David Rosenthal on cryptocurrencies
blog.dshr.org
blog.dshr.org
Domestic currency controls seem to offer all sorts of arbitrage possibilities that can be exploited using crypto currencies, the cycle usually goes -> some weak currency -> somehow convert to crypto -> sell crypto for USD -> sell USD back for that same weak domestic currency with a markup.
In addition, compared to those currencies, crypto currencies offer both stability and interchangeability into stronger store of values (be that other currencies or stocks or what not). In this system crypto exchanges have become global banks of sorts that allow their clients to manage their now globally available funds.
Putting all other things and considerations etc. aside this is a pretty fascinating system fuelled by weak states and failing economies all around the world. I think as long as those states exist there will always be an incentive for such systems to exist.
I suspect if Bitcoin is helping people in these countries evade currency controls it’s helping the rich not the poor and rather enabling capital flight than adding stability.
The risk of capital flight puts a limit on how bad the local regime can screw up the economy and still squeeze money out of it.
(And calling it capital flight is just a mean way of saying 'people want to invest elsewhere'.)
Basically the money and the wealthy can get out leaving the rest of the country floundering in an even worse situation. Which doesn't sound all that "good" to me.
And why we are at it, we should also ban people from drawing down their capital and consuming it. The effect is the same as capital flight, after all.
No more drawing down your retirement savings!
In any case, if you are powerful enough to rob a poor country, do you think you would be subject to any laws preventing capital flight?
Basically, anyone powerful enough to rob a country wouldn't really be subject to captial controls anyway.
Unless of course you want to blame the kulaks, and not the people with connections to government of robbing the country.
That would be a good thing.
(I don't think Bitcoin is actually all that impactful in the real world one way or another.)
Let's look at some real world countries. Places like Venezuela and Syria used to have reasonable approximations of middle classes before they turned into hell holes. Middle classes that lived off honest work.
> Where should they go? A first world country where their 2 cents aint worth shit?
First, the price level differences between poor and rich countries aren't that large.
Second, even if they were, you could still go to another country with a low price level that was better run. Eg moving from Venezuela to Bangladesh would be an improvement.
Third, if you come from a poor country and manage to first world country, the real price is that your labour will be much more productive there.
To illustrate the first and third point, just look at all the people who come from poor countries and move to the US illegally.
The jump in earnings is so large, that they even endure illegality and working menial jobs.
See eg Jho Low.
(If you look at the rest of the comments, I am basically arguing your point. But let's not trivialise the other side in this debate.)
Maybe we shouldn't ignore that mobile banking in Africa still doesn't allow easy access to US dollars? Maybe we shouldn't ignore that a transfer from the currency in Ethipoia to the currency in Nigeria requires routing through the European banking system?
Don't act as if the traditional financial system has greatly supported the emerging market world. Let's not lie to ourselves.
basically they save on taxes, conversion fees, cross border transfer fees, etc. on the cash portion of their revenues. it’s probably harder to do the same with card payments as the tax agencies are in control of electronic payments.
in the end there has to be a reason to use crypto in some economic activity. in the example above it’s cost management.
You mean tax evasion? I suppose that's a good thing if you're basically in favour of anarchy and societal collapse. Personally, I'm not.
That isnt evading currency controls, that is arbitraging domestic currency controls.
Evading currency controls looks like this: earn rubley-pesos, convert to crypto, convert to USD, stuff under matress.
These so called weak states and failing economies all around the world have had secondary markets (mostly in USD - see the blue dollar in argentina as just one example) since before the birth of satoshi, let alone the birth of cryptocurrency. Its not some great new trick invented by bitcoin.
Like, the Chinese government cracked down hard on Bitcoin, and while the energy stuff was definitely a factor, I'd be really surprised if cracking down on ways to to take money out of the Chinese economy wasn't also a factor.
All of these dark markets where cash only markets before, precisely because prior to Bitcoin you always needed a reliable state sponsored intermediary for online transactions.
This is not a tick.
If you're converting your crypto back to fiat you're still needing a reliable state sponsored intermediary at some point in the pipeline. Most people don't really trade flash drives with coins anymore, they use Coinbase or something that has their government ID on file. And it's not like the conversion rate from Argentine pesos to Ethereum or whatever is very favorable — it's the same as the conversion to dollars. You can argue it's more stable than Argentine pesos but that's a really low bar to clear with 50% yearly inflation. Dollars also are more stable and don't require any technology or technical knowledge.
What it has mainly enabled is for people in these "weaker states" to take advantage of public goods like electricity subsidies to "mine" (read: verifiably waste energy) whatever FotM crypto and dump it for the next cycle. I'm not sure why it's controversial to dislike rewarding people for wasting a very disproportionate amount of energy in a public way.
It just seems extra steps.
(Not in the real world at the moment, or at least not very much.)
On ramp and off ramp isn't globally solved issue and many ways are easily attacked. Just ban fiat transfers to exchanges...
You are right, but I don't see how (at least in principle) earning bitcoin this way is harder than earning USD this way? They both originate outside the system.
In practice, USD are much easier to get your hands on at the moment, and they are harder to trace. Especially as cash.
At the in-country upstream end, is a crypto farm running mining hardware, lossly turning local currency with the power company into crypto coins (croins), which can then be traded for local or foreign currency.
I mean, there was a functioning black market in post-WWII Germany – that doesn’t mean it was actually “good”. It was simply necessary until society got back in order.
https://twitter.com/markrussinovich/status/14921748339452313...
> 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity.
>In other words, 90% of Bitcoin's carbon footprint is used in a partially successful attempt to compensate for its deficient anonymity.
Miners are mainly rewarded by the new bitcoins that are created in each new block. The energy usage does not come from processing transactions; it is largely independent, it is not uncommon that miners even mine blocks that contain no transactions. If you stop 90% of transactions you will definitely not see the hashrate drop by 90%.
It shocks me that so few people seem to understand this; we keep having articles saying that bitcoin transactions are a waste of energy, and everyone ignoring that the block reward halves every few years until it drops to zero, so it not built with the incentives to use this much energy forever. In fact there is the opposite concern: with widespread usage of systems like Lightning Network and no block reward, there may not be enough incentive for people to mine enough to secure the network.
It's like asking about what types of books will be published in a 100 years from now, given we just invented the Gutenberg press.
In short, it will depend entirely upon the demand. This whole thing is about money, technology is secondary.
Bitcoin transactions aren't a waste of energy, a high bitcoin valuation is an incentive to "waste" energy (commit resources to mining).
The block rewards will drop over time, but they're denominated in BTC, so it's hard to predict what the incentive to mine will be.
It will be a long time before block rewards reach zero.
This is part of a larger argument that these requirements drive the system towards centralization, thereby defeating all the work to decentralize. These are not my arguments, but they seemed to be reasonably well presented by someone who understands the mechanics of proof of work.
You're final argument that other chains may rob Bitcoin of incentives to mine may well be additional vulnerabilities of the network, I don't know.
It's not the reward that drops to zero, but only the block subsidy. Thus the reward will largely (eventually entirely) consist of transaction fees. Which means your first observation
> The energy usage does not come from processing transactions; it is largely independent
becomes increasingly wrong over time.
The biggest misunderstanding that crypto critics and even many advocates have is that Bitcoin is a currency that people will buy stuff with. If Bitcoin has any use, it is as a final settlement layer. The Lightning network that is layered on top of Bitcoin is what is actually useful for buying stuff. Much of this article is based on this misunderstanding.
A correct criticism is that Bitcoin can be controlled by pooling mining. But a more nuanced take would be to say that it is a system that works due to aligning the economic interest of the miners providing the decentralized security with the users. The real problem with government fiat currency is less the centralization but more that the centralized actor is incentivized to monkey around with it, and particularly to devalue everyone else's money by printing as much new currency as they can without creating rampant inflation. With Bitcoin, miners could attempt to control the currency, but then it would lose all its value, so they choose not to. It's certainly still a risk to the system, particularly when one nation state like China previously did most of the mining.
Just as dollars used to use a gold standard, Lightning is using a Bitcoin standard.
So it’s an asset that can be used as a base layer for currency.
The point of a currency is to serve as a medium of exchange, not as an asset to be held. That's why accounts where people are encouraged to "hold" currency actually exchange the currency for liquid assets like stock, money market fund shares, or an insured interest in a bank's general loan pool.
(One flaw in the article is that it talks about "permissioned blockchains" as if that was a meaningful concept. A permissioned blockchain is just a database. In fact, put a database's physical storage in git version control - which uses Merkle trees under the hood to provide immutable history tracking - and you've got something even physically indistinguishable from "permissioned" blockchain tech!)
It's not obvious to me what this changes with respect to the article, can you be more specific, especially since it's a long article? E.g. I think the point about the energy consumption, the lack of decentralization still stand.
> With Bitcoin, miners could attempt to control the currency, but then it would lose all its value, so they choose not to.
Why do you think that's the case? The author quotes research pointing out that the majority of BTC activity actually comes from speculation which might have little to do with security guarantees the Bitcoin network is supposed to provide, so having them break will not necessarily impact its USD/BTC rate.
I think there's a whole spectrum of control major miners could exert without much backlash in terms of value BTC would lose. E.g. if major miners agreed to prevent any transaction from a certain address from being mined ever, they can just ignore their transactions in their pool, and revert any block from other miners that would have these transactions. I don't see BTC losing value if this is done sparsely.
Second: every year I check the state of Lightning Network and it is not pretty:
I assume this is best that it can currently offer?
https://lightningnetworkstores.com/?tags=shipped%20goods
On random I checked the Domino middleman store and of course the store locator showed the stores but was grayed out...
This is the story with crypto e-commerce over and over again. Seemingly grand claims which fall apart on closer inspection - barely functional stores at best.
Show me the money! That is show me a bustling e-commerce operation that is using crypto for non-crypto items/services. Preferably legitimate goods/services too.
I am leaving out the technical problems of actually using LN.
PS I bought my old laptop for BTC in 2013 and it seemed so much easier back then.
It may not be the most exciting area to work in, but these are new.
From April 2024, the new upper limit will be $18mln/day, if the price remains stable. If Bitcoin price rises in line with it's decreasing issue rate, in 12 years we'll have Bitcoin at $328,000, but the electricity costs will stay same as today.
$37m per day is about $1.1B a month. If we divide this by world's population of 8 billion people, we arrive at a figure of 14 cents per month.
14 cents is what you are paying to Visa for your morning croissant in transaction fees. On top of this, you pay a lot of taxes to the government to maintain and secure the money system.
Now what are we getting for 14 cents a month? We are getting money that is unforgeable, uninflatable, irreversible, uncensorable, electronic, capable of millions of transactions per second, available to anyone worldwide 24/7/365. We are getting a piece of freedom in a world that is becoming more and more centralized and controlled from above.
That assumes that everyone needs to spend more than they get in crypto for it to be worth their while. If I had $100, and I gave it to you, and you gave me back $80, that would be a bad deal for me, right? Except if that $100 is "dirty", and the $80 is "clean", that might be worth it to some.
Blithe assurances are a sure sign of bullshit.
I don't see how you compute such an upper limit given that it depends on the transactions fees. You're talking about the profitability if miners don't mine any transaction, and maybe this used to be a reasonable approximation, but as the block reward halves it will become less and less accurate. The profitability limit can be just as arbitrarily high as the transaction fees.
> We are getting money that is unforgeable, uninflatable, irreversible, uncensorable
The article convincingly argues that it's not irreversible nor uncensorable given that it's centralized, and that any similar permissionless blockchain would tend towards such a centralization.
> capable of millions of transactions per second
Are you saying that the 14 cents a month would cover the transaction fees? That's not the case right now with way less transactions, I don't see how that will ever be the case if the number of transactions increase to this number.
>> The article convincingly argues that it's not irreversible nor uncensorable
Not convincingly at all. Not a single tx has been reverted on BTC network in 13 years (well, except of couple of early bugs that caused network split), maybe you are confusing with some other network. No one is able to prevent a tx from going out, as we just witnessed - FBI wasn't able to revert a $3.6B theft transaction without getting hold of private keys.
>> Are you saying that the 14 cents a month would cover the transaction fees?
I paid a tx fee once, two years ago, to fund my Satoshi Wallet, and haven't paid another satoshi in tx fees for about a hundred of purchases since then. So I don't see why everyone can't do that. As to the initial funding of the wallet for everyone, I don't see why it can't be done off chain as well in the future.
The article mentions that the networks tends towards centralization, at which point the guarantees BTC was supposed to provide no longer hold. You can say that the big miners still won't do it for $REASON, but the point stands that it's not irreversible nor uncensorable, due to this centralization.
> No one is able to prevent a tx from going out, as we just witnessed - FBI wasn't able to revert a $3.6B theft transaction without getting hold of private keys.
The money stolen is not relevant, the budget they were willing to spend to retrieve the funds is. I don't think this was in the billions as you implicitly state. Preventing the transaction from being mined is also completely different from reverting it several blocks after it has been mined. See also my last paragraph in this comment: https://news.ycombinator.com/item?id=30313344
> I paid a tx fee once, two years ago, to fund my Satoshi Wallet, and haven't paid another satoshi in tx fees for about a hundred of purchases since then.
According to https://en.wikipedia.org/wiki/Lightning_Network#Limitations you still need a "watchtower" to ensure things won't go wrong, so if you consider everything, it's not completely free. I don't want to guess what the exact price will be because it's a futile exercise (we'll see soon enough if it gains traction), but this suffices to show that you're sweeping some costs under the rug.
I’ll leave you to calculate the cost per month (it’s much higher than 14c).
This is going to be a very dumb question but how does one catch up on the computer science academic literature ?
I believe there is merit in BTC but it's value is propped up by fake USDT unbacked $. I don't think there is liquidity for everyone to cash out at same time. Which is why exchanges always shutdown during periods of turbulence.
Just be honest. You're playing musical chairs hoping you'll have a seat when the music stops.
For my other holdings I take profits aggressively and don't lose any sleep over missed opportunities. The way I see, it's a coin toss and I'm too lazy to get into technical analysis.
What I've learnt over the years is to ignore the optimism, in the right circumstances pretty much every cryptocurrency trends towards zero. So I'm very cynical about it.
It doesn't matter if you see it that way or not. Your buying and selling is still voting in a sense on the valuation of the future cash flows of the company.
Buying and selling BTC is like buying or selling gold. There is no future cash flow to value. It is purely pricing based off supply and demand.
Also, I don't have the desire to study companies enough to understand what I'm getting into.
Index funds are appealing, but I keep reading that we're in a bubble but I also feel like assets will just keep appreciating forever, naive, I know.
Anyone who understands what Bitcoin enables and still doesn’t agree that Bitcoin is valuable and good for the world has a wildly different set of values that I can’t understand.
David Rosenthal’s article says he IPO’d 3 startups back-to-back. I suspect he’s living in a different world than the people who can see the biggest benefits from Bitcoin.
Unfortunately, cryptobros can enforce the latter and the system will go from decentral to federated to centralized.
I hope you can understand me.
But ultimately, alt projects don't affect the Bitcoin technology and centralized platforms don't affect anyone's ability to self-custody.
You have that right at least.
I cannot understand anyone who promotes the use of systems that catastrophically increase the risks of human error, particularly for the most vulnerable, and which pointedly ignore that other solutions may work better.
Particularly when the people promoting those systems have an obvious financial incentive to misrepresent them.
I can't speak for others, but I think it's great to promote whatever solutions may be solving problems for a particular use-case. Ideas like social key recovery give users an option to trade some level of full self-control for a safety net. I expect user-friendly implementations of ideas like this to be successful in the near future.
I think it's great that users can choose to participate in Bitcoin however they want. Some people will write their own private clients that nobody else uses. Some people will give all of their coins to a billion dollar company to hold for them. In-between the two extremes, people make their own decisions on what risks they can tolerate and participate in a way that's right for them.
In the Fight Against Extremism, Don’t Demonize Surveillance-Busting Tools like Signal and Bitcoin
How Bitcoin Can Help In The Fight For Human Rights - Your financial transactions say a lot about where you’ve been, what you were doing, and what you intended to do — making them a perfect way to surveil you.
Bitcoin with its public ledger of every transaction ever made by a person, as well as a public record of their current holding is "surveilence busting" or fighting the good fight against having your financial transactions monitored?
Are they confused as to the difference between encrypting messages and cryptocurrencies? I guess they both have crypt in them, but that is also the chamber beneath a church.
> anyone is free to contribute and build on top of it
These are great features, certainly welcome. However, I believe my point still stands, bitcoin is not philosophically 'private' indeed the entire basis for it working is that it is a public ledger (yes more private crypto does exist, like monero, but the conversation is about bitcoin). The public ledger is the feature, not a bug.
One day it might be all those things, one day I might be pope. But you can no more say it is that than you can say I am his holiness.
Gini coefficient is a poor metric to describe distribution in a cryptocurrency network. A single user may utilize dozens of wallet addresses, with the majority of their value centralized on only one or two addresses. In some cases, users may deposit value into shared contracts (DAI, WETH, staking, liquidity pools, DAOs, etc), giving the impression that the token balances are unequally distributed across the network. The WETH contract address, for example, is holding $22B USD worth of tokens.
There are many current Proof of Stake cryptocurrencies that would be worth considering and analyzing: Tezos, Solana, Avalanche, Cosmos, Polkadot, Cardano, Celo, Mina.
- Make loans that with less than 100% reserve backing (be a bank)
- Print up your own negotiable instruments denominated in an existing currency (sell gift cards)
- Create a new currency and hope others accept it (be a central bank)
very decentralized.
I don't think there need to be financial incentives at all, in fact i'm absolutely tired of the crypto logic that tries to impose 20th century economic scarcity on the digital sphere.
It's more similar to Madoff actually. The amount of scams are truly unprecedented too - almost daily > 1 mil.
As to the article: I feel the most important point is missing. Yes, crypto is a bad, inefficient, wasteful, slow, insecure technology which only got traction because it allowed skipping over financial regulation. Still, even if it wasn't all that it would still be a terrible idea as a currency with inflexible money supply scheme can't work. We went through it many times in human history. It's easy to see from simple thought experiments and simulations as well. It's elementary economics. How can we ever hope to make an economic argument when we can't use it against the simplest thing out there?
The whole crypto currency thing removes whatever was left from my faith in humanity. It getting traction in the tech space is just a final slap in the face as there was some hope people in our space care just a bit more beyond "number goes up if we throw enough coal on it" distributed Ponzi. We are ready to pick up our pitchfork when it comes to privacy violations even though there is at least a lot of value provided by the main offenders or against dark patterns in website design or even when it comes to a bit old fashioned politically incorrect language. Here we have one big dark cloud of a ticking bomb and I see my colleagues accepting job offers from the grifters, buying the scam tokens and trying to sell them to others before they collapse, CEOs of supposedly serious companies advocating for it (Twitter anyone? No matter it's down since IPO with that kind of person at the helm), youtubers producing Ponzi propaganda en masse, sponsorship being accepted at major events.
If it continues for a few years at this pace it will result in a dotcom bubble on steroids with a lot of desperate people and a lot of crime barons ending up with millions to use in the real world. It will not be as nice out there when it's all done.
Just a friendly advice, get out more and stare less at computers. In the big scheme of things, crypto doesn't matter, nor does HN and the same with me telling you this. Peace :)
But, I warned them and i don't care about it anymore. It made me realize how dumb it would be if people really were doing the banking themselves.
Tech is pretty complex and people aren't good at processing things they don't understand.
In the past there was religion that explained it. Now, there's some sort of void of religious belief, that can't be modified with reasoning.
Ymmv
First, crypto currencies networks are not attempting to rely on no intermediaries, but rather removing the need for trusted intermediaries. Yes there are challenges and constraints to this, but the successful operation of the Bitcoin network without a single trusted intermediary (and surviving several large physical shifts and attacks from the mining community) is a testament to its success. Prior to Bitcoin, there wasn't a single non-bank digital currency system that succeeded precisely because of the trust issues. Bitcoins success in that regard is not mentioned once.
Second, the current cost of token ownership is not always the representative cost of entry for users. Where the network requires high fees, this may be true, but there are low fee networks with varying degrees of decentralization (Stellar, Hadera, Avalanche, Solana to name a few) that get no mention here. And no, because they are less decentralized that doesn't make the point moot. It's a spectrum, and ultimately many infrastructure services do try to achieve some form of decentralization in even more traditional contexts, so to throw out the low cost fee networks makes no sense. For things like Ethereum and Bitcoin, the fees are akin for users having access or using underlying settlement and base infrastructure systems (like mainline Telcom cables, the water main, or the high value payment system of a country). These systems are all expensive. The fact that they are expensive is indicative of demand at best and a limitation of performance given security constraints at worst.
Third, the alleged illicit use of cryptocurrencies continues to be incorrect. The early years of the ransomware wave didn't even take place on Bitcoin although they both existed simultaneously, to prove that ransomware did grow on its own accord just fine. And today the vast majority of criminal activity occurs through traditional payment rails. Many studies have shown Bitcoin network criminal activity to be incredibly small (in the range of one percent). Bitcoin cannot simultaneously be an incredibly useless, overly expensive, non-currency like system but also be purposely built for criminal payments when those criminals have the exact same requirements with traditional payment systems. Of the 4B hack made almost 6 years ago, not even a billion dollars was successfully laundered. That's appalling by criminal standards in which multi trillions of dollars are laundered every year.
Fourth, feeding off my last point, KYC/AML should never be the shining bastion of success to stand behind. Simply look at the reported success numbers, read the 2011 UN report, or listen to the markets estimated billions in wasted cost. It's empirically a failure of the modern financial system more than a success.
Finally, the presence of tokens in a network more than anything represents the monetization of that networks underlying value. How this is not applauded and encouraged blows my mind in the current age we live in. Digital networks in their modern form have been the source of incredible monopolies, abuse, and systemically destabilizing elements within society for two decades now. That we should not wish to see their fundamental arrangements challenged baffles me. The usage of a token to facilitate network activity, direct user ownership, and provide a scarcity element in an otherwise infinitely reproducible domain is necessary work. I would support this innovation to be done within the confines of our traditional financial system had the current banking system not proven itself to be ossified and unusably gridlocked in innovation. Just look at the rise of fintech, the growth of nonbank finance, and the continued failure of developing market funding (not just developing economies, but the actual lower end segments of our individual markets characterized by small businesses) as proof.
And I agree with parts of his presentation. Cryptocurrencies are currently incredibly divisive, unreliable, risky, and a few have incredibly poor environmental outcomes. But there is incredibly necessary innovation that is occurring at the core of the market. The existing high wealth inequality, cyber risks, overconcentration, and stagnation of our broader more traditional markets is proof that there are raw opportunities that need to be solved.
In the end, I am saddened to see the state of our world. I see the initiation of this work from a small group of anarchists and libertarians as both a failure of our system and as the only probably place it could have come from.
The existing system has failed, I am shocked at anyone who can refute that claim after the insane levels of market corruption and speculation that characterized the 90s, the financial crisis of 2008, and the absolute global stagnation of production following that has then led to the progressively high levels of public and private indebtedness since. To act as if Bitcoin, once characterized as the "evil spawn of the crisis", wasn't exactly what our society deserved is IGNORANT and ARROGANT.
storing wealth has a collective consciousness.
David Rosenthal flaps his butterfly wings
I'll spare you the time: he's either wilfully or intentionally misinformed, far too many errors to count.
Utterly unaware of any scaling solutions, and stuck on the "zomg carbon footprint" FUD, unable to utter the word "nuclear". This is despite the common knowledge that today good chunk of hashrate being produced by renewables in the US and nuclear in Russia. Quotes unreliable sources that have a stated agenda and apparent conflicts of interest.
Outdated, inaccurate, sloppy.
2. "zomg carbon footprint" - apparently renewables can't properly supply enough to power a tiny country size of Portugal or Netherlands? I thought we are going to power the Earth with renewables? Something seems rather inconsistent here. Of course this Malthusian cannot bring himself to utter the word "nuclear".
3. Mining pools are made up of many individual miners andm depending on the protocol, the lucky hashing units and not the pool, constructs the block, and as such would not be a trusted third party. Something he seems to be blissfully unaware of.
Even if the pool constructs the block - hashing units can be pivoted away from a malicious pool in seconds.
4. Banks get hacked and lose money on the regular, it's not unique to DeFi. Insurance for DeFi exists, just it banks purchase fidelity bonds.
5. Not a single mention of censorship resistance at all. This alone should disqualify this immediately, tbh.
Reads like something written by a privileged, out of touch person who has never had to face a day of actual hardship in his life, such as: confiscation of wealth, destruction of savings by inflation, personal bankruptcy due to sovereign default, or even outright denial of access to banking for the politically suppressed minorities.
2. This is a rant, not an error.
3. I'm not sure what you're arguing here? His argument is that in practice, a tiny cartel of mining pools exerts central control over most cryptos, meaning they're not really decentralized at all.
4. There are a) way, way, way more DeFi hacks and exploits than TradFi ones, and b) consumers don't get wiped out when a bank gets robbed or hacked.
5. Omission != error
6. Ad hominem.
2. being luddite in 2022 is a grave error.
3. he's absolutely dead wrong. pools do not exercise central control which has been observed empirically numerous times.
4. Card industry alone loses $40B per year. That's just cards. Lending and wealth is a whole other universe. So make it roughly 1-2T per year, which is the entire crypto marketcap lost every year by tradfi, roughly 10x than DeFi. F. GG.
5. omission of the most key topic at hand, isn't a simple error, it's proof of ignorance.
6. ad hom, but by you. (since when is it an ad hom to call someone wealthy and successful to the point they are immune to vagaries of daily life in most locales on Earth? Amazing.)
> ad hom, but by you.
riiiight
The article directly and elaborately addresses this point, advancing the argument that renewables are scarce vis-a-vis our urgent need for them and this isn't the best thing to use them on.
Your attempt at summary is selective; I'm glad I read the piece instead.
His estimation of how much energy is "per transaction" is flawed, due to complete disregard of available scaling solutions today.
He essentially equates a central bank transaction to a penny left in a tipping jar, that's the general standard of rigour in this article.
Bitcoin just demonstrated renewable energy cannot scale in practice.
If only 1% of the electricity demand cannot be sustainably and economically be supplied by renewables, some serious re-thinking about strategy is in order.
Yes, it's fascinating to know that there's proof-of-stake. It's interesting to know there's a dozen improvements technologies in the pipeline to fix these issues. It's also curious that these technologies have been in said pipeline for a good half of a decade by now, with many barriers being political within miner group rather than technological, and with the number of BTC advocates showing actual concerns for these issues to be essentially nonexistent, drowned out by the voices of scammers and grifters.
The early internet was a unique time and place. Crypto reminds me of that today, and really the only place that does.
Just read the article. It’s very well sourced and addresses e.g. renewables. I encourage people to look at it instead of relying on this comment to make a judgment call.
2. He's been writing about these things for a long time.
3. He repurposed a talk he'd already written at short notice, so is apologizing that it wasn't created specifically for that course.
4. He's talking about how crypto currencies are now and in the past, not some imagined future where all the problems have been solved by something else.
So, up to date, accurate, well researched!
For now they are mostly selling the dream.
To nit-pick a little, almost all crypto currencies aren't anonymous. At best they are pseudonymous.
He just can't help but keep repeating the word carbon carbon carbon carbon e-waste carbon carbon, but is seemingly unable to utter the forbidden 'nuclear' word at all. Could be a California thing, I suppose. They seem to prefer rolling blackouts to advancing technology for mundane everyday things like energy, as it appears.
Another, totally unbiased and very academic reference is to a blog named: LAWFARE, specifically an article: "How to Start Disrupting Cryptocurrencies: “Mining” Is Money Transmission". Absolutely no agenda here, nuh-uh.
He then proceeds to cite a 2018 paper on decentralization of mining, from IC3, which is headed by Professor Gun, as a supposedly credible source on bitcoin and ethereum mining. Professor Gun launched his own coin around the same time the cited paper was published, and at the current market rates his conflict of interest is measured in single digit billions at the very least. Good for him, but does not make for an impartial research reference, would you cite Peabody Energy on benefits of coal, do you expect them to say it's terrible?
This lecture is simply just DR peddling carbon alarmist dogma and malthusian doom porn for your consumption.
You've literally just read an ideology piece with references conflicted in billions and you believe it's accurate and well researched.
If this is what passes for expensive "education" at a high-ranked university in the US, many more things I found rather puzzling about that country are immediately clear.
My more factual observation is that you're quick to leap to huge assumptions, and you seem angry when people disagree with you.
You assume that this is pushing an ideological agenda on the behalf of Stanford, or the state of California, for which I see no evidence.
You assume the fact he doesn't mention nuclear is evidence of ideological bias. He clearly states that carbon emissions need to come down now. Nuclear can't do that. I have no idea what his actual stance on nuclear power is, but you cannot assume he is a priori opposed to nuclear power because he doesn't talk about it in this talk.
You assume that the links he is providing are further evidence of pushing an ideology. The Lawfare link is making the legal case that money transmission is occurring, which is precisely the point he is making. The fact that a co-author on a paper on decentralization of mining may have made a lot of money out of launching his own coin in no way diminishes the observation that "a Byzantine quorum system of size 20 could achieve better decentralization than proof-of-work mining at a much lower resource cost."
It's quite clear he doesn't think that the externalities of crypto currencies can be easily mitigated. But you assume a lot in order to make your case that there is something nefarious and ideological going on.
Yes Bitcoin is stuck on carbon footprint, no need to ad meme keywords in between.
> Quotes unreliable sources
While you have presented 0 sources only wishful thinking.
Could you please elaborate?
> Vote with your wallet, you don't like it don't use it. But don't try to convince me
I don't understand this argument. You can easily do exactly what you ask of others: Don't click on the headline (the reader equivalent of "vote with your wallet"). Nobody is trying to convince you of anything. You came to the thread all on your own, and there since nobody reads every single topic posted on HN you made a conscious decision and an effort to expose yourself to this article and this discussion.
> Because if you do, but leave things of the table...
That argument makes just as little sense. We cannot discuss something because we have not yet discussed something else? Since this can be applied to every single topic, nothing can ever be discussed. The argument only makes some sense, depending on context, if the topics are chained together and the one being discussed depends on some other, and we don't have a result yet, so discussing the dependent one is not possible without knowing more about the previous one.
So even though we are reaping the benefits now, they need to prove we are all "stupid and the whole ponzi scheme will collapse and you will cry and we will say told you so."
Jealousy, plain and simple.
HN hates crypto, but instead of ignoring it, articles such as these keep popping up, to comfort everyone that "we're not stupid but they are."
Nice generalization. I stopped reading after that.
How much is the banking system with all of its employees and buildings wasting I wonder.
It has some pretty good points.
> How much is the banking system with all of its employees and buildings wasting I wonder.
So, you want to compare the entire banking sector with just a subset of a subset ( eg. Sushiswap)?
I took Binance as an example that the whole Bitcoin electricity thing didn't take into account and that your comparison isn't even in the same league. Binance has eg. Obvious employees/developers.
There are many more things not included in your "reference". Sushiswap is just a subset of what wasn't included either.
One problem I'm working to overcome is safety during buying and selling cryptocurrencies. It's very easy to make a mistake when buying/selling, especially for inexperienced users. Even experienced users also make mistakes. The answer is automated trading, which has more safety built-in. You can use it whether you want to invest over the long term or look for short term gains. https://tradecast.one
14 years after the first browser we had: Google, WordPress, ...
Except when it's too early for eg. The hardware ( tablet and ml come to mind)
That ain't to say that proof-of-stake is perfect, either, but it's painfully obvious that its critics are coming in seeking to appease their confirmation biases rather than evaluate new technologies objectively and rationally.
Full disclosure: I do own a decent amount of some cryptocurrencies, including various PoW and PoS currencies. I'm obviously biased in favor of them, but at least I'm willing to admit that.
In places with a high renewable generation mix, electricity prices are often very volatile, sometimes very cheap and even negative in times of high production and sometimes very expensive when production is low and demand is high. Proof of work mining uniquely only draws electricity when prices are economically viable, only buying electricity when there is excess supply, and can quickly shut down when that situation changes.
You can see this eg: in Texas where ERCOT has signed demand response agreements with many bitcoin mining companies to cut power when demand is high and supply is low (not that they would choose to continue operating anyway given the marginal price of electricity vs the marginal bitcoin production).
https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fi...
https://www.dallasnews.com/business/energy/2022/02/04/texas-...
We are going to settle Mars by relying on windmills. That's the plan?
On Earth those windmill are much cheaper than nuclear power, even taking into account their capacity factor.
humanity however, needs to branch out, and quick. and windmills aren't going to help us make that jump to an interplanetary civilization.
Nuclear is cheap, very cheap. It was made expensive by political decisions, under the guise of proliferation suppression, but is actually a tool of economic suppression of potential challengers.
Germany, one of the most high-tech countries in the world, cannot make renewables work. Germany also has very electricity rates. France, on the other hand, builds nuclear, supplies Germany, and has MUCH lower electricity rates.
I guess no one told them nuclear is too expensive?
Now Macron is doing it to secure energy independence and win point in upcoming elections.
Someone forgot to inform them nuclear bad?
We actually experienced high historical costs in 2021 for electricity as well. Nuclear does not shield us from variation in gas prices
If crypto manages to run that gauntlet, there is a good chance that someone with a track record thinks it is socially useful. People confidently declaring that it is useless are in the same bucket as people confidently declaring that the internet was a fad in the first big tech bubble - lacking humility. The truth is we don't know if this (likely outrageously large) bubble is a complete waste or masking something transformative.
Only a small minority of people who buy crypto genuinely have a considered belief that it's socially useful. The overwhelming majority are simply speculators who believe that they can sell it for more than they bought it for.
Which, assuming that the individual speculators are intelligent and rational, has the emergent property of providing something that is socially useful. And if they are stupid and irrational, it'll bankrupt the lot of them so that they can't waste that much money again.
The economy is a cruel beast, but it is much better than you or I at deciding what needs to happen to get people what they need. If something like bitcoin really is just a money burning exercise with no redeeming property, sooner or later it'll go bankrupt and disappear back into obscurity. It can't be a hot new thing forever. And "speculators" only have power when they are consistently right. If they routinely make big gambles and get it wrong then they don't get to speculate for long.
(1) Mr. Wog93 was talking about speculators, not criminals.
(2) If any of my grandmothers were still alive then they could be scammed in any asset class. Bitcoin is riskier but, frankly, anyone crazy enough to "invest" in bitcoin is probably going to lose all their money regardless of whether they get scammed or not. So this grandmother test is a bit of a wash in my eyes.
The only thing that makes me special is I'm humble enough to say maybe I'm completely wrong in my opinions so other people should be allowed to take risks I think are stupid. There is a fair-enough system that will sort out who is right and who is wrong based on evidence.
Thank you for using my correct title.
>Libertarianism's attraction is based on ignoring externalities, and cryptocurrencies are no exception.
The economy as currently regulated doesn't correctly price in externalities such as the ongoing cost of global heating generated by burning fossil fuels.
People seem to struggle with positive externalities so the argument usually falls flat, and the situation is too clear to me to be able to spell it out easily. But without fossil fuels, 40-80% of the modern world would have been all but impossible. The knock-on effects of abundant cheap energy (and precursor materials to plastics) aren't being priced in.
I am not an expert on economics nomenclature, but ISTM you can't really call that externalities when it's already being rewarded by the current economic system. Wouldn't that be an "internality" or something? They are already included.
Unlike the negative externalities from pollution. In the absence of something like a carbon tax, they are not included.
And even if I've got the definition wrong, the oil and gas producers are creating huge amounts of value that are being captured by other actors in the economy (like me). If we fairly evened out the harms and benefits, they deserve subsidies rather than taxes. Obviously nobody sane is going to advocate for that, but if we want to price in externalities that is the logical outcome.
This isn't obscure logic. People often point out that the measurable value of what blue collar workers produce is far in excess of their pay and follow it up with the idea that we should force the market to pay them more. It isn't a good idea but it is logical in as far as it goes.
They are, however, overused, because the negative externalities are not properly accounted for.
> And even if I've got the definition wrong, the oil and gas producers are creating huge amounts of value that are being captured by other actors in the economy (like me).
That's how all market transactions work: Whenever you buy something, it's because the value you derive from the purchase is higher than the price you pay. All business has this value-add aspect. When you buy a jacket so you don't freeze to death in the winter, that doesn't mean you are beholden to the clothes manufacturer for your life.
No, that isn't true. There is a reason the environmentalists have had so much trouble getting their policies to catch and it is the fact that statements like this are manifestly wrong. The hardship caused by fossil fuels is minute compared to the benefits. If anything, oil and gas are underused. There is little question that if we could get more people more oil & gas, lifestyles would improve more than damage done by negative externalities. We've seen this play out in multiple countries. The only reason not to be pushing them like mad is that we're about to run out of useful reserves.
The benefits of a modern economy powered by cheap energy substantially outweigh the negatives. More cheap energy pretty much inevitably increases the general good. Taxing that energy doesn't help.
> That's how all market transactions work: Whenever you buy something, it's because the value you derive from the purchase is higher than the price you pay.
Yeah, but that isn't an externality. An externality is something that happens to a third part to a transaction - which is my relationship to the fossil fuel industry. I purchase very little fossil fuel.
The externality is they enable other deals to happen that would otherwise be impossible. Like my groceries.
Just because you assert this doesn't make it true. Tragedy of the commons is at play - we have no good way to measure if your statement is true or not - which is it's own issue.
It is easy to imagine how your statement could be wrong, despite what we see. Starting with a non-industrialized society, you add in some tech, like cars. Some people use them for personal benefit. Of course a few cars don't cause everything to go suck just by themselves, and even so, the benefit for their users outweigh the harm to them personally, so they use them! Some other people are now going to need to use cars to compete with the people who do use them. Eventually the harms really become apparent, but there is no going back. And even if some people would choose not to use cars because of the harm, it is much harder to choose to abstain when practically speaking, things are still going to suck because everyone else is.
So, taking cars as an example, how do you know you are right?
You pay a grocer who pays a farmer who pays a fertiliser manufacturer who buys some natural gas. You wanting to eat has a reasonably direct impact on demand for fossil fuels, and therefore prices and profits. The oil company doesn't capture all the value, partly because they're not doing all the work, and partly because of competition.
If the oil companies went away tomorrow, the price of oil would skyrocket, because people want to eat, and new oil companies would form to meet the demand. There is no need for subsidy.
Positive externalities are things like "I financed construction of a road for my own commercial reasons, but other people can use it for free". Or "I wanted to renovate the rundown building I live in, but doing so made my neighbour happy too".
But to come back to the point, finally. The argument is that we know crypto mining has negative externalities (crypto miners don't have to reimburse people negatively impacted by climate change). The article argues that permissionless blockchains are doomed, ultimately, to fail anyway. So they will destroy value, by pointlessly wasting fuel AND by harming the climate (which doesn't factor into a miner's decision-making because it's an externality).
There is if we add on a tax for the negative externalities, we need to consider both positive and negative externalities to get the tax right. The evidence is that the more fossil fuels we use the better off people are. If we add a tax on we'll use less, which is pushing the market in the wrong direction.
It is very hard to argue coherently that less & more expensive energy leads to better outcomes. The evidence is that in countries like China, Africa & India everyone benefits a lot more from using more fossil fuels than the cost of any negative externalities. We've run a big natural experiment here, the outcome is that more fossil fuels == rapidly improving living standards. Less fossil fuels leads to poverty.
Breaking growth in fossil fuels with a tax would be doing much more harm than good, even to bystanders. So there must be a large positive externality here somewhere. Because if you reduce the negative externalities and the outcome is much worse for everyone then there was probably a big positive externality in there somewhere.
I dunno, I suppose as a question - who do you think is bearing the cost of these negative externalities right now? Because it sounds from your reasoning like you are imagining a group of people who don't use fossil fuels or sit downstream of fossil fuels (so they can't influence the market with price signals). Who are these people, demographically speaking? And to preempt my argument, would they not be better off if we got them access to fossil fuel rather than worrying about negative externalities as they sit outside the system? It worked great for China.
There are few positive externalities directly associated with the act of burning oil, except some associated with global heating.
There may be positive and negative externalities from the things people choose to do with the power generated. Companies are generally better at internalising positive effects than negative ones, for obvious reasons. If my chemical plant produces hot water as a waste product, I can sell that to the plant next door or to a district heating system. Competent business try not to leave value on the table, and try not to pay costs that they don't have to. But where they can be identified, sure, subsidise away. Just not crypto mining.
> So there must be a large positive externality here somewhere
Not necessarily. There is/was a large positive asset: ie. a huge store of chemical energy underground. It has allowed us to do incredible things. If the cost of it included the negative impacts of burning it, the market would use less of it, smarter, more efficiently, towards the most valuable outcomes, and in better balance with the harms.
>who do you think is bearing the cost of these negative externalities right now? ...would they not be better off if we got them access to fossil fuel
I'm not a climate scientist and I'm not qualified to re-litigate the scientific consensus, which is that global heating is dangerous. Some will be more affected than others by increased incidence of extreme weather, water wars, mass migration, cost of flood defences etc. But ultimately it is a "tragedy of the commons": few of us are innocent, most of us are impacted or at risk in some way. It isn't even in the interests of those of us with economic power to stop polluting, because the cost of each of our individual actions is externalised. If I take a flight, I get the full benefit, but experience only one eight billionth of the total harm. That's why it needs a systemic fix.
If your position is simply that we are fortunate our planet was/is abundant in fossil fuels, I don't disagree (ideally there wouldn't have been enough to completely wreck the climate we depend on, but...). But the issue is whether we should trust the market in respect to cryptocurrency mining specifically. The history of human civilisation seems a bit beyond the scope.
If we imagine a counterfactual where there were no fossil fuels, double-digit percentages of the world's population wouldn't exist.
There is no way that the oil and gas producing companies have made money on the same scale as the value they've created by enabling billions of humans to exist. No way at all. There is obviously something very powerful happening that is more than offsetting the notional damage that they will theoretically do at some point in the future to a relatively small percentage of humans.
If we balance out the harms and benefits that the coal and petroleum miners have caused to the rest of humanity, the ledger is overwhelmingly in their favour. I can't even estimate the numbers involved but based on the fact that I'm not slaving away for a fossil fuel company double digit percentages of my life I can tell it isn't close.
Replaced crypto with stocks, how does it read now?
The ultra-wealthy deploy or deny capital to mold the society to their views.
"Social utility" is just this mind virus the ultra-wealthy spread in everyone's mind to make their rule-by-proxy feudalism palatable to the peasant class.
but to your point, you are exactly correct. Stock markets is a game, designed to methodically transfer wealth from the peasant pockets to the ultra-wealthy that write the rules of the game.
One, and most common, game is to have peasants as suckers of the last resort and have their pension funds buy all kinds of garbage because "mandates". Why would anyone want to hold negative yielding debt? But they do.
What the fuck are you talking about? If the stock market didn't exist, it would literally be impossible for average people to own (parts of) extremely productive and profitable large companies.
The average Joe would just fall even further behind.
These articles are pointless. No one is going to bother reading Brian Arthur of all people to have any clue.
Just the same dumb conversations over and over and over.
When someone makes an argument of the sort that just because there is a market for something then it magically becomes useful, it tells me they haven’t heard or understood this quote:
“The market can remain irrational longer than you can remain solvent”
Also, strange how such prominent tulip story never resulted in adoption of tulips by any country? So weird, why is that?
And yet with Bitcoin, we see adoption not by one, but by several G-7 countries as a valid payment mechanism, one small country as legal tender, another small country preparing a bill this year, and Russia signalling it will regulate Bitcoin as currency, not property?
Strange, that.
But anyway, here you actually presented some arguments and explanations for why bitcoin can be useful.
Now, I don’t think bitcoin will actually end up anywhere useful in the end because it doesn’t really solve anything that fiat doesn’t (except perhaps for people in the illegal payments market) but we can disagree on that.
My point was about the previous argument, that there was inherent usefulness or value in bitcoin just because there are people speculating on it, that is fallacious.
This would mean much cheaper commodities(including gold and silver), much cheaper land, much cheaper housing, a lot fewer bubbles in the stock market. Much more healthy fiscal environment overall, with other stores of value "demonetized" and devoid of the monetary premium. A stretch goal for sure, but maybe can be eventually approached asymptotically on a longer time scale.
However, a pure monetary asset doesn't need to have any intrinsic value. It just needs to be a widely accepted store of value (and preferably, but not necessarily medium of exchange).
As such, it would seem that an entirely speculative asset would be one of the greatest achievements we will ever make.
Seems contradictory at first, but if you really think about it, I see nothing of fundamental importance that comes even close to it today. Especially today.
How would you suppose bitcoin or any other crypto would lead to this?
If it becomes the global reserve currency, and remains accessible to everyone - the world would end up on a disinflationary Bitcoin standard.
In a disinflationary/deflationary environment the cost of borrowing/interest rates goes up, thus the leverage that is fueling asset inflation is removed. Blackrock doesn’t buy single family houses cash, they have access to the fed discount window.
During the gold standard we’ve had prices stable for hundreds of years in some examples, so at least we’ve seen that historically prices can be quite stable.
Today, land has become the primary saving vehicle and that’s less than ideal.
Personally I’d love to see land demonetized as an asset via Georgist taxes.
It reads like a false equivalence.
I do own stocks in companies such as Woolworths (retailer), BHP (mining company) and Westpac (banking company). The fact that they produce goods or services that they can sell at a profit was a huge decision in my decision to invest (and a big reason why I didn't invest in crypto).
I don't have data, but I suspect this is how most stockholders think. They accumulate shares over their lifetime and rely on the dividends to pay for their lifestyle during retirement.
Yes, Wall Street Bets exists, but the average person with stocks is not a day trader leveraging themselves up to their eyeballs to gamble on some crazy contracts.
Amazon hasn't been profitable on paper for decades. Tesla took until 2021 to make a profit.
You'd underperform terribly if you were to wait until they make a profit, as markets are forward looking and you are paying attention to trailing indicators.
Profits today for an organization size of Amazon is execution of a plan put in place 5 years ago.
If you are about to dive into value investing: Berkshire made most of their money from Apple, which was a side bet made by a hired portfolio manager, not Buffett himself.
That's a good theory, but it doesn't seem to be working. Because, well... gestures broadly at everything
It's like saying that we perfectly good system called economy and thus drug cartels are the natural results. Who knows, maybe their bloody rule will result in something transformative as well. Still I wouldn't be happy just accepting the state of things.
What's socially useful is drastically different from Iceland to Tonga.
People have their own mind to decide what is useful to them.
That point is up for debate, but that's not the point I'm addressing.
> Doing the work cannot have a societal benefit
I'm just pointing out that this use of electricity makes new renewable electricity deployments viable when they otherwise would not be. In that sense, if you think that replacing fossil fuel generation with renewables is valuable then bitcoin mining is valuable in that sense.
Renewables are cheaper already than fossil fuels. Their electricity generation is just not stable enough to replace all of fossil fuels. We can use bitcoin mining to smooth out supply/demand of electricity which allows us to use a higher proportion of renewables in our supply than would otherwise be possible.
Mining is unsufficient, because it can't provide energy in the night when the sun is not shining. Storage systems can
Bitcoin only makes it worse, because it uses/wastes energy of which we don't have enough clean one
Bitcoin requires only as much power as a tiny country size of Portugal/Netherlands, less than 1% of electricity consumption globally.
Less than dishwashers, heated pools or computer games use. Perhaps we should ban these also?
If anything, we should be thankful Bitcoin exposed the inability of renewables to scale in practice.
Waste even more energy than we already do!
Riiight. "Tiny".
Netherlands is number 31 and Portugal is 52 by electricity consumption out of 216 countries. https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
To put it in context: you could power all of Argentina with the power bitcoin wastes. Big enough for you? Or Nigeria five times over (that's 200 million people times five).
We were told renewables are cheap and plentiful, but it turns it they cannot even power 1% of the demand?
Why do reneweables scale so poorly?
Stop.
People make the argument "it will boil the ocean". Is this not the claim, roughly speaking?
..but why is it renewables cannot service reliably and inexpensively just 1% of demand?
I have no problems with renewables, but interplanetary civilizations subsisting on windmills is just fantasy.
2. Construction speed is not immediate
3. 1% of global consumption is still hell of a lot (more than 150 countries. Stop pretending that if you say 1% this makes it "tiny")
4. You are the only one talking about interplanetary civilizations and pretending your opponents are making arguments they are not making
They have a max capacity. They cannot be steady consumers of electricity for the 95%+ of the time that there is enough electricity to go around.
> Mining is unsufficient, because it can't provide energy in the night when the sun is not shining. Storage systems can
I can use the same argument: Storage systems are insufficient, because they can't consume most of the excess generated power to make development of more renewables economically viable. Bitcoin miners can.
I have already answered that.
Excess power can be removed from the system removing valuable CO2 emissions damaging society for about 700 dollars a ton
There are industrial and chemical processes where electricity is not a viable replacement for the CO2 intensive approaches we are using now. Building up a hydrogen economy for those applications would be great. And much more useful than that cryptocurrency bullshit.
I would also hope that we do not go back to some "darker" forms of society where only the "value to society" mattered.
So the "cryptobros" think this is new and exclusive for crypto? No and no. Their hype to damage ratio is starting to match those of tobacco companies.
Eg: google/facebook datacenters, aluminum smelters, factories, etc.
Just turn off fossil based plants and you reduce needed max capacity.
Didn't know we have too much energy with a low carbon footprint.
Also there is economic harm in shutting down mining I.e loss of mining fees.
https://www.bloomberg.com/news/articles/2021-12-22/europe-s-...
> "I think it's clear that one of the issues facing aluminum is that it is costly to bring down smelting capacity and even more costly to bring it back up again," Harvey said during a virtual presentation at the Bank of America Securities Global Metals, Mining & Steel Conference. "I think it has tended to be a relatively slow process for producers to come to those decisions."
> Harvey said each potline at a smelter requires about $25 million to restart, which made it challenging for operators to reach curtailment decisions.
https://www.spglobal.com/platts/en/market-insights/latest-ne...
For industrial, they can establish peak-times and broadcast the pricing info. So maybe not "seconds" but they can react to demands and pricing. It is possible (and depending on the industry, likely) that some industries do have backup power on site, so they switch to that and stop using grid power.
Boggles my mind how some think it's acceptable.
Nest Thermostat offers many features to automatically do this if users want it, both to save money, as well as to help the planet. Full disclosure, I work at Google, but not Nest.
https://support.google.com/googlenest/answer/9244031
The numbers don't make sense to do that.
The average time a piece of hardware lives on the Bitcoin network is just 16 months, after which it becomes e-waste, too underpowered to matter.
So assuming the CAPEX is $1000 for a piece of hardware that draws 1kW, the most it can consume is 11 MWh during its lifetime - about $1500 at residential prices (Texas) or $500 at wholesale prices.
So just how deep can you throttle down the rig to take advantage of the low energy prices? The numbers seem to show that anything below 70-80% active ratio will start to cost you more in capital than you save in electricity.
So you can avoid the peaks but certainly cannot wait for the relatively rare excess renewables events.
Also - if you have free electricity, which is a thing in certain settings, where prices can and do go negative, mining hardware will be viable for "a long time".
Yes, this is exactly what is going on.
If you think you have a solution to this decades old reality, then thank cryptocurrency for forcing you to notice.
Energy was being wasted, renewable energy was also being wasted, in perpetuity, forever, until cryptocurrency producers put their applications at the site and started using it. There is still a lot more energy of this kind that will be tapped into by miners.
Again, if you really think you have another economically viable alternative, emphasis on economically viable, then dont forget to thank bitcoin, and also do the thing. You’ll single handled help many people and gain leverage in public policy to enforce your dream world that excludes proof of work.
Although relaunched coal operations or weak electrical grids is what makes the news, the other energy use is just a much greater opportunity for miners and much more prevalent already in use and scale.
I think anti-POW vigilantes actually have a role in making sure it stays that way because there is a real threat, but it requires then acknowledging that it already happens that way, but since people are searching for ways to be anti-POW instead of looking for energy uses that were worse before POW moved in, it is an ironic way to lose this battle.
When I think about a new technology, I like to come up with a "proof" that something is or is not substantial. Something like "Email transfers a message just as well as a letter, but is orders of magnitude faster. Therefore, email has substantial value".
For Bitcoin (and other crypto), I came up with this "proof" that it is not a fad:
You can freely buy all kinds of stuff everywhere. A company can sell you a bag of stones. A hammer. A knife. A pencil. A lamp. But you cannot buy Bitcoin freely anywhere. If you want to buy Bitcoin, the government jumps in and says "Oh no! This is extremely dangerous! Write down the identity of this person. We need to monitor them!".
If Bitcoin is so dangerous to governments, it cannot be just a fad.
In your email your argument is “email is faster”
In your bitcoin example it is “you can buy (with) bitcoin everywhere” and then suddenly “but governments monitor me so it cannot be a fad.”
That seems a non-sequitur to me. Something is not a fad because a government tracks you.
He didn't say that, read his comment againt.
2. It's going to boil the oceans!
3. We officially recognize it as currency.
If you used the governments aversion to meth to judge the market size of illegal drugs you would have hit the nail on its head: The worldwide market for illegal drugs is tens of billions of dollars, has been around for centuries and nobody expects it to go away soon.
It's actually hundreds of billions.
Governments attempt to prevent their currencies from financing them. They do this through controls like AML/BSA.
Cryptocurrencies bypass these controls. It’s not just dangerous for governments, as the article points out this makes it dangerous for everyone. It has single-handedly enabled ransomware attacks to be profitable and endemic.
I honestly don’t understand your argument at all.