Unfortunately, production of energy is one of the very things which is driving one of our biggest global problems - global warming.
I don’t see how the two can be decoupled.
Bitcoin’s value isn’t coupled to energy. However, it does have a perverse incentive to miners to consume as much energy as possible.
Each additional miner that comes online doesn’t really add anything of value to the network at this point. It just consumes more energy. Each miner plays a game of maximizing their own energy usage to maximize their take of the fixed rewards structure.
It has to be the single most inefficient large-scale engineering project I can think of, and certainly the only one that literally pays people globally to make it less and less efficient.
Then what would happen if the energy and materials needed to compute the hashes were literally zero cost?
The reason it consumes so much energy is because people really don't trust each other.
Not necessary people in general. But people interested in crypto certainly don't trust each other.
So the more demand there is for irrefutability, the higher the energy costs.
Its a distribution layer built on top of it.
Not even that. A large majority of Bitcoin holders actually store 'their' Bitcoin in exchanges (who are known to be completely untrustworthy). Binance's cold wallet is actually the largest single holder of Bitcoin. It's just a get rich quick scheme
That there's a link between how irrefutable the ledger is and the energy cost/how distributed the miners are is what I find quite interesting. It's not quite E=mc^2, but it feels like it's getting there.
What does this quality imply for most commodities?
Sorry, but it is?
"The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended."
If the price rises, the mining becomes more profitable, more miners jump in, and mining gets more difficult so the issuance rate stays roughly constant.
If the price falls, mining becomes less profitable, some miners drop out, and to keep issuance from slowing down the difficulty is decreased.
Whatever the price does, the energy usage follows. So we can't really say that energy usage is the foundation of BTC's value, it's the other way around.
The second thing is that there's no certainty that bitcoin mining is actually causing us to kill ourselves or that it causes meaningful levels of harm. Lots of panicky hand waving around the subject, but little concrete evidence of the hysterical thing you stated.
Furthermore, energy consumption per se is not inherently bad, even for very dubious uses. It's how you procure your energy that defines harm, not that you use lots of it. If for example, we were seeing people mine bitcoin with say, solar power, or mini nuclear fusion reactors, it wouldn't matter that they choose to use energy they paid for on something some perceive as wasteful.
A Bitcoin miner powered by a solar panel isn't contributing to global warming beyond the manufacture of the solar panel. The problem is how we generate energy.
If someone wants to consume electricity mining bitcoin thats every bit as valid use as their time as playing video games imo. I choose to play games because I prefer that.
Should we count the cost of manufacturing the computer(s) doing the work? More so if ASIC? The recycling-or-not of same?
I’ve been thinking about “mining something” since I will soon have a surplus of solar energy I can’t sell back into the grid. Not a ton but enough to maybe join a pool and make a small profit.
But even then it strikes me as wasteful… gotta do something with that box when it’s obsolete.
No economist would say the value of anything is based on scarcity. Scarcity is basically a code word for supply. The value of things is determined by the intersection of supply and demand, not supply floating in a vacuum.
b) > If value of a commodity is predicated on scarcity - eg gold - then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based?
What are you even trying to say here? Do we say cars are subject to some impossible contadiction because they consume energy? Do we say the heater in your home is valueless because it consumes energy? Do we say your bank is somehow invalid because it's operations consume energy? What does any of this have to do with the fact that bitcoin doesn't have an unlimited supply (ie is scarce)? This is complete gibberish.
Unfortunately this seems to be more like wishful thinking. As one example: https://ourworldindata.org/grapher/energy-consumption-by-sou...