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Comment by PragmaticPulp | Hacker News Reader

> then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based?

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.

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I think it's more that case that it's a transfer mechanism. It transfers the irrefutability of transactions into an energy cost.

The reason it consumes so much energy is because people really don't trust each other.

> because people really don't trust each other

Not necessary people in general. But people interested in crypto certainly don't trust each other.

Closer. The user-agents running Bitcoin (nodes) are performing an algorithm that was purposely designed such that all such user-agents are mutually distrusting.

My second point also includes that people are willing to spend all of this energy for mining because of the Bitcoin value. I'm suggesting that people are in because they distrust the current currency system: The more they distrust other currency, the more Bitcoin they buy, the higher the energy costs as more participate, the more irrefutable the ledger, the more energy is spent...

So the more demand there is for irrefutability, the higher the energy costs.

Most people buy Bitcoin on exchanges. That negates trustlessness

A crypto exchange is not part of a blockchain's protocol.

Its a distribution layer built on top of it.

That's fine, I'm just telling you that these people clearly are not interested in the properties of the blockchain itself

If the constant scams in cryptocurrency space show anything it's that they trust each other way too much. "Trust less" is a sort of aesthetic pose more than anything

> people really don't trust each other

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

Not denying that there's a HUGE bubble in it with hustlers and suckers.

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.

Most of the world's gold is stored in central bank vaults guarded round the clock by armed guards.

What does this quality imply for most commodities?

> Bitcoin’s value isn’t coupled to energy.

Then what would happen if the energy and materials needed to compute the hashes were literally zero cost?

Then mining operations would expand further until they hit some other cost constraint, like labor.

"Bitcoin’s value isn’t coupled to energy."

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."

They are coupled, but the BTC price is the independent variable, because of the difficulty adjustment.

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.

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