A New York Power Plant Is Mining $50K Worth of Bitcoin a Day
coindesk.com
coindesk.com
This is actually pretty sad. This isn't power that would otherwise be wasted: they are emitting more pollution and greenhouse gasses in order to mine Bitcoins.
Bitcoin has created a perverse incentive to pollute here.
Edit: For example, it could be interpreted as an argument to be more mindful of gold extraction externalities.
My beef with the statement lies in "not any different". Having qualities in common doesn't preclude differences. In this case, there are differences.
https://www.gold.org/goldhub/data/gold-supply-and-demand-sta...
I should say there's also 48% used for jewelry, but that doesn't really make a good excuse either. The pollution is necessary because ... people need to display their wealth?
[1] https://www.gold.org/goldhub/data/gold-supply-and-demand-sta...
The US having worldwide enforcement of IP rules a primary foreign policy goal for the past 50 years has mostly closed that loophole, despite most other countries not having a direct financial incentive to enforce copyrights. The same could be done with worldwide environmental costs.
This isn't obvious to me. Natural gas is often a byproduct of extracting other resources like oil, coal etc. If it isn't used for electricity, heat, chemical feedstocks etc. it either gets flared (resulting in zero revenue) or else ends up in the atmosphere as such, with a vastly higher GHG potential compared to the CO2 equivalent.
The only intrinsic value is the amount of energy wasted to mine the bitcoins.
We could cut the energy consumption of bitcoin to zero and the quality of life of everyone would not change at all.
If you'd like to account for the carbon externalities, then do so. Tax carbon emissions. Proxy by purchases of fossil fuels if you have to. The reason we don't do that is that most people are rampant polluters. They know it, because when you put the numbers up, we know something interesting: most of those attempting to shame others here are rampant polluters, emitting large multiples of the median human's carbon. The truth is you can't maintain the standard of life you're talking about at the emissions necessary.
Shame doesn't work here. Only policy. Tax the carbon if that's what you don't like. Tax the sound if that's what you don't like. Tax the land on its value if you think this is an uneconomical use of the land.
But shaming is ineffective. You will walk away with the dopamine rush of outrage, having achieved nothing of note.
But the comment I responded to said this:
> We could cut the energy consumption of bitcoin to zero and the quality of life of everyone would not change at all.
Now I'm not one to normally be pedantic, but if we actually treat this non-literally we're faced with an optimization problem: how much is it worth reducing the quality of life of these people to ensure that energy isn't "wasted"?
So either you take the statement as a rhetorical flourish, in which case it is an inadequate response that merely relies on emotive appeals. Or you take the statement as literal, in which case it is obviously true. I guessed at a path but perhaps I should have articulated both sides. As it turns out I guessed wrong and you can see from his response that it was just an optimization problem inadequately specified.
I do think social shaming is very powerful, but it must be used correctly. Shaming Bitcoin professionals is fine in my opinion.
Sure, money has no value when you're stuck on an island, but a bow and arrow does. Similarly, a bow and arrow has little value in Tokyo city and money does. Money is the engine that drives motivation - it can be used to compel others to do good things.
Also, people don't understand what Bitcoin mining in wholistic sense is.
Model A: Energy -> Factory (Assets) + Labor -> Revenue
Model B: Energy -> Mining hardware (Assets) -> Revenue
It is surprisingly the same (we can even argue that labor is involved in building mining assets, GPUs don't grow naturally). You can argue that any economic endeavor is a waste.
Unless they actually are using it to purchase carbon offsets, I don't see what's the point of this hypothetical?
> Also, people don't understand what Bitcoin mining in wholistic sense is.
Sure, some Bitcoin critics don't understand it well, but don't paint us all with that brush. Some of us have a very good understanding of what Bitcoin mining is and still find it tremendously wasteful.
I've added some more clarity.
> Sure, some Bitcoin critics don't understand it well, but don't paint us all with that brush. Some of us have a very good understanding of what Bitcoin mining is and still find it tremendously wasteful.
By all means, expand on this and enlighten me, I am curious to hear both sides.
It’s like writing an unnecessary API wrapper or similar abstraction layer. YAGNI
Sure. My concern with Bitcoin mining is that (#1) it absorbs efficiency improvements by design, and that (#2) it is structurally an environmental race to the bottom.
By #1, I mean that even if you could magically halve the energy use of mining overnight, you wouldn't meaningfully reduce Bitcoin's footprint: mining would use less energy, so it would be (temporarily) more profitable, so miners would scale up until it was back at equilibrium. It's back in equilibrium when the cost of mining is the market value of a coin, and since energy costs dominate the cost of mining, this is (roughly) when energy use is on par with what it was before the efficiency improvement.
By #2, I mean that mining naturally gravitates to places where the externalities are not priced in. If Country A has a carbon tax and Country B does not, mining will just move (pushed by the invisible hand) to Country B, rendering the carbon tax ineffectual with regards to coin mining. Of course this is just part of a bigger problem of enforcing global externalities locally, but the tools that would usually help here (trade policy, etc.) do not really apply to crypto mining.
I am saying that the economic system built around bitcoin is, by definition, negative-sum. And there is nothing about the technology that can change that.
I don't actually think switching exclusively to a deflationary currency is a good idea, but I don't buy that it creates a situation where value can only be destroyed..
There is no wealth creation anywhere else in this system. There are only these factors, and they are negative-sum, except for market operators and miners.
If you are producing widgets on the side, that is entirely unrelated to the token market. You can do that with any currency, and it is entirely orthogonal to the tokens. You are not creating wealth within that market, you are creating it outside that market, and possibly transferring it into as a separate step, to be siphoned off by market operators and miners.
Now that I understand your point: how is this different from any currency? Currencies are a medium of exchange, by definition they don't have intrinsic value. The value is defined by what you can buy. They are simply a convenient accounting system for value, not the source of value.
How does your argument not apply to every other currency?
Bitcoin implements only half of it, and pretends this is just as good. It is not. It is just gambling.
What does that mean? That the dollar implements the entirety of the economy? No currency "creates value"
I understand what you mean by saying bitcoin is zero sum, but I'm asking for an explanation of how that's any different (for example how is the dollar NOT zero sum)? I don't think you've explained what, in your opinion, is the differentiating characteristic here.
Bitcoin has nothing like this.
It seems like a catch 22 you're presenting. It's a bad currency because nobody uses it, and nobody uses it because it's a bad currency. To me that's kind of a circular argument, and the same argument could be made about any early-stage network (the internet, facebook, etc.)
This is the point you need to expand on. When I asked what the difference between bitcoin and the dollar is, you said the defining difference is that the dollar is used by a country. So if that's not the difference what is?
If bitcoin was adopted, would it not also represent a unit of the economy?
Does your argument boil down to "it's not officially backed by country therefor it cannot serve as a medium of exchange"? If so I ask you WHY that prevents it from being a medium of exchange?
I really don't follow the "negative sum" argument. It seems like that applies to every currency, so it's kind of an irrelevant point
Bitcoin is not managed this way. It has rules set in stone it follows entirely on its own, without external input. This means it exists in isolation, unaffected by whatever economic activity takes place around it. This is entirely unlike a national currency.
You think a requirement for currency is that the country using it can manage it? What about all the non-US countries that use the dollar? They absolutely cannot manage their currency. What about in the past when the US and others were on the gold standard? There are a million counterexamples.
And again, let me reiterate (because it seems we're drifting away from the point here) that we were originally discussing whether bitcoin was "negative sum". I'm telling you that if it has utility (like any other currency) there is value being created.
> This means it exists in isolation, unaffected by whatever economic activity takes place around it.
I don't really know what that means, everything is subject to outside economic forces.
And I have explained why it is negative sum. It is an exceedingly simple system and easy to analyse. There is no value creation involved at any point. Any value creation happens outside of the bitcoin economy.
There are only three factors:
1. People putting real money into markets. 2. People taking real money out of markets. 3. Exchanges taking a cut of that real money.
Nothing else involves actual value.
The combination of 3 and the fact that miners are allowed to do 2 without transferring any value in means that for the reason of the users, the sum is negative.
I think the (implied) argument that the GP is making is such that Bitcoin is having too large of a cost to the value add to society.
I have no idea if this is true or not. I don't even know how we can quantify environmental damage relative to revenue.
In Model B the product is a transaction network that is horribly inefficient in terms of $$$ transferred per unit of energy input. It probably makes sense to buy Cocaine (even then other cryptos are likely more efficient energy wise/secure) with Bitcoin, it doesn't make any sense to buy a car with it when there's already a banking system
Energy -> Factory + Labor -> Goods and Services -> Revenue
Goods and services improve the life of people, and we have deliberately organized our society in such a way that providing goods and services is incentivized with revenue.
That you can also leech revenue for yourself by shuffling liquid assets around while providing no net benefit to the world is a side effect nobody intended. If you happen to reinvest that revenue into something more positive than what the other suckers would have, then no harm no foul, I suppose, but then "Revenue" shouldn't be the endpoint of your model. Something like "Well-being" should.
What are your thoughts of governments using a resource such as hydroelectric dam or wind power to mine BTC and using it to build infrastructure (Goods), healthcare (Service), etc.? It kind of sounds like trickle down economics though, I am afraid.
Well, the typical answer to "what can government do about this thing that is bad for society, but not bad enough to ban outright" is "tax it", though as another poster pointed out offshoring limits the efficacy of this strategy.
I'm going to interpret your second question as "What are your thoughts of governments using a resource such as hydroelectric dam or wind power to mine BTC and using it to increase their budget?" since in general, money spent on Expense X doesn't remember whether it was generated from Assets Y or Z; money in the budget is money in the budget. That said, I suppose I'm not strictly opposed to the idea, though I'd be interested in an analysis of the returns you can get on those CPUs when you're optimizing for a community rather than an individual - for example, how much benefit does society get from putting all that CPU to work for something like folding@home?
I think the other concepts are quite interesting as well. But it’s not fair to say bitcoin is design to destroy the environment as it can also drive people to design ever more efficient ways to produce energy.
Are we converting increase in thermodynamic entropy with decrease in information entropy (with some loss)?
What if we use bitcoins mined by renewable resources (for e.g. Hydroelectric generator) to purchase carbon credits? What would the energy balance and economics look like?
“[These] companies are using extraordinary amounts of electricity — typically thousands of times more electricity than an average residential customer would use. While such a significant amount of electricity usage might go unnoticed in large metropolitan areas, the sheer amount of electricity being used is leading to higher costs for customers in small communities because of a limited supply of low-cost hydropower,” according to the New York State Public Service Commission.
https://www.northcountrynow.com/business/blockchain-industri...
After NY state authorities set higher rates for crypto mining, one of the local communities withdrew from the local power agency so it could set its own rates, which has prompted at least one company (Coinmint) to announce plans to relocate there. https://northcountrynow.com/business/cryptocurrency-mining-c...
Well for what its worth, i think its a bit weird theyre doing this - and hope we get fusion power soon.