Whether you like it or not, Bitcoin's current market cap is 1 trillion$ (which btw is more than the GDP of many countries), when you look at it from that perspective, the energy spent to secure it is worth it.
To make this more obvious suppose all money was bitcoin. By your logic it would be worth it to make our sole economic activity 'securing' it. We'd literally all starve and die.
Wrong. The number (or more specifically "weight") of the transactions that can be processed in a given time period is constant, and does not scale with the hash rate.
> it would take more than the entire energy production of the world to make bitcoin the sole currency
I do not follow..
Sound good so far?
Next, the block reward is denominated in BTC. Currently 6.25 BTC every 10 minutes, but it'll halve again in 2024. The block reward, plus transaction fees, is what the network pays miners. It makes sense for miners in aggregate to expend about that much money on mining, because if the network is spending less than that, there is still profit available for additional miners joining in.
If that 6.25 BTC becomes valued at 10x or 100x as much as it is today, the expenditure on mining will also be 10x or 100x larger. Obviously this can't actually exceed the energy production of the world because that's impossible, but this new artificial demand for energy can soak up lots of capacity that would otherwise go to more productive, yet less profitable, endeavors. The fact that it's using 1/200th of the world's energy production already, while it's just a toy speculation vehicle, doesn't bode well.
As you correctly point out though, this additional expenditure on mining will do absolutely nothing to help the number of transactions that can be processed in any given time period.
Nobody here is impressed by you, the condescension sounds ridiculous.
> the expenditure on mining will also be 10x or 100x larger
This is correct, but the assumption that energy will continue to represent a very large part of that expenditure is faulty. There is a huge incentive for miners to mine more efficiently, especially in this hypothetical universe where Bitcoin is driving up energy prices.. That expenditure could easily be disproportionately spent on more efficient hardware / algorithms.
Alternatively Bitcoin might not be using proof of work in this hypothetical future. It's not immutable.
I suspect mining expenditure would still be mostly spent on energy usage, not finding more efficient hardware/algorithms, since mining is an arms race -- when miner A finds a more efficient algorithm, it's only a matter of time before miner B finds it too, and then they're back on level ground competing over energy.
But even if this is not the case, I don't particularly care whether the mining expenditure is spent on energy, or developing and manufacturing new mining hardware, or sacrificing goats to a hash-finding deity. Since the amount of mining the network does is set by a price tag (the block reward), and its intent is to make 51%ing prohibitively costly, by definition it must use up some valuable resource. Whether that's energy or human ingenuity or semiconductor production is just an implementation detail but it'll always be a waste.
If Bitcoin switches away from proof of work, I'll stop criticizing it for the inefficiency of proof of work.
I can't imagine an algorithmic or hardware improvement that would stop a proof of work system scaling with energy input.
You might be right though, but like I said I don't think PoW is necessarily the final state.
It indeed makes no sense if you completely ignore half of the argument (and probably misunderstand it on top of that).
The argument was that it makes sense to spend currency for security equal to the amount of currency you are securing, meaning if you do that for all currency, (pretty much) the sole economic activity will be securing it.
Suppose for the moment that what is mining power to bitcoin is the US military to the USD. It makes no sense to spend all USD on just the military, so that it can secure the currency, does it?
You are right, I don't understand this argument at all. It only makes sense to spend the minimal amount that would keep it secure.
The incentive to mine is only the block reward, which is only transaction fees plus inflation. The incentive is not the entire pool of currency.
I'm not sure what you mean by the 2nd paragraph, are you saying if all money was bitcoin, we'd only spend energy to secure that and we wouldn't do nothing else? That wouldn't make sense right? If all money was Bitcoin, there wouldn't be as much upside to it, because it will have already won, so you'd need to do other economic activities which will grow faster than that.
It's just another one of the forms of mutually assured destruction that we will eventually have to confront. It's unfortunate that being very obviously horrible isn't enough to change it, but the same could be said for climate change or nuclear proliferation, and these things are still moving along, full-tilt.
If anything, this problem is not limited to Bitcoin, we should put a carbon tax on everything with externalities. Why just focus on crypto when there are far bigger polluters?
According to who, the people making all the money? It's obvious that people don't find it that simple.