning-network-watchtowers/
That supervision probably will have a cost of some kind.
> You can hire watchtowers nodes for a fee and design the revocation transaction in such a way that the watchtowers will also receive their service fee when you get funds of the other party as a penalty.
So we're adding many, many more middlemen to the picture. Not only do we have to pay for the final transaction (which requires a large amount of electricity to be "mined" into the blockchain), we have to hire watchtowers to ensure that our Lightning Network transactions remain correct even if our counterparty tries to screw with our transaction history. (Remember: the full transaction history in the Lightning network is off-chain).
Being a watchtower is extremely low cost, it only requires a small amount of memory. Every full lightning node is watching the blockchain anyway so it is easy to watch for some extra transaction ids with a certain prefix. Transaction IDs are sufficiently long that only part of the txn ID (half) needs to be shared with the watchtower. The tower can only decrypt and send the revocation txn once the malicious txn is broadcast, and the watchtower reward can be built in to the revocation txn.
How much will watchtower rewards cost?
The economics aren't fully studied. But I'd expect a good watchtower would be proportional to the amount of the transaction. That is, if you wanted to protect a 100 BTC transaction, you'd want to spend more on the watchtower reward than if you wanted to protect a 1 BTC transaction.
Hypothetically, if you spend too little, the watchtower + your opponent can collude to effectively steal some of your money. (Ex: the Watchtower could be paid by your opponent to NOT send the revocation message).
The reward only has to be high enough for it to be worthwhile for other nodes to spend a small amount of memory storing your txn.
In the case of 100x watchtowers watching one transaction, each watchtower only has a 1% chance of actually getting the reward.
There are some services currently providing watchtower for a flat fee instead, and the going rate is low (1 satoshi / txn watched) =~ $ 0.00008
This idea has been around the corner for a while now. How likely is it really, how long will it take, and what will adoption look like? Until it happens and is popular, it seems fair to discuss how much a Bitcoin transaction actually costs...
According to the article, bitcoin consumes about the same amount of electrical energy as Austria, a nation of 8,857,960.
According to Bureau of Labor Statistics, ~8.6 million people are employed in "Financial activities" in the US.
BLS: https://www.bls.gov/emp/tables/employment-by-major-industry-...
It's this wasteful at this level of scaling. That only gets worse.
This encompasses a very large part of the responsibilities of the political system, army, secret service, ...
Those cost centers can't be ignored if the goal is an honest comparison between the energy efficiency of bitcoin vs. fiat.
Without explicit evidence of a market failure it's probably fine to assume that negative externalities are factored into sticker price of goods as the opportunity cost of product X eventually must take into account those externalities as applied to everyone.
The problem with KYC and banking laws are that you can prevent anyone from conducting business for any reason. They've not seen abuse per se but people have been caught up in them with no recourse. Their application in reality may see them ruled unconstitutional.
Bitcoin, then, is just a correction in the other direction. Because face it: large financial institutions still facilitate money laundering, just not for small people.
No one forces you to have a bank account, just like no one forces you to have a driver's license - which also involves giving up some rights, btw.
The constitution recognizes the inherent right to be secure in your personage and effects. This should include your financial information.
I think it odd that people accept the abrogation of their rights w.r.t. driving. Yes, the government can definitely tax you for road use, but imagine having to carry an ID around that proved you paid your income tax, and that you were required to be IDable at almost all times to be sure you were not committing tax evasion.
Cost of running this public tamper-proof database is $4B + Personnel + Amortizing cost of ASIC Forms, Say $6B
Where does the money come from? This Database isn't selling any service to Enterprise or Government or Public to get revenue. So, the $6B money has to come from Bitcoin holders or new suckers.
Every year it has to get $6B new money just to maintain the current value of Bitcoin.
The question is not how many you burned, which is what the mining algo answers with such precision, but how much you paid for them in the first place, which it can offer no insight into.
Some possible shortcuts to paying retail prices for electron mining fuel:
1. You're a large business power customer and pay vastly discounted rates on a contract basis.
2. You're stealing some or all of your power, either by pirate wiring or by paying some official to look the other way, or a little of both.
3. Your mining operation is a pork barrel project with funding secured from your local government's (either clueless or remarkably pragmatic) business development office. Sometimes there may be a legitimate exit plan for this, like repurposing the new datacenter facility you built, after wringing every mining penny from it possible, to host cloud services or as the core of some government-sponsored technology park.
4. You may have been mining quite along time and now have enough early coin held back from the $100 days to slowly sell off into the retail market at 80x profit, or borrow against. It may even be that this reserve of held back coin is partly responsible for the thin liquidity in the market, and consequent bubbled-up price.
5. You publicly, or covertly own or have an interest in one or more of the mining pools and public exchanges, and retain a share some of the Tx and conversion fees which helps subsidize the mining costs.
6. Same as above but for mining rig manufacturers and fabs. Mine on newly manufactured chips for a few days or a week before shipping (for 'testing' purposes ofc) and you get to stay ahead of the difficulty curve as well as get free subsidy from your own customers.
The stripped down reason you see it as wasteful is that you have some set of beliefs about what is "right" and "meaningful" (many of which, I'll take liberty to say, most likely likely NOT consciously thought out) and since the core technical principle behind Bitcoin is simple enough, it's easy for you to see it does something that seemingly does not contribute to the fulfillment of what you consider "meaningful" (i.e. performing tons of computation that essentially compute nothing "meaningful").
Technical principles behind markets, industries or your own existence are not simple enough, so you cannot see through them and decide at a glance that they are "wasteful". And since you generally avoid falling into philosophical discussions (rightfully so), this is good enough for you. This doesn't mean that they achieve something that will turn out "obviously meaningful" to you (I'm cynical enough to assume they actually not), it's all just too complicated to tell at a glance.
If this is all too abstract, I'm saying that Bitcoin is actually doing something, and this something is much more complicated than the technical principle you can easily see behind it. You should take this into consideration when thinking about what this giant CO₂ emitting machine actually is. It is not a machine for computing hashes, as it might seem from a purely technical perspective.
PoW utilizes the honest indicator of un-forgeable expense to mitigate this class of risks.
https://www.mckinsey.com/~/media/mckinsey/industries/financi...
In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions.
There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either.
So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks.
I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
It's not like it is free to have a system like that!
To be clear: if you ask my opinion on technical side of Bitcoin, I wouldn't be really praising it. But, as I said already, Bitcoin is not a technical thing. It is a very complicated sociocultural phenomena that definitely did achieve something. And you need to consider everything X is, to apply words such as "wasteful" to X.
Again, if this seems too abstract: if you are living in the USA, you are consuming twice more energy (per capita) than Japanese people, having lower life expectancy (both are far from the ends of the spectrum, BTW). So, the existence of USA citizens is wasteful.
Now, doesn't stripping down all the nuance of living different lives in different countries seem a bit outrageous to you? It surely does seem so to me.
Bitcoin is a drain on the electrical system. You are basically arguing that it is okay to litter because it will create jobs and spawn new anti-litter technology.
Doesn’t work that way, sorry.
This type of argument goes nowhere fast.
I’ve never seen an article like this for the entire crypto space as a whole but I imagine it is much, much worse.
The carbon estimate seems very poor.
> Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining.
The reason many miners are in China is that they can access cheap off-grid renewable sources of energy there, such as excess hydroelectric, so using an on-grid CO2 estimate doesn't work.
Setting aside the non-trivial ecological damage caused by dams.... all that renewable energy could have been used to power something that actually adds value to society. Instead it is getting flushed down the toilet solving useless math problems so that a relative handful of people can milk a larger set of rubes for all their money. Oh, and enable criminals to continue their criminal behavior....
If the miners are using excess production, then by definition, that power could not have been used for anything else; otherwise, some consumer in the grid would have used it!
> The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid
You just need to read.
> Setting aside the non-trivial ecological damage caused by dams..
I don't think anyone is claiming that the dams were built to mine Bitcoins. The power generation was provisioned to power towns, but it is generating more electricity than the towns can use or profitably transport away.
> all that renewable energy could have been used to power something that actually adds value to society.
There is a market to buy the energy. If anyone wanted it for basically any other purpose, the price would increase and the miners would presumably go anywhere else in the world with overprovisioned renewable energy, so that their profit can be preserved. Mining doesn't have many requirements: it doesn't even need to be on-grid. It's created an arbitrage market for cheap electricity, and people will search out the cheapest electricity in the world to use for it. By definition, the cheapest electricity will be the least wanted.
Its not the final word, but it is something to vigilantly monitor in case the following changes:
Most bitcoin energy use is from mining, and that mining uses renewable energy or energy waste byproducts. Source: my experience with mining companies that don't publicly disclose how they do this profitably.
So for now, try to corroborate it yourself. I would say that 70-80% of bitcoin mining is not a wasteful use of energy and that merely estimating the energy numbers doesn't tell you anything about the source. What I mean by "not wasteful" means that it isn't pulling away from another use of energy that was ever going to happen.
This wasted energy is usually in the form of byproducts around other power facilities that cannot be economically converted and transported to residential and commercial areas. This is where bitcoin mining shines: Bitcoin mining does not need a robust internet connection and does not need to occur in residential or commercial areas. A computer with a satellite connection can submit hashes to the bitcoin network, and pools further make it practical to have lower latency, because they merely pay out based on your contribution to the pool.
So miners that use energy waste byproducts (converting those byproducts to electricity at the source and taking transformers there) often times are doing a favor to the power company or whoever is there.
What to monitor: if nation states start competing over power of this network, they may disregard the economic feasibility of doing so, and then it will be incredibly wasteful uses of electricity.
The block reward is 12.5 BTC (and fees are neglible), which is $100000. There's a new block every ~15 minutes, which means 35000 blocks per year. ($100000 * 35000 / 73 TWH) = $0.048/KWH. So miners spend at most $0.05 per KWH on electricity. Assuming they spend 60% on electricity, they spend ~$0.03 per KWH, so not an outrageous price.
The problem is BTC grew too big too fast. The block reward is very large, but once it drops to the magnitude of fees ($2000 / block), we'll probably see a decrease in the energy usage to the (perceived?) value of decentralized payment system.
Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
Which will disproportionately hurt the poor.
> The assumptions underlying this energy consumption estimate can be found here [1]. Criticism and potential validation of the estimate is discussed here [2].
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
This pretty much lines up with what I've seen in all Bitcoin energy use debaters: the evangelists insist the numbers are all wrong, but never really provide any evidence to that point.
Now they pass the time counting their money until their stars burn out.
I've never bought anything illegal (but some weed perhaps) yet I feel very uncomfortable every time I have to share my personal details with any party.
I also want anonymous P/O boxes.
I just bloody don't want any party to track me nor tell me what I am and what I am not allowed to buy (unless it's a weapon of mass destruction or a human slave and there are other ways to bust people selling these).
https://www.theguardian.com/world/2016/nov/08/india-withdraw...
First: it absolutely is being outlawed, slowly but surely. The US is not yet fully there (although: try to buy a 1M USD house cash and see what happens), but most EU countries are fully there.
Second: Try and wire a large sum to your brother who happens to currently be stationed in disreputable country X or Y, and see what happens. Or mail him a box full of cash. See what happens.
In the US, if the cops notice you have large amounts of cash in your car during a "routine traffic stop", they will take it from you on the basis that you must be a drug dealer.
One thing is clear, no matter how far blockchain technology progresses, proof-of-work will never reach the efficiency of a trusted intermediary.
https://qz.com/1204840/iceland-will-use-more-electricity-min...
but reopening closed coal power plants for crypto mining is more worrying:
https://qz.com/1250980/an-australian-coal-power-plant-will-r...
Meanwhile Apple introduced the first version of the iPhone, completely transforming the mobile landscape.
Meanwhile, Uber and lyft upended the taxi market completely.
Meanwhile, we have private companies sending payloads to the space station
Meanwhile, electric cars are increasingly becoming mainstream.
In what possible way can you claim bitcoin is “in its infancy”?
A complete and utter waste of resources, which at best fills a gap while the actual problem remains unsolved.
Bitcoin is fundamentally an asset. A useful analogy is to think of it as gold. Gold can be used to make payments, but it is not convenient. Same goes for Bitcoin. But they are both useful as a robust way of storing value.
Maintaining the Bitcoin network costs energy, but almost nothing else. Given Bitcoin's price history, it's safe to assume that Bitcoin's total energy cost is a tiny fraction of its current market cap of around $150b. Now compare that to the social costs of protecting gold, which probably has an over $7 trillion market cap. Wars were fought and lives lost for its ownership.
In conclusion: a large and liquid crypto asset like Bitcoin provides a much more advanced solution of value storage and transfer than traditional physical assets. Its net social benefits should be orders of magnitudes higher than its energy expenditure.
But on the other side, hey blockchains are so cool they can do the same work as banks but six orders of magnitude less efficiently.
Otherwise, we could also argue that iPhones are a humanitarian disaster.
Does this analysis take into account secondary network transactions? For example wire transfers are relatively expensive to process still, but are often used to settle huge volumes of things like ACH payments, nightly sweeps etc.
The CO2 emissions heavily depend on the actual use of renewable which nobody can be sure about. In some cases like bitcoin mining using fuel that would otherwise cause CO2 emissions, you actual have a net gain. (See companies like https://www.upstreamdata.ca/)
So even by those arguable arguable CO2 emissions it's actually less than 0.1% of the world's total.
I wish people that have knee-jerk reactions about this, actual think about the big picture and what actually causes high CO2 emissions and offer way fewer benefits than censorship-resistant money.
The luxury fashion industry for example for a long time has had a big negative effect, from drying up whole lakes, to child labor to effectively destroying villages for what... anyhow.
This network is unmatched in it's provability and security.
There is a turing complete machine, operating that can be trusted. Seriously, the possibilities are limitless but guess what, they do have a cost. And there are too many con-artists around. But an industry that is changing the entire monetary policy around world is very impactful. It's changing it and you'll notice in the coming years how much monetary policy is going to change. The grand experiment is about to happen. Are we going back to gold? Are we going to innovate a replacement that's better than crypto? How is 'money' going to function in the 21st century?
P.S. Proof of Stake is terrible in it's economics. If you think rent-seeking is good, then PoS is for you. It's not for me and I think it's terrible based on the game theory of it. Remember the 'We are the 99%' chants? Yeah, not going to go over well.
In a PoS network, those that have the currency can "stake" their possessions to gain more. They don't need to spend in hardware/electricity to mine more. There is a built in function to extract currency.
From the article, Bitcoin used 73.12 * 10^12 Wh and generated $5,749,979,074 in mining revenue
Googling shows that the US economy used 3.82 * 10^15 Wh and generated $ 19.39 * 10^12 in GDP
So bitcoin uses 12,716 Wh of electricity for every $ of revenue, and the US economy uses 197 Wh of electricity for every $ of GDP.
More nuanced: https://www.youtube.com/watch?v=iTelx_iGajE
Can a couple of these people agree that a well-coordinated merge & release to sabotage proof of work is ethical.
A better way would be a global ban coordinated among every nation, and even then that would be difficult to pull off.
The earned value would need to transition to the non-proof-of-work favoured network.
Turmoil would take care of the $ value of the forks (crypto confidence is rattled enough as it is)
Alex de Vries (blockchain hobbyist with no scientific / economics background who started digiconomist)
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
Oh yeah, and he invented this energy consumption index...stop letting yourself get trolled.
> Equivalent to the power consumption of an average U.S. household over 21.13 days.
After the last BTC is mined, miners will still presumably be able to profit from block transaction fees. That might help power a little bit since they'll worry more about being efficient with which transactions go into a block.
It won't solve the transaction cost, but I thought sharding was supposed to help that, although I never bothered to learn about lightning network.
This would make Bitcoin useless.
> Cannot the bitcoin developers put in a massive difficulty jump at this point?
No, because the miners will continue to run the useful version (for some definition of useful). Changing the algorithm would require a hard-fork and a hard-fork to turn down the network will result in the "new" branch of the fork ... turning down, while the old one continues.
If bitcoin can't survive without mining (which IIRC isn't related to transactional processing or any actual use of bitcoins), then bitcoin has a guaranteed uselessness point when the difficulty jumps exceed, I dunno, the output of the sun?
As for code changes, what is the lightning network about? Isn't that a code change? And if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take, then those coins would be worth much less.
I'm not saying the code change is easily done or even technically feasible. But it should be considered.
Bitcoin is immoral in the age of human global warming.
Because mining is what secures the network.
> which IIRC isn't related to transactional processing
Transactions are confirmed by being included in mined blocks. The amount of compute power burned to mine that block, and the following blocks, is what prevents someone from pretending a different transaction (moving the money somewhere else - a double-spend) happened first.
> what is the lightning network about? Isn't that a code change?
Software running on top of the existing mining network, although downwards-compatible changes were made to enable it. The downwards-compatible is key here.
> if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take,
Then someone would make an exchange that still trades "original Bitcoin" and get rich, and the exchanges would go bankrupt.
More sensible and less controversial changes failed or resulted in splits (with the chain that remained downwards compatible being the most valuable one).
(Downwards compatible is the easiest approximation I can come up with for the much more complicated reality.)
Thus BTC is a bankrupt idea, since it assumes geometric growth in energy/computation. Time to sell!
https://bitcoinist.com/bitcoin-mining-energy-consumption-us-... https://www.thesun.co.uk/tech/9062282/netflix-energy-crisis-... http://theconversation.com/us-military-is-a-bigger-polluter-...
only 2 nodes away from failing :)
https://www.buybitcoinworldwide.com/mining/china/#reason-2-e...
Reason #2: Excess Coal
Coal is the cheapest power source but also the dirtiest. It’s well-known that China has comparatively lax environmental policies. Major cities like Beijing are notorious for their high levels of smog, produced mostly by burning coal.
Energy producers can freely burn coal and use the energy for Bitcoin mining. Instead of physically transporting the coal, it’s easier and more cost-effective to establish a Bitcoin mining operation near a source of coal and convert carbon directly to crypto.
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
https://twitter.com/el33th4xor/status/623178828727361536
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
— Emin Gün Sirer (@el33th4xor) July 20, 2015
FTA:
Carbon footprint
Bitcoin’s biggest problem is perhaps not even its massive energy consumption, but the fact most mining facilties in Bitcoin’s network are located in regions (primarily in China) that rely heavily on coal-based power (either directly or for the purpose of load balancing). To put it simply: “coal is fueling Bitcoin” (Stoll, 2019).
https://www.wired.com/story/bitcoins-climate-impact-global-c...
Bitcoin's Climate Impact Is Global. The Cures Are Local. To measure bitcoin's contribution to global warming, you need to know where it is mined and where those computers get their electricity.
...
Not so fast, said county officials. They pointed to a different culprit: a giant coal plant halfway across the state. If energy from the dam went to bitcoin mining, they said, the county as a whole would wind up using more coal. In April, officials required all future mines to build their own renewable power.
Missoula County was on the right track, says Christian Stoll, an energy researcher at the Technical University of Munich. In a paper published Wednesday in the journal Joule, his team takes a closer look at the energy consumption of bitcoin mining, based on where miners are located and the types of machines they are using. “Coal is fueling Bitcoin,” he says. “The question is how to prevent it, and that’s up to local regulators.”
That's the coolest phrase I've read today. What would someone from before Bitcoin think about that?
https://news.bitcoin.com/how-big-hydro-power-partners-with-b...
CryptoKidz: I'm in!
But haters gonna hate, and downvoterz gonna downvote. what evs
First of all I also want to mention "Cambridge Bitcoin Electricity Consumption Index" (https://www.cbeci.org). In my opinion it makes better comparisons (https://www.cbeci.org/comparisons/).
The strongest hypothetical argument against the consumption is that Bitcoin incentivizes green energy. The mining operation is mostly interested in one thing: access to the cheapest electricity possible. Currently China is still subsidizing electricity, which has attracted a lot of Chinese miners and apparently is tolerated by the state.
But in the longer run I believe that Bitcoin will be the thing that will allow investments into green energy on a big scale. This is currently only happening by e.g. governments guaranteeing a minimum electricity price with other horrible consequences (see Germany: https://translate.google.com/translate?sl=auto&tl=en&u=https...).
Bitcoin however provides the incentive by itself to invest into green energy. This also is regardless of the fact that where there are optimal conditions for green energy often no infrastructure is available to add it to the grid. Bitcoin only needs an internet connection and consumes energy on-site.
Regarding arguments that compare transactions with energy spent (comparing apples-to-banana...), I will make a counter-comparison: "The amount of electricity consumed every year by always-on but inactive home devices in the USA alone" spends three times the energy of the Bitcoin network (see "Fun Facts" at https://www.cbeci.org/comparison).
Comparing the energy consumption of a transaction is meaningless, because this transaction may enable thousands of off-chain transactions (see Lightning network) and vary in actually block-spent-size depending on if it aggregates many actual transactions or not. It also shouldn't be a surprise that a lot of energy went into it in the first place, since otherwise the whole point of Bitcoin, namely being open, borderless, censorship-resistant and neutral, wouldn't be possible.
It's like saying that all the many maintenance checks of airplanes (https://en.wikipedia.org/wiki/Aircraft_maintenance_checks) wastes so and so many hours and energy of engineers' work-time, just because you don't see that they make air travel safer.
Same goes for Ethereum at 15 TPS... Ethereum is an over-engineered mess of technical debt. It's been stretched way past its original design goals.
All these valuable cryptocurrencies are a symptom of a failing capitalist system. The only reason that they had value in the first place was because the rest of the economy was so inefficient and speculative that they started to look like a wise investment in comparison (especially as a hedge).
The rise of useless jobs is real, this is especially true in the cryptocurrency industry. The amount of human effort and talent which has been wasted on Bitcoin, Ethereum and other overhyped, poorly engineered cryptocurrencies is staggering.
Not only is it wasteful, but this industry is producing a new wave of engineers and scientists who are gullible (hype-driven), unskilled and complacent; a dangerous combination.
Most cryptocurrency projects were created by juniors who had limited understanding of distributed systems and scalability at the time. If Vitalik Buterin had to start Ethereum from scratch today (knowing what he knows now), I think he would design it very differently. But instead, he is forced to support the existing network and protocol even though the only real way to fix the project is by starting from scratch with a new foundation.
It's like if you start building a 1-storey apartment and after you finish, you realize that you actually needed a skyscraper; but instead of starting again from scratch, you decide to re-use the existing building foundation with the same investors, same architects, same engineers, same builders. You even allow the existing tenants continue to live inside the house while you continue building on top. It's probably not going to work because you don't have the right foundation, your team doesn't have experience building tall structures and you don't have any experience leading projects of such complexity - The fact is that your odds of success are extremely low; your foundation is probably not strong enough, your team is probably not smart enough and not adaptable enough and you, the leader, are probably not humble enough to accept reality; so you will fail to take the necessary steps to fix the problems.
Many coins attempt to tweak this Proof of Work model. The result is not wasted energy but wasted human effort. What we need is to go back and explore Bitcoin Proof of Work model. It's works and simplest to configure.
I create Bitflate, a Bitcoin fork with constant inflation. I get to see a small-scale, simpler version of Bitcoin energy consumption. Currently, it costs me about $3/day to mine coins and verify transactions. I get about 12-14 TH/s. That is cheap for running a digital ledger system. It's cheaper than renting any server on AWS. I imagine, in the future, businesses can run private permissioned digital ledger system to verify their own transactions. A Proof of Work system like Bitcoin is not wasteful.
Edit: based on a cost of electricity at $0.1/kwh, and assuming bitcoin operators break even and are rational, one transaction costs less than 3kw of energy:
If it cost 600kwh, we would assume a transaction would cost at least $60.
Electricity is probably a lot cheaper in China. If it was half as much we would be looking at under 6kwh of electricity at the most.
You can see how much money a block miner receives for a block of transactions, and given the money they received, and an estimate for the cost of power, you can estimate how much power they might have been willing to expend on it
Going off the guy's link, I guess it's 24 cents to get into the next block, and a block has about 500,000 transactions, so whoever mines that block gets $125,000. Assuming 4 cents per kWh, the presence of only one miner, and no other operation costs, he'd still be breaking even if he expended (1 kwH/$0.04)*$125,000 =~ 2,500 kWh per block
(and by the same napkin math, that's 6 kWh per transaction)
What's weird is TFA seems to be using a similar methodology (but looking at total bitcoin mining revenue instead of an individual block), and yet they came out with a number 100x as large. I'm not sure why there's such a big discrepancy.
See: www.electricitymap.org
> Electricity is probably a lot cheaper in China.
Specifically, miners in China are famous for colocating with overprovisioned excess hydroelectric power that is not transportable elsewhere via the grid.