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Comment by latchkey | Hacker News Reader

We all know bitcoin uses a lot of energy, there is no debate about that. But, on a global scale of all energy used, it is just a tiny tiny sliver of the pie (see my previous link). Just because something uses energy doesn't mean it is inherently bad. If you want to extrapolate and say that wasting energy on PoW is bad, then you also have to compare that against all of the other wasted energy. If you do, bitcoin doesn't look that bad either.

Of course plenty of people here like to fixate on telling people what a good or not good use of energy is. Which is so ironic to me given that here we are using energy to have this debate and I'm sure someone out there thinks it is equally wasteful.

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The article is not about energy usage, it's about capital outflow in the form of energy expenditure. As long as mimers must pay someone to keep running, either capital outflow must match capital inflow, or the price will go down, and consequently mining will decrease and with it security. Either way, not a good store of value.

Ok, so then this is the age old debate of what happens when mining ends? I guess I could have kept reading for some new insight there. Face palm.

The age old debate about what happens when mining ends? When does mining end?

Mining never ends, but the inflationary aspect does [0]. At which point, bitcoin will become unprofitable for most miners and they will shut down. A few who can remain profitable, from the transaction fees alone, will stick around and the end result is that energy usage will drop significantly. Unless, of course, miners vote in another consensus model before then (unlikely).

This is a big reason why there is such a huge land grab of new miners coming online right now and a huge increase in power usage. It also solidifies the monetary policy imho. Once emissions stop, it'll become even harder to obtain what BTC is left and as long as it stays desirable for its intrinsic value (imho, that is digital gold... its store of value), people will want it.

Don't forget that while 19m have been emitted, millions of that are locked up forever and will continue to get locked up over time (things like people who die suddenly without leaving access to their private keys). Thus, there is actually a lot less than 21m BTC that'll ever be available.

͡° ͜ʖ ͡° at the halving chart on that website. I usually don't think that past performance indicated future results... but come on... this is just obvious financial cycles. If you haven't already, you'd do well to buy $100 of bitcoin and just sit on it.

[0] https://www.bitcoinblockhalf.com/

OK, you mean when the creation of new bitcoin ends.

No, that's not what the article is about. The article basically says any cryptocurrency that relies on mining cannot be a store of value because mining requires capital outflow which means your bitcoin loses value without continued capital inflow in the form of new demand.

It is very likely miners vote in another consensus. There are ~118 years left before the supply capnis reached. If bitcoin lasts that long, it is highly likely that some major changes occur, consensus seems like the number 1 candidate for change.

The end result of energy usage dropping... if the energy usage drops, the security does also. So price decrease results in less mining, and therefore less capital outflow, which is great, except it results in less security. the only way to get 0 capital outflow (and therefore require 0 capital inflow to keep a steady price) is to have 0 mining, which means no blocks being produced and no security, which again, does not make a good store of value.

> The article basically says any cryptocurrency that relies on mining cannot be a store of value because mining requires capital outflow which means your bitcoin loses value without continued capital inflow in the form of new demand.

Sorry, but you have to make the distinction between mining and inflation. Two different things. Mining is just validating transactions. Today, miners get paid newly minted coin + fees for that service. In the future, they will only get fees. You have to factor that into the long term viability of the coin.

After just watching ETH literally destroy GPU mining, I don't think it'll be that easy for Bitcoin to achieve any sort of changes that affect mining in any way.

Yes, there are 118 years to 21m, but the supply is dwindling... 6.25 now... next 3.125... and the difficulty keeps going up. Did you ͡° ͜ʖ ͡° at the link I sent? It has a nice graph of the decline of inflation... we are super close to zero by just 2029 and 2033... even closer.

> The end result of energy usage dropping... if the energy usage drops, the security does also.

Untrue. Difficulty adjusts automatically. The ONLY issue is if a huge amount of hash drops off... and then rejoins... together... all at once... in a way to attack the network. But the economics of doing would negate that pretty quickly.

> the only way to get 0 capital outflow (and therefore require 0 capital inflow to keep a steady price) is to have 0 mining

No... we are going to get to near 0 capital outflow by 2033. We will always need mining to form blocks. The question is what will happen to the fees, and the price. Fees are a function of usage and a minimum set by the miners as a whole. There will always be miners willing to form blocks for almost no fee. If there is little usage, the fees will stay low, but demand of the coin as a store of value, should drive the price up due to the fixed supply and lack of availability.

I don't think you understand this stuff as well as you think you do. That's not intended as a rib, it's important for us to continue learning.

The hash difficulty adjusting automatically keeps the block time relatively constant. Security goes down the less hash power is on the network, that's an undisputed fact. Hash power is proportional to energy consumption. Lower energy consumption means less hash power means less security. Think of it like this: if 2 CPUs secured bitcoin, it is trivial to attack. How much hash power and energy an attacker has to buy for a successful attack is the security of the network.

You don't have to factor in the distinction between emission (commonly called inflation) and fees when discussing this particular topic, any bitcoin liquidated to pay for energy usage is mathematically identical to price inflation when looking at BTC as a currency. It is sell pressure, it is capital outflow.

Emission of new bitcoin, or inflation as it is commonly called, is not the same as capital outflow. Capital outflow is sell pressure. You cannot get to 0 capital outflow as long as miners must pay for power. Do you understand what I'm saying? This has nothing to do with how many new bitcoins are created.

Please try to understand what I'm telling you. We aren't talking about the usual everybody-has-heard-it-a-million-times bitcoin critiques. I am very, very familiar with how bitcoin works and understand very much all the points you're making. But these things have no bearing on what I or the article are saying.

I hear what you're saying and maybe I'm just not explaining myself well enough. You're totally right. Thanks for the clarification. I do understand things the way you're explaining them. I appreciate that you're trying. =)

You're right. Sell pressure (capital outflow) cannot end. That said, with inflation (or emission) becoming less and less over time, there won't be as much to sell.

I'm sorry, but difficulty is also security. Attacks aren't just about hashpower, it is also expense (capital to buy and run enough hash) for the attack. If the hashpower goes down, you're right... there is a window where attacks become possible before the difficulty adjusts (I'd argue ETH PoW per block adjustments were more secure), but that would require the same amount of lost hashpower to also be 'found' and dedicated towards attacking the network at the same time. It isn't like the network was less secure 1 month ago than it is today.

There won't be as much bitcoin to sell, but the capital outflow remains the same if the security remains the same, and that means the price of each bitcoin would have to be much, much higher, but that requires equal capital inflow. If inflow is less, price goes down, miners can't afford it so they drop off the network, security goes down and capital outflow goes down too.

Block difficulty does not determine security in any way. All it determines is average block time, that's it. The security of a network is determined solely by the hash power on the network (and the expense to double it). There's no window while difficulty adjusts, if hash power goes down the security goes down until hash power goes up again. The network was less secure if the hash rate was lower. On September 14 at 12:00 UTC, bitcoin's hash rate was 136 EH/s. Right now it is just under 250 EH/s. Bitcoin is more secure right now than it was on September 14 at 12:00 UTC, and the block difficulty has nothing to do with that whatsoever.

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