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Comment by onlyrealcuzzo | Hacker News Reader

Global wealth is $400T. All crypto currency combined is worth about ~$2T at this point. So to store 0.5% of the world's wealth, we are using 0.6% of the world's energy.

Banks obviously don't use anywhere near this much energy. Bitcoin is estimated to use more energy than all other server farms put together.

So we are using 0.6% of the world's energy to store 0.5% of the world's wealth. And < 0.6% of the world's energy to store the other 99.5% of the world's wealth.

Doesn't seem like the ideal wealth storage technology.

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I would include the energy needed to maintain trust in other currencies including efforts to prevent counterfeits, which I might argue includes some portion of a nation's militaristic might. Trust is an even more ambiguous, yet crucial aspect of maintaining a currency's value, tied up in the "order" or predictability of the society using the currency, which involves various legal systems and at the most basic level, relationships between its peoples.

It takes a relatively minuscule amount of energy to maintain a database of numbers associated with certain people and entities, but quite a significant amount to make it mean something.

If this were actually true, Coinbase would not need to exist with a market cap of $100B.

I don't really understand this argument. If militaries are part of the embodied infrastructure of a country's banking system, this would imply that replacing the banking system with something decentralized (like cryptocurrency) would cause countries across the world to reduce their military footprint.

I find it much more likely that military resources would be diverted to somewhere upstream of mining in the value chain. For example, if we continue relying on carbon-intensive proof-of-work blockchains, why wouldn't armies simply be diverted to secure energy resources?

Yes, similar to countries going all over the world to find gold in years past. In that sense, fiat would require less military since you don’t need to go conquer anyone, just being able to project enough of a threat to stop counterfeiting is enough.

Either way, it’s very convoluted and tough to tease out line item costs, but I don’t think comparing electricity usage is a good proxy.

My point is that, if a country no longer derives its power and wealth from controlling the banking system through military might, rather than freely giving up that power, it's going to flex that military might in other ways to ensure that it maintains that power and wealth. If crypto merely displaces military resources (as I think it would) instead of replacing them (as you seem to be arguing), then it's not really fair to count the military as part of the banking system's energy/carbon footprint.

That's why we need centralized exchanges like coinbase to enable off chain transactions within their walled garden. Then we can have the worst of both worlds.

The energy spent on bitcoin’s proof of work is not tied to the volume of transactions though. At a technical/protocol level, the same amount of mining would be needed if there was $100 trillion being stored or $1 being stored.

Although higher prices make larger mining operations more enticing and profitable.

I like this reasoning in terms of global wealth

The energy is not spent on storing though, it's expended when verifying transaction, isn't it?

In the sense that verifying transactions is what keeps the bitcoin network alive.

Yeah but if people would mostly store their bitcoins, wouldn’t the energy needs go down?

Here is where Bitcoin's wasteful algorithm comes in. The vast majority of the energy expenditure comes from bitcoin miners burning compute cycles to bid for the right to add the next round of transactions to the ledger, which happens every 10 minutes. The more energy that the miner spends on computing SHA1 hashes, the higher the chance that they'll find a lucky hash that entitles them to a monetary reward from the transaction fees, plus freshly minted bitcoins.

The idea behind this proof-of-work scheme is that creating an alternative blockchain history becomes prohibitively expensive, pushing the network to achive a distributed consensus. However, it's tremendously wasteful because the energy isn't actually being spent on "useful" work.

> So to store 0.5% of the world's wealth, we are using 0.6% of the world's energy.

It's even worse in terms of energy per transaction.

Which is a useless metric because the energy usage doesn't scale with the number of transactions.

What's the total energy cost, including human capital, of keeping the petrodollar afloat via global wars/hegemony?

Even if it is greater than 0.6% (it's plausible) - dollar denominated wealth accounts for 25% or global wealth. Which is 52.5x the amount of wealth as all of crypto.

The US doesn't even use 20% of the world's energy. So you would need to think that 125% of the energy the US produces and consumes goes directly into fighting wars and "supporting the petro dollar" - which is absurd. Almost 50% of energy is spent on transportation and utilities alone...

In the most generous of worlds, Bitcoin is 10x less efficient than the current systems. It is probably closer to 1000x less efficient (or more).

Well the US has killed over a million people in Iraq, Afghanistan, and Syria in the current wars. How are you calculating the cost of that million lives to prop up the dollar?

This is one of the biggest selling points of crypto, it’s not tied to a government that may decide to commit mass murder for its sake.

This implies that the energy required to store wealth in centralized databases is easily calculable.

It also implies that the goal of storing wealth is optimizing for low energy usage, which seems less important than security/safety, ease of transfer, taxation, automation, and other factors.

I’m not making an argument for or against PoW. Just want to point out it’s possible >.6% of humans energy output may in fact go towards banking and payments.

This is a poorly reasoned comparison. The .6% figure was in reference to .5% of wealth; presumably much more energy would be required to store closer to 100% of wealth with crypto.

Given that we are nearing the irreversible destruction of our climate and that existing electronic systems offer all the benefits you mention, but with massively lower energy cost, your claim that energy “seems less important” is unsupported.

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