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Comment by orblivion | Hacker News Reader

Okay, here's my Big Brain, 4D Chess take:

Elon Musk wanted to adopt Bitcoin, but he knew there was this big problem with energy consumption. It's bad for his brand, and perhaps goes against his own ethics. Could he say "hey, get the energy consumption down and I'll go all-in with Tesla"? People wouldn't think much of it.

Better option: Buy a huge stake in Bitcoin, announce that he'll be accepting bitcoin at Tesla, get people really excited, heat up the market, and then pull it out from under them. Now all of the big stakeholders in Bitcoin have a clear, almost measurable incentive to clean up bitcoin's act. If Bitcoin adopts proof-of-stake or whatever needs to happen to bring down energy consumption, people will look back and thank Elon Musk for it.

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https://www.bloomberg.com/opinion/articles/2021-05-13/elon-m...

  Surely by next week he’ll be tweeting, like, “we are building a giant battery in the desert to mine Bitcoin, Bitcoin is good again, you can use it to pay for Teslas,” and the price will shoot back up, and I’ll once again hit the button that auto-generates this column.

Lol. I freaking love Money Stuff. Levine writes so clearly and humorously on so many modern finance topics.

There was a time Porsche made more profits than revenue, back before the 2008 crash. Mainly due to financial shenanigans, primarily with VW. Came crashing down in 2008 with the failed acquisition of VW, that ended with a merger of kinds.

Maybe Tesla ends up in a similar situation, making the majority of it profits from Bitcoin. Wouldn't be to bad for them short term, it would mud the waters regarding Tesla even more so.

Whenever people start talking about Big Brain 4D Chess I think, probably not it.

Elon is pretty busy, before he got into space flight, he new very little about it. Some people at the time said as much. However 2 years later the same person said he was literally an expert on many things and had learned an insane amount.

This seems more like Elon became convinced of the potential of crypto currency in general, told Tesla to look into it, if it is a viable cash storage and if it is, logically using it for payments make sense.

Then they based on their internal team for evaluation of environment they saw that their entrance in the market caused a massive spike and released if this continues and they continue to drive people in that market it would be damaging for the mission.

It reasonable that they didn't understand how large the increase in power consumption was and how large it would be if it continued to be adopted. So rather then continue to drive in that direction they pulled the plug.

I know, its not a crazy big brain story, but its actually how most flawed process happen.

I forgot to consider that he caused the spike in energy usage in the first place. I think this makes more sense.

Still, the outcome may be about the same. The incentives I described are still there and staring them in the face.

It is not possible to clean up bitcoin.

Even if it moved entirely to renewable energy it would still be a massive opportunity cost. There are productive uses that energy could be put to. Bitcoin is not productive.

Using gigawatts to process a few transactions a second, when existing financial frameworks can process millions of transactions a seconds at a fraction of the energy input means that bitcoin is always a massive waste.

There is utility in the bitcoin network that is not found in existing financial systems (censorship-resistant, seizure-resistant, borderless, and pseudonymous). And If you are thinking about the energy consumption of btc on a per transaction basis you are misunderstanding that the btc network should be thought of as a settlement layer, rather than a payment layer.

> Bitcoin is therefore best understood as a high-integrity utility-scale settlement network, similar to Fedwire [...] No surprise that like other real-time gross settlement systems, Bitcoin is a suitable base upon which other payments networks can be built. These are numerous, but they include off-chain transactions at exchanges, near-chain solutions like Lightning, sidechains with new trust models like Liquid and Rootstock, and smart contract platforms like Blockstack that rely on Bitcoin’s security.[0]

The myopic focus placed on the bitcoin networks energy consumption has always seemed absurd to me. Considering all the plastic junk manufactured in China, shipped on giant container ships all across the globe, emitting vast amounts of carbon, only to be thrown away a year later. To me, this alternative monetary systems provides far more utility to humanity than some plastic funko pop figurine. But the latter slips under the radar and the former attracts huge amounts of criticism. It's almost as if there is some concerted effort tarnish the public opinion of bitcoin.

[0] https://www.coindesk.com/frustrating-maddening-all-consuming...

> the btc network should be thought of as a settlement layer, rather than a payment layer

This ruins all of the stuff you mention. Or at least restricts these nice features to the rich. People don't have access to these features if they are only used indirectly through the major institutions they work with.

All of those features remain intact, even with the eventual creation of a payment layer. There is nothing to prevent someone from transacting directly on the blockchain.

Except the high fees due to limited throughput and the absolutely gargantuan CO2 emissions, which are the topic of this thread.

You can't say it is a settlement layer in one breath and then immediately turn around and say that no really everybody truly has access.

Yes, that’s how the btc network works, that’s what censorship-resistant means. You would primarily transact on a payment layer, which true, may not have all the features of the base layer. But you also have the ability to opt-in and transact directly on the blockchain and get all those nice features listed above, however the transaction fee would be higher and the speed of the transaction slower.

For some definition of "higher" and "slower", yes. The scale of BTC is such that if we distributed transactions evenly across the 7b people on the planet, you get one transaction per five years.

The current mining payout is 6.5BTC per block, or roughly $350,000. We are fitting around 1,500 transactions in a block, meaning each transaction costs $300. The price will only rise as more miners join and there is more demand for space in a block. The international poverty line is such that a single transaction would cost somebody at that line half their year's wages.

All that good stuff won't be available to the masses. Just the rich and powerful. Hooray.

> you get one transaction per five years

Isn't it per 89 years? So basically every person gets one transaction in their lifetime. (If we are generous and allow for 5 transactions per second, then everyone can make 2 transactions in their lifetime. Yay!) That is rather remarkable.

(1500 transactions/block * 6 block/h * 24 h/d * 365 d/y / 7e9 person = 1/89 transactions per person per year)

I grabbed some page that claimed 7 transactions per second and also did the math wrong. Not sure how that happened.

This is the big reason why I don't buy the lightning network. It won't be possible for people to have a wallet that connects to some lightning hub, since opening and closing a connection requires an on-chain transaction. So it will be impossible for anybody other than the richest few to even possess a useful wallet. Everybody else will have bits in a database they don't control.

Golly. All those things (just like payments) are available much cheaper other ways.

I am not a cryptographer, but the cryptographers I know and trust all agree on that.

Say you wanted to pseudonymously send funds to a family member with a frozen bank account in say, Gaza, by the end of the day. What tech would you use to accomplish this?

Please don’t use Gaza as a justification to this broken piece of technology. That’s borderline dishonest.

It's 100% honest. Palestinians have been using bitcoin for exactly the reason I mentioned above. [0]

[0] https://www.coindesk.com/crypto-gaza-west-bank-bitcoin-pales...

"myopic focus placed on the bitcoin networks energy consumption"

It is not myopic to look at, and call out, the elephant in the bedroom

> There is utility in the bitcoin network that is not found in existing financial systems (censorship-resistant, seizure-resistant, borderless, and pseudonymous)

That utility exists in most of the crypto offerings. Bitcoin is horribly inefficient as a payment layer although that's exactly what people want. If it's not good for what people use it for, something better will replace it. It's not about who's first, but who's last.

>> Considering all the plastic junk manufactured in China, shipped on giant container ships all

ah there it is, the straw man. The "plastic junk" makes a lot of poor people's lives a bit better, but fuck those people right?

Layer 2 scaling solutions?

They are like Yeti: everybody talks about them, but no one has actually seen them.

People are using lightning right now. Your ignorance of it isn't proof of absence.

Existing financial frameworks sit on top of the whole lot of trust-providing institutions, that include governments and us army. If you would compare energy consumption of all that, bitcoin could be cheaper alternative. Maybe.

Bitcoin sits on top of those very same institutions as well. The only thing stopping criminal gangs from stealing the keys to your wallet forcibly at gunpoint is the justice system. And the blockchain could not exist without the massive government subsidized investments in network infrastructure.

You seem unaware of proof-of-stake and other initiatives that should significantly reduce Bitcoin's footprint.

...which are unlikely to ever get implemented because adoption of such an "initiative" would have to be decided by miners, and that decision would immediately make their very expensive ASIC hardware completely worthless.

That is not bitcoin

The mere technological advance bitcoin has enabled via blockchain alone has led to creation of smart contracts and an explosion of innovation in the space, no doubt all this will inevitably lead to massive productivity gains. Maybe bitcoin itself won't be the final answer but something inspired by it will be.

I don't think there's any 4D chess. With most of his stuff, he's just selling a story.

Lately, that story (and the products to match) have pivoted from eco-luxury (Roadster, Model S/3/Y) to a story targeting the well-off eco-prepper crowd.

Switch out the underlying technologies and the customer demographics and it would would be offroad pickups instead of Cybertrucks, propane generators instead of Powerwalls, suitcases of unmarked bills instead of crypto, flamethrowers instead of guns (ok, I'm stretching the analogy, but you get it).

And just like with the lower tech equivalents, the likelihood/frequency that most of his customers will use the products to anywhere near their full potential is close to zero, because most still live well within the safety margins of civilization.

And whether he actually believes in any of the story himself is sort of besides the point, because there are enough people that fit the above description who will eat up his products and the story that comes with them.

This is not to diminish how much he's done to accelerate EV adoption. He realized that most people aren't really onboard with using EVs for the sake of the environment, and that you have to target people's selfish needs to move a product, not their prosocial feelings. Remember that Nissan Leaf was the first mass market practical EV, before the Model S, but for a whole lot of people it didn't do much for their mojo.

It's not that complicated: https://arstechnica.com/tech-policy/2021/05/private-equity-f...

I feel like the acceptable level of due diligence that should have necessary for Tesla to move in the Bitcoin direction should have easily accounted for a possibility like this.

BTC would not survive a PoS fork. The threat model requires a consensus mechanism to include a huge network of hyper vigilant greedy actors that may enter or leave at will. For a linear utxo blockchain, there’s nothing but PoW with those properties.

The energy consumption is the only security mechanism Bitcoin has. It's impossible to drive it down.

PoS would be a completely different fork, and it's not clear how secure/censorship-proof it would be.

Any protocol change is, by definition, a fork. If everyone says the new PoS Bitcoin is the real Bitcoin, then it is so.

But what would be incentives to using a PoS Bitcoin fork, as opposed to starting over with a fresh altcoin?

You keep the existing network effects which are massive.

Some interesting timing [0].

[0] https://www.reuters.com/business/sustainable-business/exclus...

I like to believe to that theory as well.

But there is probably a simpler explanation : crypto is still experimental and Elon is pragmatic as new informations arrive. Where Bitcoin is the graal for some people, for Tesla it was only another real scale experiment about a payment method.

No 4d chess needed. It feels like this was a simple pump and dump.

Did they sell their remaining 1 billion in bitcoin? I saw they sold 100m a few months ago.

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