Building renewable energy sources in the middle of nowhere to power a bitcoin farm is just completely nonsensical and does noting to help with the shift to renewables.
Specifically, more security for the next block, only. Once that block is mined, the process starts all over again for the next block.
The energy usage reset button is pressed as soon as each block is mined. No energy is "stored".
Sounds like a catch phrase from an "alternative" news site or a thing a member of a religious cult would say.
But, for those without power due to a blackout, you can’t simply spend money and instantly turn the lights back on. You can either have already spent money to have backup power, or you have a problem. It’s like breathing, if your drowning spending money to be able to breath in 2 hours is useless you need air now.
Which is why electric grid operators need infrastructure not money to avoid causing blackouts.
and is the tree I am cutting a battery too?
wouldn't it be easier (and more sustainable) then to plant trees than mine bitcoins?
Because I can buy fiat currency with BTC, BTC is a fiat currency!
In that sense, Bill Gatess "Reinvented Toilet" does kinda the same. People pee and poop, sewage is processed and is converted to clean water and can produce energy [0]. Thus PaaB(!?)
[0]: https://www.elitereaders.com/waterless-toilet-system-generat...
I find it strange that even people at a prominent firm like Union Square Ventures are perpetuating such misconceptions.
Remember, their goal is to make money. As we’ve seen over and over again, there’s a strong financial interest in doing whatever is needed to make their holdings profitable and most will say anything short of legally actionable misrepresentations.
Building renewable energy sources in the middle of nowhere to power nothing also appears nonsensical at first glance, yet it actually happens to the point that energy prices can go negative.
For one, some forms of renewable energy are highly volatile and can not just be made to match demand under any circumstance. Hence there is a need for batteries to store this otherwise worthless energy. Today, these batteries just don't exist, wind farms are ideally backed up by gas plants, whose output can be regulated to even out wind volatility. In other cases, wind is backed up by coal or nuclear plants which can not be regulated as well, hence more of that wind energy goes to waste.
Secondly, especially in the case of China, these renewable energy projects are meant to raise the domestic product and production capacity numbers, with little regard to actual demand. The electricity grid to deliver all that energy to actual consumers is an afterthought.
In due time, these problems shall be solved. Better ways to store volatile renewable energy will emerge, better transmission infrastructure will arise. Bitcoin could be a stepping stone to solve the hen-egg part of that problem.
It seems to inspired or in the spirit of ‘The Ministry for the Future’ by Kim Stanley Robinson.
“ It’s called Carbon Coin in the book, a Bitcoin-like currency that the Ministry gives out for carbon sequestration — that is, any project that sucks CO2 out of the air, whether it’s carbon capture or farmers rewilding their fields — at a rate of one coin to one ton. Oil companies get coins if they stop being oil companies, basically, leaving their assets in the ground for a century or so. Coins can then be bought and sold on currency exchanges like any other.”
The only argument I can see is that the sheer resource hunger will force our hand in using renewable energy. Of course, I am not saying this is a good argument at all.
There is no such thing as virtual energy. And the other forms of payment we use are a million times more energy effective.
What bothers me is that newsletters as this one who I believe are widely read serve this up as a good idea.
https://www.exponentialview.co/p/ev-315
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This is actually a weird game theory problem because there are a lot a miners with expensive hardware that would be worthless if such a change happened. You could fork it, but you'd have to attract miners after burning them (possible if commodity GPUs were viable, again), and you'd have to convince people that the new tokens are also valuable, and this isn't just Bitcoin Cash II.
Bitcoin has odd, long-term systemic risks based around miners.
Cleaner energy sources are a necessity, but simply reducing consumption will always have the best impact on sustainability.
I'm happy to let BTC win if it means that global warming is halted. But if worldwide net zero emissions is a prerequisite for BTC being considered non-wasteful then that's a tall order.
"Distributed" sounds nice, but it isn't really that valuable in the end.
>>>Response to Dan added here due to rate limit.
> waste power
Infinite energy in the universe and everything mankind has achieved has been in large part due to energy consumption. The idea that we should now stop that trend is antihuman/antihuman-progress at its core.
Let the individual/market decide the best uses for energy... not your money = not your choice.
BTW off-planet mining using the sun/stars is a great idea for the future and doesn't require them to be blacked out.
What GP is saying is that switching to renewables doesn't make all of the negative externalities of wasting power go away.
You shouldn't extrapolate out on that to some grand view of the world that says we should never use technology. It just means we shouldn't waste power, and we shouldn't use "solar" as an excuse to waste power.
[0]: After all, Dyson spheres are powered by renewable energy.
> not a battery
What's a better way to losslessly and securely store human labor/time for future use? Almost everything else (fiat, gold, silver, real estate, etc...) that exists is debased/debasable, deteriorates, or loses value.
The above arguments completely hinge on energy being "wasted". Lossless labor/time storage isn't "waste" to market participants seeing a need for it and putting their hard earned money behind it.
Bitcoin basically turns one of the hardest to counterfeit things in the universe, energy, into money.
How else can you achieve lossless storage without a trustless secured environment (the bitcoin network)? Any multi-decade/multi-century solution that market participants should focus on instead?
Look, yes, Bitcoin is deflationary, but it's still subject to market pressures. It's not technologically guaranteed to be worth anything 200 years from now.
Besides that...
> securely store human labor/time for future use?
It's not secure storage if you can't retrieve it[0]. What do you mean by "lossless"? You permanently lose all of the energy when you convert it into Bitcoin. You can not get that power/energy back, it is gone. What you hope is that the value of Bitcoin will allow you to trade your coins for somebody else's energy. But guaranteed scarcity is not the same thing as lossless storage, otherwise we would store all of our Youtube videos on collectable Beanie Babies.
Bitcoin's value is based on social consensus, not because it can be converted back into electricity. You're not storing anything, you are using a scarce resource to guarantee that it will be difficult to create more Bitcoin in the future, thereby creating a deflationary currency.
> Any multi-decade/multi-century solution that market participants should focus on instead?
All of them? Most currencies have been around for multiple centuries. The US dollar has been around for multiple centuries, and the US dollar is young.
Yes, the value of the US dollar can fluctuate, but, and I can not stress this enough, so can Bitcoin's value. There is no magical technology that makes Bitcoin worth anything, it's worth what people are willing to trade for it.
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Maybe a thought experiment will help here.
If you think that Bitcoin is genuinely storing energy in a lossless format independent of market pressure, then I should be able to create a new Bitcoin using the exact same technology because it's Open Source, and it should also be just as valuable, right? I just need enough people to join in on mining that it's difficult to commit fraud, and now my secondary coin should be just as good as Bitcoin at storing value, because it's using the same technology, the same distributed governance model, and the same electricity to power it.
Heck, I don't even need to create a new coin, I can fork the current chain; that's what Bitcoin Cash did. So let's say I fork Bitcoin's chain, and all of the exchanges that currently take Bitcoin also start taking my new coin so it's similarly decentralized.
Have I just doubled the amount of electricity in the world? No, of course not. Because the value of both coins will be based on social consensus, not because they are a perfect digitized storage medium for electricity.
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Another thought experiment on retrieval.
Let's say tomorrow, the apocalypse hits. The US government collapses, the dollar is worthless, all governments are overthrown. Government-issued currency is only fit to burn. Gold isn't even worth its weight in food. Only Bitcoin remains.
Now, bear in mind that the Internet does not exist anymore, because the US government and a bunch of centralized, US-dollar funded corporations were maintaining it, and they're all gone. But you would like to convert your Bitcoin back into electricity, because it's a lossless store of electricity/effort.
How do you do that? How do you even trade your bitcoin when there is no network for you to connect to? A truly lossless store of electricity should be able to handle that situation, right?
Owning 1000 satoshis/21M BTC is guaranteed to be worth 1000 satoshis/21M BTC 100 years from now, it can not be debased.
Every fiat currency (USD, GBP, CAD, AUD, etc..) has a denominator (aka max supply) that increases. Almost every fiat currency dies a horrible death in less than a century due to this inflation. 1 British pound sterling used to buy 12 ounces of silver but is now worth 0.5% of its original value and dropping. This is not lossless time/labor storage, the denominator is increasing rapidly as central banks respond to the crisis of the day.
How does a beanie baby look after 100 years without maintenance, no deterioration? How easy is it to counterfeit a beanie baby? The problem with your approach to criticizing BTC is you believe you can isolate the properties first. All the properties I mentioned and more work together in a synergistic fashion to create a lossless time/labor energy storage network.
>I should be able to create a new Bitcoin using the exact same technology because it's Open Source, and it should also be just as valuable, right?
This would be true if we ignored one of the primary laws of money, "hardest money wins". There can literally only be one hardest money, and capital will flow into it precisely because it is the hardest and acts as the best store of value. This is where looking at BTC as technology first leads you astray, it is in fact money first. Money will flow into one rather than the other BTC fork and the one with the highest hash rate will secure value better. The network with the highest hash rate will also have a huge incentive to expedite the death of the softer/less-secure money/network through 51% attacks and more... then consume its value.
Silver was the hardest money in the world until people realized gold was more scarce and harder to mine...silver turned into a shitcoin not long after that moment. Anyone that continued to hold silver after that point suffered a tremendous loss of value... hardest money wins in action. Bitcoin is now doing this to gold and every store of value on the planet thanks to better design.
>How do you even trade your bitcoin when there is no network for you to connect to?
This is P2P money first, just because it has now scaled to 10M+ users doesn't mean it can't run like it originally did, with 1 miner and 1 node. It can scale all the way back down to the size of whatever is required in your doomsday scenario. It will still be the hardest money in the universe in that scenario since all networks will be equally affected by the blackswan, so the people that do continue using it will appreciate its lossless storage and retrieval of human labor/time energy. We already have the blockstream satellite for transactions (Puerto Ricans were using BTC while banks were closed due to no electricity after the recent hurricane) and over the next decade nodes and miners will be put in space (probably by SpaceX and other large holders pushing for multi planetary human existence)... the network hasn't gone down in 12 years and after space nodes/miners are in place, the network will never go down unless an extinction level event occurs in our solar system. It is so well designed, it is already a space money solution.
I took another run at this because the longer you take to understand these concepts the poorer you will be. This may be among the most important information you could ever receive at this moment in history but requires knowledge in ~5 disciplines to fully appreciate... ~200 years ago I would've been doing something similar by telling you to convert your silver to gold before the price plummeted into a death spiral.
That's your definition of lossless storage? Literally any limited-run asset fits into that category. It doesn't mean that your 21M BTC 100 years from now is going to be worth anything, because limited-run assets are not inherently valuable.
It certainly doesn't mean that Bitcoin is a store of electricity because, again, you can not get that electricity back once it is lost. You are hoping that other people who didn't put their electricity into Bitcoin will trade you some for an asset. That is not the same thing as retrieval.
> Almost every fiat currency dies a horrible death in less than a century due to this inflation
No? That's just very blatantly not true, to the point where I don't understand how you made that error. The US dollar is multiple centuries old. The EURO is multiple centuries old. The most common currencies today across the world are multiple centuries old.
It would be a massive stretch to try and argue that all of them have horribly died, given that I can 99.99% guarantee that right now your job is paying you in one of those currencies.
> This is P2P money first, just because it has now scaled to 10M+ users doesn't mean it can't run like it originally did, with 1 miner and 1 node.
I don't mean to be confrontational about this, but do you understand the technology behind how blockchains work? The whole point of the blockchain is to prevent double-spending. If you're waiting months to reach consensus in a P2P network, that's months before you can be sure that a transaction went through securely.
If you have 1 miner and 1 node, and if lots of people across an environment are building this setup, you have effectively mass-forked the blockchain already. You've lost the ability to prevent double-spending. The only reason Bitcoin is secure is because everyone uses the same chain and is connected to the same network. Fracturing that chain is forking. That's what forking is.
This is also why Bitcoin is having difficulty scaling, because the whole point of a blockchain is that you need network consensus and network consensus takes a lot of time/energy. The reason you can't double-spend is because your hardware is slower and less powerful than the overall Bitcoin network. A single-pool network destroys that principle.
This is also why people are worried about the environmental costs. You seem to be looking at mining as something separate from the transaction process. It's not, mining is how transactions on Bitcoin get written onto the chain. That energy cost doesn't go away, it's an intrinsic part of how transactions get confirmed and secured. The principle is that the more people you have mining, the harder it is to commit fraud. A 1-person pool is not secure.
> This would be true if we ignored one of the primary laws of money, "hardest money wins". There can literally only be one hardest money, and capital will flow into it precisely because it is the hardest and acts as the best store of value.
So in other words, it's exactly like I said and the value of Bitcoin is based on social consensus that Bitcoin has value, not on an inherent immutable property of Bitcoin itself.
You don't know that 200 years from now a better store of value won't come around, and if that happens, your own principle of "hardest money wins" will guarantee that your Bitcoin is worthless, because the newer, better store of value will be the "harder money".
> I took another run at this because the longer you take to understand these concepts the poorer you will be.
No offense, but I think this is part of the reason why people compare Bitcoin to a pyramid scheme. I do understand the tech of Bitcoin and the economic theory about it. I've been hanging around this circle and listing to the talks and proponents since early 2013-2014. I've dug into the algorithms that make this work and listened to the economic theories that early proponents were using to justify their experiment. What that experience has given me is an understanding that this process isn't magic.
So you use words like "space money solution" which means nothing for a network that requires real-time consensus to confirm transactions. You're saying that the network literally can't go down, which displays a wild misunderstanding of how mining actually works and why it's important to the technology. You seem to be under the impression that Bitcoin is magical just because it's complicated. But as someone who has genuinely been in this space for a long time and genuinely spent a bunch of time learning how the technology works, most of the magical properties you think exist... don't.
You're buying into a technology that you don't understand, based on wildly flawed economic ideas like "deflationary assets can't go down in value", an idea that can easily be proven false just by looking at the history of literally any other deflationary asset. Never mind the fact that silver and gold are also deflationary assets in the long term; apparently they don't count because they physically degrade, a process that hard drives are magically immune from. Never mind the fact that you yourself seem to understand that silver dropped in value when gold took over; apparently that can't possibly happen with Bitcoin because it would be impossible for anyone to iterate on the technology. We should all just buy into this idea because you said the words "space money".
Fiat currencies aren't backed by commodities... the modern fiat dollars we have used since 1970 are very different from what existed before that point in history. It can be and should be considered a separate currency.
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You seem to not know the history of money/fiat currencies and make a lot of assumptions about things that are not based in reality.
Being in this space since 2013-2014 doesn't mean you have a good grasp of the tech or the economics. Many people that arrived at the btc maximalist position in the last 6-12 months have more of a basic understanding of these topics, I can tell from your responses.
Unfortunately this is growing too long for me to respond to and I gave it a good go, so I will let the market teach you the rest of this lesson (warning - the market is a harsh teacher). I would have to give you a course in monetary/economic history to adequately do this topic justice and this is not the format that is best suited to do it in.
Good luck holding on to fiat as a store of value.
It's not "required", it's only that high because it has so much success. Bitcoin would be working with only one miner running, the first blocks were minted on a private computer.
Also its about hash power not number of miners, that's completely irrelevant. 100 or 1000 miners that means nothing.
Miners have, in the past, resisted improvements to the network that would reduce their profits so this all seems pretty unlikely as well.
Also, it is not clear that having more or fewer miners on the network drives prices - it seems more likely that more miners reduce transaction/confirmation times, improving service levels and increasing value (to the extent that actual transactions drive value or price).
Of course it is. If it costs a miner $10k in electricity, rent etc to mine 1 BTC, they will need to sell at least $10k worth of BTC to cover their cost. If they stop mining, they will have less pressure to sell.
Miners hold over 2mm BTC so hard to see how their actions have no direct impact on price.
My point, is that when electricity costs approach zero, more people will mine which will impact prices.
But it seems that the cost of electricity can drive down prices, not only up.
You said that price of electricity 'backstops' prices, and that miner spending $10K on electricity will need to sell that much BTC. Seems more like an inverse relationship. They need to sell $10K whether the price is $100/BTC or $100K/BTC, so lower BTC value makes more selling. Similarly, higher elec costs increase ready supply of BTC on sale, more supply lower prices.
On the other side, lower elec costs, mean more hoarding by miners, reducing sell-side pressure/supply
This would seem to make elec costs inversely related to BTC dollar value, not supporting it - so an effect, but in the other direction?
The article states that Bitcoin uses a lot of energy and as miners want to maximize profit, they want cheap energy. This is good for renewables as that is cheaper than other forms of energy generation.
Doesn't everyone want cheap energy, like factories or heavy industry? Are Bitcoin miners really more eager to push for clean energy than other industries?
The whole arguments sounds like "we need to use up more energy so there's more incentive to produce additional, clean energy".
In a world that’s already struggling with this, it makes no sense at all.
Yes. Given enough time, Bitcoin will gentrify the power grid.
> In reality, this couldn’t be further from the truth. Bitcoin is actually one of the greatest financial incentives to transition the world to clean energy.
without bothering to explain why any one point they highlight would beget any one outcome claimed by the post. In fact, there are some backwards incentives that are missed. An example would be their claim with regards to Great American Mining: rather than using mining as an incentive to pay for capturing lost methane, what's to stop producers from diverting existing gas production towards mining right now, putting demand pressure on existing supplies and driving up gas production (and leaks, etc.) rather than just capturing and processing leaked gas?
There's nothing. There's no incentive for existing gas facilities to fix their leaks when they can just pipe their existing output into bitcoin, drive up demand for gas, and therefore justify more drilling (and more inevitable leaks that they won't have any incentive to fix).
> Bitcoin isn’t bad for the environment. In fact, Bitcoin is very, very good for the environment. The University of Cambridge reported at over 75% of miners use renewable energy and now there are solutions to turn methane emissions into mining as well.
This doesn't mean anything. Or worse, it means 25% of a phantom industry makes use of dirty power, So whatever Bitcoin imposes on the world in power usage (130 Terawatt-hours of energy - https://techcrunch.com/2021/03/21/the-debate-about-cryptocur...), 25% of that, or about 0.15% of global power production, leverages dirty fuels. If all mining ceased tomorrow, we'd benefit substantially from dirty power usage coming down and more clean energy supply being directed back into productive work.
Thanks for hearing my rant.
Because it makes 0 financial sense to do so. The market demand for gas waaaayy out competes bitcoins demand for gas.
wish I could downvote.