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Comment by zardo | Hacker News Reader

> Nor does it seem like an amount that can make a dent in the energy consumption problem of Bitcoin mining.

If you make a dent in the energy consumption problem, doesn't the network automatically adjust to pop the dents out (increase the difficulty)?

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It does if miners persistently aim at their maximum power allotment and keep investing in an equal amount of new hardware and extra hashrate. The pivot point where operational costs outweigh the revenue seems to sit just beyond the power allotment for most operations, at least until something radical happens with the power efficiency and costs of mining equipment.

Yes it does.

Indeed. The price of a bitcoin and the price of energy are the only two variables in the function that determines the energy consumption.

The depreciation of mining equipment is a third variable, and it is rather significant at this point in time.

As an example, the Antminer S19 Pro retails for $8-10k and is rated at 3250 W. Running it 24/7/365 would consume 113.88 MWh of electricity over a four-year lifespan. At average marginal hydro power rates ($0.05) this would cost $5,694 while at typical residential rates it would roughly double to $11,388.

The hashrate is an input into the difficulty calibration but not the energy consumed. Energy consumption is not an input that could be considered by the network because it's not observed globally (or even locally, really).

EDIT: the equilibrium determining whether and how much capital to invest in hashing equipment is not related to 'difficulty' -- it's a human economic factor that considers difficulty as an input.

Energy consumption determines the cost, whereas the benefit is determined by the value of a bitcoin, and the demand for on chain transactions. Cost will always approach benefit.

Any increase in power efficiency will lead to lower operating costs, which will lead to a higher hashrate, which will lead to an adjustment of the mining difficulty.

> The hashrate is an input into the difficulty calibration but not the energy consumed

my understanding is that this is correct - others are introducing "cost of electricity" in an economics statement, not the math of difficulty itself

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