Every Bitcoin payment 'uses a swimming pool of water' | Hacker News Reader

Every Bitcoin payment 'uses a swimming pool of water'

bbc.com

22 pointsdataminer56 comments

The correct answer to all this type of smear campaign (they do this to beef, among other thigns) is "yah, so what? If there's a sustainability problem raise the price of water until a sustainable amount is being used across all uses. If there's a claimed externality not being priced that externality exists for all uses, so raise the price until the externality is covered and see who is using what after that."

This whole line of argument is utterly stupid because it assumes incorrectly that the complainer should have input into what I do in my life and that is the polar opposite of how a western country, especially the USA, works constitutionally.

>In total, bitcoin consumed nearly 1,600 billion litres - also known as gigalitres (GL) - of water in 2021, the study, published in the journal Cell Reports Sustainability, suggests.

It's too bad the study isn't linked, but the math seems a bit fudged to me. Maybe they're using the amount of water per block (144 per day) which records multiple transactions? For 2021 there were about 250,000-ish[1] daily transactions on BTC, so roughly 91 billion transactions. With 91 billion transactions using 1600 billion liters of water you get about 18 liters of water per transaction instead of the 75,000 or so liters a pool is.

If you assume a 24 x 12 x 4 pool and use blocks instead of transactions, each block uses about as much water as a pool.

[1]https://ycharts.com/indicators/bitcoin_transactions_per_day

I agree. Measuring per-transaction mining work seems like a bad choice of metric because mining uses blocks of transactions. Maybe someone mixed up the two.

Every fiat payment is backed by similar energy and resource usage by the standing military (or dependence on another nation's via other exchange) that gives it worth and stability. Bitcoin is laudable in that it's energy and resource use is at least non-violent.

These days cryptocurrency transactions are also backed by standing military and police, since fraudulent cryptocurrency transactions is a crime now in many countries [1].

> A Serbian man has been extradited to the United States, where he faces charges in two separate federal indictments in the Northern District of Texas and Eastern District of New York for his alleged participation in coordinated cryptocurrency and binary options schemes.

[1] https://www.justice.gov/opa/pr/leader-70m-cryptocurrency-and...

I'm experiencing 4090 pricing violence.

> Every fiat payment is backed by similar energy and resource usage by the standing military (or dependence on another nation's via other exchange) that gives it worth and stability

This has always struck me as a terrible rebuttal. This essentially means that the only reason that countries have armies is that they have a currency, which is obviously false, thus destroying the argument.

I mean, France, doesn't have their own currency but still has a standing army.

Bitcoin is as entangled in the military as any other currency. It only works with a functioning Internet, functioning power grid, with the ability to buy computer parts with regular currency, and it's regularly valued in fiat currency. So the idea that the military is an extrinsic cost that only applies to fiat currency is a complete myth, Bitcoin relies on the government.

And even ignoring the fact that Bitcoin is regulated and there are government policies and laws dictating how exchanges work and it is seen by a large portion of the community as a speculative asset alongside traditional assets like stocks and bonds, the truth is that Bitcoin would collapse if society collapsed because global connectivity in order to synchronize the blockchain with everybody using the currency is a literal requirement of the technology. It isn't a federated system, there is one database that gets replicated everywhere. And that global connectivity and ability to replicate the database and to connect to miners is enforced by a standing military.

It's especially silly to look at Bitcoin as independent from military presence given that the complaint is that Bitcoin uses a ton of power and water, and control of energy sources and access to natural resources is historically a giant influential factor in US foreign policy.

And yet bitcoin works just fine in countries where the central government collapses and their currency is worthless. In fact, that's one of it's more common uses. This is very unlike a fiat currency.

The USA could be gone and bitcoin would still work. China did ban it and mining and it still works. The idea that it is "as entangled in the military as any other currency" is obviously untrue.

> The USA could be gone and bitcoin would still work.

If the USA vanished tomorrow, the global Internet would collapse, and Bitcoin in fact would not still work.

You very literally cannot transact without an Internet connection, the thing that is maintained by... governments and the USD and fiat currency. Also:

> And yet bitcoin works just fine in countries where the central government collapses and their currency is worthless.

Does it? Bitcoin is terrible at regular transactions, to the point where I've got another Bitcoin proponent further up the thread complaining to me that I shouldn't be comparing Bitcoin to a currency (I wish y'all would get your story straight on that by the way).

One big problem is that the price fluctuates way too much and the community is actively hostile to attempts to stabilize the price. Transaction fees are another issue; the best method that's been proposed to minimize transaction fees is to take transactions off of the blockchain and then consolidate them. Which sure, honestly I agree with that strategy, but it should give people pause that making a currency usable involves avoiding the underlying technology behind it.

And so you bring up countries like China, but Bitcoin really hasn't thrived in China. Yeah, some people use it, but restricting it for everyday purchases has pretty much worked out the way the government hoped. The coin is not really that censorship resistant, you end up kind of needing to go through the same money-laundering steps that you'd use anyway to get it into a usable currency.

But all of that is kind of besides the point, because once again, in a world with an unstable power grid or disrupted Internet, the currency stops functioning. That is not a good disaster currency. But go ahead, prove me wrong. Go set up a Bitcoin mine in Gaza. To the extent that Bitcoin has been able to function in any collapsed region, it's only because other countries like the US, China, EU, etc maintain Internet connections to collapsed regions that users can piggyback on. And those Internet connections are maintained using military and national resources.

Regarding continuity of Bitcoin's functionality without a stable power grid or Internet, take a look at Blockstream's satellite constellation.

So, two things. First, this is a technically that changes nothing about the underlying problem. The issue is not that Bitcoin is specifically reliant on the ability to make an HTTP request, the issue is that is a network that requires global connectivity. Transacting requires a connection to a global network, which is an inherently fragile basis for a coin that is supposedly going to function in disaster situations.

Second, I'm sorry, your idea to reduce reliance on governments and military is to maintain satellites?

No, I don't bring the satellites up as a means to reduce reliance on governments and military. I bring them up to mitigate the risks of disruptions to Internet connectivity. Personally, I think the Internet is decentralized and durable enough that this won't be an issue, thanks to the excellent engineering decisions made by our (military!) forebears at DARPA. I brought the satellites up specifically because your parent comment said that "with an unstable power grid or disrupted Internet, the currency stops functioning" which they render false.

> I brought the satellites up specifically because your parent comment said that "with an unstable power grid or disrupted Internet, the currency stops functioning" which they render false.

I don't know, I would say that a globally connected network that digitally transmits information is effectively an internet regardless of whether it is transmitting data over ocean cables, satellite connections, telephone lines, or pigeons. I disagree that a satellite system changes anything about that point; technically I guess it's different, but it feels a lot like quibbling over linguistic technicalities when the actual meat here -- that transactions require global consensus and network connectivity -- is unchanged.

And to be honest, even that linguistic distinction feels slightly like an "in theory" argument anyway, because Blockstream doesn't appear to be a separate self-contained network, the most charitable interpretation of the system I can see is that it is a bridge to the Internet to increase connectivity. Blockstream does not get rid of the requirement to get transactions onto the Internet, it just provides a way to sync the blockchain to places that don't have direct access. I still think it's accurate to say that transactions on Bitcoin must be synced over the Internet with the entire network. Many miners are only connecting to the network through the Internet, and Blockstream is still ultimately going to be synchronizing with those miners.

If I hand someone a piece of paper describing the transaction I want them to perform, and then they drive to their house and log into their computer and perform the transaction for me, my take would be that we have not actually gotten rid of the Internet requirement. Delegating transactions or providing bridged access to the network does not mean that Internet access is not still ultimately a requirement for transactions, or at least that's the way that I interpret an Internet requirement.

You're right, this does seem like semantic quibbling. What sort of scenario are you worried about, that would cause both the terrestrial and satellite Internet (including, as you wish, Blockstream's satellites) to become globally partitioned? You previously stated that vulnerability to such a scenario made it a bad currency.

The scenario I'm thinking about is the one that superkuh brings up above:

> The USA could be gone and bitcoin would still work.

An event that caused the USA to dissolve would likely signal a network disruption on such a level that satellite access or maintenance could not be guaranteed and that global Internet access might feasibly be partitioned or disrupted (or could fail completely given the amount of international cooperation involved in maintaining the Internet).

In addition to potentially breaking access to the network (or damaging the network to such a high degree that it ceased to be a global network), a disruption of that scale could also basically break mining given the amount of mining that is localized within the US. Or substitute China if you want. It's not clear to me that Blockstream's satellites or general satellite Internet would be sufficient for mining pools even if they were sufficient for signaling transactions to the Internet.

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On a less catastrophic level, power also becomes a problem. I mentioned Gaza above, which currently has extremely limited access to electricity. It is hard to imagine maintaining a mining pool or securing transactions in that environment.

Satellite connections do obviously help with access in those limited situations, but people in those situations are relying on the majority of the mining pool and the network being centralized in stable locations with stable governments. In which case, I would question the currency's independence or reliability as a fallback currency during global financial collapse -- an event that would destabilize not just individual small pockets of users but the actual network itself.

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It is definitely true that the scenario is unlikely, but if Bitcoin is being sold by people like superkuh as if it is a disaster-proof security that could survive global financial collapse or the elimination of the USA... I don't think it would survive that.

To be fair, that's not necessarily the thing that makes it a bad currency though, you're right to point that out. The reliance on connectivity does make it a bad currency but not because I'm worried about the Internet vanishing, more because the reliance on global consensus makes it slow and inconvenient to use for everyday transactions.

The disaster stuff is largely just an imagined scenario and there's no reason why a "good" currency needs to be disaster-proof in order to be useful. But if that imagined scenario is being used as a selling point for the coin (which I think superkuh was doing), that's when I start to take issue with it.

Animal agriculture uses more water and yet advocates are silenced. People are willing to denounce anything as long as it doesn't personally affect them.

Vegan here! If you're an omnivore you have my full permission to complain about Bitcoin's water usage. I personally give you my "vegan blessing" or whatever to do so even if you still eat lots of meat.

I would love for more people to become vegan, our current meat industry has a very large negative environmental impact. But please do not use veganism as an excuse to care less about the world. People's inability or unwillingness to give up meat should never be used as an excuse to avoid conversations about other inefficiencies and bad behaviors.

I'd love for people who care about the environment to give veganism a try or at the very least to reduce meat consumption. But if I can't get someone to do that, I'd still like for an omnivore to not use Bitcoin, especially given that veganism is an uphill social battle and Bitcoin thrives on hype and vibes and could genuinely see significant reduction with more conscious avoidance of the tech. So at the least, don't use Bitcoin, but also consider looking critically at meat consumption as well.

I'm a vegan and bitcoiner and I'm afraid you have no idea what you're talking about concerning bitcoin. I recommend you watch some Michael Saylor interviews.

I've been watching Bitcoin since the early days, I understand the tech. "Bitcoiners" love to say that critics just don't understand what we're talking about, but unfortunately a lot of us do. Linking to yet another interview is not going to change that. Saylor started heavily pushing Bitcoin in 2020; frankly, I have been in this space significantly longer than he has.

And Saylor is particularly funny to link to because Saylor is a poster child for treating Bitcoin as a primarily speculative asset. He is one of the prime examples I would give for why Bitcoin is not a useful currency. Early proponents of Bitcoin used to tell me that people like Saylor wouldn't exist and that the coin would be used as... well, a coin. I honestly wish they had been right, but they weren't.

Instead the community pivoted from calling Bitcoin a currency to calling it a store of value; the whole point became getting as much of it as possible, holding it, not using it as a currency, and then trying to spark interest so that the held asset would rise in value.

Suffice to say, I don't think there's much real-world value in that, I think it's a pointless shell game. There are lots of speculative assets that people can buy and lots of gambling games that people can play that don't waste this kind of energy.

And even if you want to play a gambling game with a speculative asset, Bitcoin is a terrible cryptocurrency to play it with. It's been surpassed by other coins on pretty much every single technical measure from privacy to bandwidth to energy usage, and the fact that people are still consolidating around what is pretty objectively inferior technology at this point compared to other coins is proof positive to me that this is about the confidence game, not about the technology or about a movement. One more interview is not going to change that.

You must still be missing something if you think it's a waste of energy.

You might understand the "tech", but probably not the economic side. Do you understand the scam that is central banking? For example, do you realise that the number of dollars is doubling every decade and that this halves the value of each one. Do you understand the Cantillon effect, Gresham's Law and Thier's Law?

How about that the banking system is receiving interest on every dollar in existence even though it printed them out of thin air, backed by nothing?

Do you know what the 3 purposes of money are (unit of account etc) and it's fundamental requirements (e.g. divisibility, portability, etc) Do you understand why gold is/was so valuable? Why it replaced shells and beads as money?

> You might understand the "tech", but probably not the economic side.

I have heard every argument you make here. I have been in this space, I have heard the talks, I have heard the economic theories. You are starting from a conclusion that if someone thinks Bitcoin is a waste of energy there must be something they don't understand. But there's another possibility here that you're not considering, which is that maybe Bitcoin actually just didn't work, and the economic theories were wrong.

If that literally can't be a possibility in your head, then I don't know what to say -- this is like talking to Flat Earthers where every experiment has some mitigating factor that means it doesn't count, or there's some phenomenon that means that anyone who thinks the world is round must just be missing some point or must just have not seen some argument. I don't know how to work through someone starting entirely from a conclusion -- that Bitcoin is good and it's not a waste of energy and it accomplishes its goals -- and then working backwards to try and figure out why the conclusion they've already drawn is right.

The possibility you're not considering is that yes, the existing fiat monetary system has tons of problems, and Bitcoin was a cool attempt to build something better. But it just didn't work out. The tech didn't work out, the economic theories didn't end up playing out the way people wanted them to play out, the privacy guarantees didn't hold up, the bandwidth and transaction capabilities didn't scale the way we all wanted them to scale, the energy costs went out of control, and (most importantly) the community behavior didn't match what the founders and early proponents thought would happen. They tried to create a currency and unfortunately failed. They had interesting theories that didn't play out in actual reality.

But sometimes I feel like Bitcoin proponents literally can't envision that as a possibility, they're too invested in the thing and so it's become a leap of faith. Questioning it isn't possible. And I can't think of any better example of that then having someone come into a conversation almost directly saying, "I don't know what you don't understand or where you're going wrong or why you think that Bitcoin is a waste of energy, but you must not know what you're talking about because you reached a different conclusion than me." I don't want to be mean about this, but all I can think about reading this comment is that Youtube documentary where the guy goes into Flat Earth comment sections and systematically walks through an experiment and at the end they just say, "well, we don't know what you did wrong to get a result that indicates the world is round, but you must have done something wrong, try it again until you get a different result."

The reality is that Bitcoin is not working well as a currency. Come up with whatever theories you want about that, but the economic predictions people made about how Bitcoin would be adopted and used... didn't happen. The evidence isn't there. I'm not saying that as a critic, it would have been great if those people had been right, I'd love for there to be a good, privacy-preserving digital currency that works across countries and allows for low-cost microtransactions. But I also have to be honest about when an attempt to build that thing fails.

And continuing to dump energy and resources into a failed attempt to build a currency is a waste of energy. At best it's sunk-cost fallacy preventing people from learning from Bitcoin's mistakes and trying to build something better. At worst it's a speculative confidence game where the tech and theories are irrelevant and the only thing that matters is that the price of the coin (measured in USD, ironically) keep going up.

The reason I'm so confident that you must have missed something is because I'm so confident that I'm right about bitcoin. Why are you confident the earth is round? It's because you've been able to debunk every bit of evidence that suggests it's not.

Since learning about bitcoin in-depth a few years ago, I haven't found a single criticism that I can't debunk. Perhaps you'll be able to offer the first, but the odds are heavily stacked against you. Especially if your main arguments against bitcoin are:

- it wastes energy (I disagree in the strongest way - I'd prefer it to use more energy)

- it doesn't work as a currency (I agree, not yet at least, maybe never)

- it's used differently to how early proponents thought it might be (I don't care)

If you've listened to and understood Michael Saylor's "pitch" for bitcoin, but still see the energy it uses as wasted, then I don't think there's much more I can add - it takes so long to explain bitcoin, and it seems that you've likely already heard everything I'll say.

One of us is the flat-earther and all I can say is that it's not me.

> Perhaps you'll be able to offer the first

In quite literally every single practical application that Bitcoin has been used, from currency, to anonymity, to investment, to regulatory circumvention, to price reliability, to the democratization of finance, even to independence from the USD, Bitcoin has been found lacking. I'm not making that last criticism up either, there's strong evidence that Bitcoin's value tracks with the stock market. That should be a major red flag to its proponents, but it's not because... :shrug: sunk-cost line needs to go up.

The criticism of Bitcoin is that from its inception, it has not succeeded in a single one of its goals. On literally every axis, both technological and economic, it has either been surpassed by other coins or the underlying theories have turned out to not hold up in the real world.

The criticism of Bitcoin is that all of its hype boils down to the hope that it might become useful in the future, even though it has thus-far failed or been surpassed in every attempt to be useful. And this has been going on since Bitcoin began, and still people come in and say "well, I got into this a few years ago and it seems sound to me." My sibling in Christ, there is a history of failure here that you are either not privy to or are ignoring.

You can have all the theories you want, the problem is that none of them are demonstrable and the things being built with those theories don't actually work in the real world. But as long as you keep everything in theory and keep talking about gold vs beads, sure, you can debunk anything that anyone says because economics are complicated and it's easy to make arguments that sound good even if they're not practically useful in the real world for building actual systems that people use.

> it doesn't work as a currency (I agree, not yet at least, maybe never)

This is also why these conversations are exhausting, because there is no singular philosophy that Bitcoin proponents share other than that they think Bitcoin is good. I can jump from a Bitcoin proponent telling me that Bitcoin is the future of financial transactions to someone telling me that it's not intended to be a currency in the first place, and they'll happily promote Bitcoin alongside each other even though their actual goals are completely contrary to each other and their philosophies are completely incompatible.

This should also be a warning sign to people, but for some reason it's not. There is no unified consistent philosophy from Bitcoin proponents about what the coin is even intended to do. There are a lot of factions, and you'd think they'd all be at each others' throats, but they're not. For some weird reason, people with radically different philosophies about the goal of the coin don't seem to have much disagreement with each other as long as the USD-price keeps going up. Almost like the USD-price going up is the actual uniting goal. Almost like it is first and foremost a speculative asset designed to exploit FOMO, and all of the philosophies and theories are secondary to that goal.

> it's used differently to how early proponents thought it might be (I don't care)

The irony of someone saying this after coming and saying, "if you're critical you obviously don't know enough about the theory behind the coin" is not lost on me. You're coming into a conversation extremely late, looking at the people who invented the thing you're calling revolutionary, looking at their claims which ended up being proven wrong, and saying, "it's actually everyone else who doesn't understand what's happening here."

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> it wastes energy (I disagree in the strongest way - I'd prefer it to use more energy)

Not so much relevant to our conversation, but for anyone else reading, this is why discussions about proof of stake are contentious in crypto spaces and why efforts to build efficient coins are likely to fail, because a large portion of the space sees the wastefulness as a feature. The entire design is oriented around making the coin inefficient and making transaction verification inaccessible to anyone who does not control large amounts of power/hardware. Burning the world is not an unfortunate side effect that can be mitigated, it is a desired part of the process, to the point where I have actually heard proponents call Bitcoin a "battery for excess electricity." Their philosophy is that burning the world is desirable as long as they're able to sell the ashes for a profit.

And that's a big reason why it took so long for Ethereum to move to PoS and why people were so mad about it; that's why discussions about energy efficiency aren't going to work out. That's also why the only way that energy usage is ever going to decrease for Bitcoin is if the coin crashes entirely, because the energy usage is a function of the coin's USD market value and the USD market value that miners can extract from wasting that energy. If energy prices go down, miners will use more electricity until they rise again. If there's excess electricity somewhere else, miners will use that too. They have to, that's how Bitcoin is designed to work, it's designed to soak up any electricity that is priced efficiently enough that it can be used to mine coins. Bitcoin is a machine that purposefully inflates energy usage in proportion to its USD market value.

You say "I have heard every argument you make here. I have been in this space, I have heard the talks, I have heard the economic theories." but I can tell quite clearly from everything you've said that if you've spent time in the bitcoin space, then it wasn't for long. And if you've heard the talks and economic theories, then you didn't fully grasp them, or you listened to the wrong people. It's hard for me to imagine that you've ever watched a full Michael Saylor interview.

For context, I've been studying bitcoin and the associated economics almost every day for the last 3 years. After writing it off in 2012, and shorting it in March 2020 because it's "inefficient - a waste of energy", around 5000 hours of studying later, I now have my entire net worth stored in it. I see it as one of the most important inventions in the history of mankind - at least equal to the internet itself.

We are poles apart. However, you view it very similarly to how I did when I was naïve. That's how I know that I'm right.

I'd strongly recommend listening to Robert Breedlove's "What Is Money? - Saylor Series". I'd also highly recommend the book "The Creature from Jekyll Island" to understand why the fiat economic systems are a cancer on the world, corrupting the very root of civilisation.

If you want to understand bitcoin, you need to really invest the time. It takes days, weeks, months.

You'll learn that miners don't validate the transactions ($100 nodes people can run at home do that). That rather than waste energy, bitcoin will increasingly use waste energy (by definition energy that no one wants and so are not competing for), and extremely efficiently. That the value can double every 4 years with no increase in energy use. That money that doesn't take work of equal value to create will inevitably lead to corruption and devaluation relative to bitcoin. That it supports and will be often critical to the viability of renewable energy plants all over the world. That it's unstoppable. That it is the ultimate store of value and as such will suck in an enormous share of the stored value in the world, from currencies, bonds, stock market, real estate. It will become a world reserve asset, allowing entire countries and their populations currently enslaved by the dollar and other fiat to store their value safe from constant stealth theft via money supply inflation. That it can be as anonymous as we need it to be. That the bitcoin network will be used in a similar manner to the inter-bank clearance system (slow, robust with high-value transactions). That layer-2 and higher networks such as Lightning will offer final settlement for small (and/or private) transactions.

This is going to happen whether you like it or not. Mankind has never seen hard scarcity in a liquid asset before and hardly anyone is ready for what's going to happen.

> And if you've heard the talks and economic theories, then you didn't fully grasp them, or you listened to the wrong people. It's hard for me to imagine that you've ever watched a full Michael Saylor interview.

"Repeat the experiment until you get a different result."

> I now have my entire net worth stored in it

Again, not really relevant to our conversation, but to anyone else reading, this is why you're never going to convince someone in this position by argument or talking online, the best you can do is publicly demonstrate that the arguments are worthless for other people.

Someone who has their entire net worth invested into a coin is never going to be swayed by technical arguments about how it works or by economic arguments, or really by anything. We could talk about the fact that the lightning network also has privacy problems, we could talk about the misconceptions here about how mining works and how the underlying technology for verifying transactions works, but it's not going to change anything.. There is no way to sway someone in that position because "I have my entire net worth in something that is a failed experiment" is going to be resisted by every single emotional neuron in the brain.

So the defense becomes "you just need to spend more time looking, if you spent more time you'd see I'm right, if you don't believe I'm right, it just means you haven't repeated the experiment enough times until it yielded the result I want."

Because it has to, the brain has to react that way. I don't mean this as an insult, if I was in the same position I would act the exact same way because that's just how human brains work, and I would be no exception. Once you invest into something on that scale, it is extremely difficult not to have blind faith in it.

> "Someone who has their entire net worth invested into a coin is never going to be swayed by technical arguments about how it works or by economic arguments, or really by anything."

This isn't true. I can buy back fiat with my bitcoin within an hour if you convince me that I've made a mistake - I have no commitment, sunk costs etc. I think it more strongly applies to you - think how much bitcoin you could have owned. You've missed out on life changing wealth forever because of the opinion you've formed. It would hard to accept that you're wrong now.

I actively seek out criticisms of bitcoin where ever I can. So far I've not found a single person who I can see understands bitcoin but doesn't own any, but I've also failed to convince any of those people who don't get it.

If you're open-minded, I'm happy to talk about the misconceptions and will happily be corrected if I'm wrong - please go ahead - hopefully one of us will learn something.

Lets keep it simple and forget about using bitcoin as a currency for now. Let's focus on bitcoin as a superior alternative to gold.

> "we could talk about the misconceptions here about how mining works and how the underlying technology for verifying transactions works, but it's not going to change anything.."

Let's start with that - what are the misconceptions?

> I think it more strongly applies to you - think how much bitcoin you could have owned.

For anyone following along, this is the FOMO strategy. It's a little weak? I kind figured you'd argue that I had emotional investment in USD, which would have been a much stronger argument for you to make (albeit, not an argument in favor of Bitcoin). To skip over that right to "but think about how much you're missing out" is... I don't know, I've seen people make this pitch better.

> So far I've not found a single person who I can see understands bitcoin but doesn't own any

It does seem like your definition of "understands Bitcoin" is "agrees with you", so that's not particularly compelling as an argument.

> what are the misconceptions?

Okay, sure, I'll bite.

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> You'll learn that miners don't validate the transactions ($100 nodes people can run at home do that).

This is straight up wrong. Bitcoin proves chain validity using a system called proof of work. Singular nodes are never enough to complete a transaction, the whole point of proof of work is that lots of people race and that enough people spend enough compute power at the same time that someone trying to rewrite the chain or double-spend can't keep up with the network. This is a huge misunderstanding of an extremely basic fundamental part of the technology. When people say that Bitcoin allows for distributed consensus, this is what they mean -- the network is trusted because there are a ton of people wasting energy and no singular actor can get enough energy or resources to outspend enough of the network to launch an attack.

This is not me making something up, Satshi talks about this in the introduction of the Bitcoin whitepaper (https://www.bitcoin.com/satoshi-archive/whitepaper, emphasis mine):

> Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed timestamp server to generate computational proof of the chronological order of transactions. The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.

To be fair, it is true that individual nodes can validate whether or not a proposed chain is completely incorrect, but so heckin what, that's not really the important part of how the Blockchain works. The important part is that the network specifically trusts whatever the longest blockchain is, and that entire security system is based on the entire network constantly racing itself to increase the chain's length.

The inefficiency is the point, the point is that the network can spend more energy than you individually can. It outspends your access to compute power. "The network outspends your attack" is basically the definition of a proof of work blockchain. So at a purely technical level, your explanation here already has issues. But let's ignore that and talk about economics:

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> That rather than waste energy, bitcoin will increasingly use waste energy (by definition energy that no one wants and so are not competing for)

This is not really a thing. I don't know if you think Bitcoin mines aren't hooked up to the normal power grid or something? They are, they use the same power grid as residents. They run 24x7, they use power at market rates for the areas that they operate. That's why areas with cheaper electricity are more attractive to miners, because they have to buy the electricity, they don't get given to them for free because it was going to be thrown away otherwise.

Bitcoin mines purchase energy from the market and very obviously that affects prices. It is true that there are situations in the power market where power drops into negative prices during low-usage, but Bitcoin mines don't restrict themselves to those areas/times and use far too much power to be operating entirely on that excess electricity.

This is a pretty basic economics error -- for what you're saying to be true there would need to be a huge excess of energy that cannot be harvested or sold to the market other than to Bitcoin mines. But Bitcoin mines aren't special, they're GPUs. The power they're using isn't some special format, it's just electricity, and it could be used for any computing tasks or power expenditure. This is obviously true just from first principles of economics and how markets work, but because I know you won't believe me when I say that, it's also something you can see in the real world: a 2022 study estimated that Bitcoin mining cost upstate NY residents upwards of $250 million dollars in increased electricity costs (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720). It's also demonstrable within the Bitcoin market itself, part of the reason why China is attractive to miners is because it has fixed-price energy regulated by the government. This means that miners can ignore the price externalities because they're not operating in a free market, the electricity is price-controlled.

So Bitcoin proponents love to say that the energy used on Bitcoin would just be wasted if it wasn't used for mining. But it's obviously not true, both from a market perspective and from the even simpler argument that we could be running those GPUs to do any number of more useful activities.

Moving on:

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> That the value can double every 4 years with no increase in energy use.

This is not how the economics of mining work. The amount of mining that happens is a function of the cost of mining and the potential value from mining. The cost of mining is the regulatory cost, the electricity cost, the cost of buying GPUs, etc... The benefit of mining is the payout rate and the market value of the coins that get payed out. If the value doubles and the other prices or the payout rate stays the same, the amount of mining will increase.

This is, once again, extremely basic economics; supply and demand. If I can spend X dollars to get Y dollars worth of Bitcoin, and Y doubles, then the mining will go up until the costs increase again. Now, maybe your argument is that energy isn't the specific cost that's going to go up, maybe your argument is that the bottleneck on mining is going to be GPU availability. Which, cool, but massively inflating the GPU market and driving up prices is also a pretty big negative externality and also pretty bad for the environment given how those GPUs get made.

So I can't stress this enough, the reason people mine Bitcoin is so they can make money. It's because they get money out of mining. If the price goes up, the mining will increase until either the costs go up or until enough new people are mining that the payout rate decreases.

You might disagree with those economics, so once again, let's look at the real world. Have the number of Bitcoin miners increased as the price of Bitcoin has increased? Yes. Is that just a very strange weird coincidence? Probably not.

Probably not, because getting back to the technical side, this is by design. Remember how the network is secured -- if it is cheap enough for a dedicated attacker (even at a nation-state level) to buy up enough electricity and GPUs to perform a 51% attack, then the network isn't secure. The way the network stays secure is that as the benefit of such an attack goes up, it becomes harder to perform because more and more people get involved in mining and that natural increase keeps the resources involved in mining constrained.

I want to say this as clearly as possible: it is a necessary part of Bitcoin's security that it waste resources. PoW only secures a network if it uses so many resources in its computation that attackers cannot get access to enough resources to launch a worthwhile attack. Once again, this is not coming from critics, the original Bitcoin whitepaper describes mining incentives like so:

> 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.

Satashi specifically calls out electricity as an expended resource in the creation of new coins. They go on to describe coin price as a contributing factor to encouraging attackers to mine instead of to attack the network:

> If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.

From the very beginning, Bitcoin was designed to scale mining volume with coin price and to soak up available CPU and energy resources to prevent them from falling into the hands of attackers.

But again, you don't have to take me at my word for that, you can also just look out your window at GPU prices and look at just how much mining has affected them and how much those prices fell after Bitcoin crashed from its all-time-high. Why did they fall? Because there was less demand for them from miners, because the amount of computer power miners are expending to secure the network is influenced by Bitcoin's exchange rate.

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Anyway, none of this is going to convince you of anything. But all this to say, if you come into a conversation telling me that I don't understand Bitcoin, and the examples you give directly contradict the founding whitepaper of Bitcoin, you're not making a very strong argument.

> "To skip over that right to "but think about how much you're missing out" is... I don't know, I've seen people make this pitch better."

To clarify, I was pointing out that you're more invested in your beliefs than I am in mine. If I see that I'm wrong, I can simply sell my bitcoin at a profit and walk away - my bitcoin ownership is not a psychological barrier to a change of my belief (a hypothesis you made). But in order for you to change your opinion at this stage, you will also have to come to terms with that fact that through your own mistakes you failed to buy bitcoin at prices probably 10x-100x cheaper than they currently are. This is the barrier to change of belief that you incorrectly accused me of.

> "It does seem like your definition of "understands Bitcoin" is "agrees with you", so that's not particularly compelling as an argument."

It's true. The fact is that bitcoin presents itself on the surface as a combination of "Ponzi scheme" alarms bells, combined with massive, wasteful energy use. Most people see this and believe that they've seen through the hype that the dumb people have fallen for and walk away, albeit a bit disgruntled about the waste of energy that is affecting everyone.

They'll probably think things like, "I couldn't really care less about this crypto rubbish, but at least do it in an energy efficient way like [insert random shitcoin here].

Almost every bitcoiner has been there, even Michael Saylor!. It actually takes a deep insight into a number of widely differing areas of knowledge/expertise to see the whole picture (which also involves seeing though some of the nonsense of traditional finance/Keynesian economics) and only then does it make sense, and only when it makes sense does it become an excellent use of energy, rather than a waste of energy. If you miss just _one_ piece of the jigsaw, then bitcoin is an enormous waste of energy. So far every point you have made against bitcoin is one that I also made at one point along my learning curve but after 1000's of hours of deeper learning and contemplation, have realised they were wrong.

So, let's just start with the first of my misconceptions and at least agree on the facts, rather than any conjecture, before continuing on :"Miners don't validate the transactions ($100 nodes people can run at home do that)"

First off:

> "Bitcoin proves chain validity using a system called proof of work"

Almost, but proof of work doesn't prove anything other than work. The chain validity is proven by the global network of low-cost nodes that check the chain (including the claimed proof of work) against the rules of bitcoin, defined by the individual node itself. If a miner mines a block of transactions in a way that doesn't conform to bitcoin as defined by my node, those transactions didn't happen (according to me). If someone makes a code change that I believe is detrimental enough to bitcoin that I'm willing to take a stand, then I won't apply the change to my node. Assuming I'm correct in my opinion, other bitcoiners will likely do the same and ultimately the network will split into two separate networks of nodes/miners, the best of which will ultimately win. This was seen in the "block-size wars" (were you on the side of the big-blockers?), which showed that the miners can mine according to which ever rules they like, but their work will be ignored by people who think those rules make bitcoin weaker/worse and the work will ultimately be wasted if those people were correct.

> "To be fair, it is true that individual nodes can validate whether or not a proposed chain is completely incorrect, but so heckin what"

So you agree to certain point, but not that the nodes have any power in defining what bitcoin is. Does my explanation above, including the outcome of the "block-size wars" change that belief in any way?

> "The important part is that the network specifically trusts whatever the longest blockchain is, and that entire security system is based on the entire network constantly racing itself to increase the chain's length."

I agree, but will qualify that the nodes on the network only trust the longest blockchain that confirms to the rules that the nodes' chosen code defines. If my node says the new longest chain is not bitcoin, then it's not bitcoin and I ignore it.

> "The inefficiency is the point, the point is that the network can spend more energy than you individually can. It outspends your access to compute power. "The network outspends your attack" is basically the definition of a proof of work blockchain. So at a purely technical level, your explanation here already has issues. But let's ignore that and talk about economics:"

So I agree on the fundamental point of "the network outspends your attack". But I don't agree that this makes it inefficient and I don't see how it highlights issues in my explanation (could you elaborate?) To me the question of a system's efficiency is "does this system solve the problem while using the lowest amount of energy possible?". And so we first need to agree on what problem bitcoin is solving, before we can determine whether it's efficient or not. If you agree with what I've written in my other points above, then we can move on to that, but let's just get the facts about the blockchain straightened out and agreed on first.

> If I see that I'm wrong, I can simply sell my bitcoin at a profit and walk away - my bitcoin ownership is not a psychological barrier to a change of my belief (a hypothesis you made).

This is textbook MLM talk here, and for the benefit of anyone else reading I want to take a minute and walk through it. First, it doubles down on FOMO again after it's been pointed out as FOMO; it just rephrases the same argument again slightly differently. Secondly, it puts forward the absurd notion that investment into a financial vehicle makes one more objective than observers outside of that financial vehicle.

Think that through for a second if you're a reader, if someone came to you and said, "I've invested a huge amount into this company and so my analysis of how the company is doing and its growth potential is more objective than an outside analysis", you would rightly dismiss that person. You would not be persuaded by that person telling you, "well, I can sell my stock if I think the company is doing poorly." This is how most of our financial disclosure systems work, we recognize that people in those positions have huge vested interests in seeing the systems they are invested into succeed.

But MLM-style systems like Bitcoin attempt to invert that argument, claiming that their stake makes them more trustworthy. And they use a specific trick to do it: they argue that de-investment from the system is costless. It's not, for a couple of reasons. First, it's just straight up ignoring barriers: moving really massive amounts of money into and out of crypto is complicated, often requires going through exchanges, and caries tax implications. It also ignores the social and emotional costs of doing so. But most importantly, it's also false in the more basic sense that when markets crash they crash because there is no buyer for an asset at the previous market rate.

So in an MLM scheme, you'll get told that it's risk-free because the company will just buy back any product that you can't sell. Inevitably, you find out that there are some major caveats attached to that, and you'll be stuck with product you can't sell. With Bitcoin, you'll get told that you can just convert your crypto assets back to traditional money at the same price (or even at a higher price, as npoc suggests, get in early enough and who cares if the market goes down, you'll still win). This ignores the fact that observably, when Bitcoin last crashed, a whole lot of people were stuck having bought coins that were worth less than they bought them for.

The FOMO argument is arguably the most toxic element of the Bitcoin community because it encourages people to invest more than they can lose. If you were around for the last Bitcoin crash you might remember that certain parts of the crytpo social sphere needed to basically start doing suicide interventions for their members. All investment caries risk: all of it.

And of course, financial investment into a system does generally decrease objectivity about that system.

> you will also have to come to terms with that fact that through your own mistakes you failed to buy bitcoin at prices probably 10x-100x cheaper than they currently are.

For the record, if Bitcoin actually succeeded in improving the world, I would be thrilled. I would lose nothing; I'm not hurting for money, and some of us genuinely pay attention to these technologies because we want the world to be a better place, not because we're trying to get rich quick.

But once again, this is just FOMO, and I really do think it's the most toxic part of the community, and it's the part that I honestly think irritates me the most because I literally watched people online contemplate suicide after the last Bitcoin crash and I think it's extremely gross to pull people into that system using FOMO without adequately explaining the risks or the extreme financial interest that Bitcoin proponents have in pulling in late adaptors in order to increase the value of their own coins and justify their earlier investments.

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So, that out of the way:

> Almost, but proof of work doesn't prove anything other than work.

This is like saying that cryptographic signature validation doesn't prove anything other than that the signature is valid. It's an oversimplification of why the system exists and what it's used for.

You have this basically backwards, miners do validate transactions in every sense that matters. The fact is that multiple valid blocks can be appended to the blockchain at any given time. Mining and proof of work is how the network decides which of those blocks will be "canonical".

You move on to talk about governmental decisions and code changes within Bitcoin, but that is an orthogonal concept to what I'm talking about, which is this: that the energy expenditure of Bitcoin is how the network secures itself, not a conversion of electrical energy into value or a byproduct of a separate process. It is used for security and validation of transactions. If this was not the case, the blockchain would not need to be distributed in the first place. But it does, because it uses proof of work to validate transactions.

> So I agree on the fundamental point of "the network outspends your attack". But I don't agree that this makes it inefficient

I understand that under your definition of inefficiency that you might choose to use a different word, and honestly, if you want to, fine. I don't really care that much, I understand you are pushing back against whether that energy expenditure is worthwhile. What I mean is that the expenditure is not being used for anything except as a barrier of entry to network attacks. It is a set of arbitrary calculations that are designed first and foremost to be incredibly difficult to do, not to solve some complicated problem. It is designed to "waste" CPU time (or nowadays, GPU time).

Most people would call that a deliberate inefficiency, in the same way that we would say that peacocks growing large tails that decrease their survival chances in order to attract mates is a "deliberate" inefficiency -- it is worthwhile for the peacock to do, but it is also a system that is not in itself useful, but where the inefficiency itself serves as either a signaling mechanism or a barrier to prevent other actors from competing (in Bitcoin's case, to prevent bad actors from double-spending). I agree that my usage of the word is orthogonal to whether that deliberate inefficiency is worth tolerating, but regardless of whether you'd use a different word than "inefficiency", this is still an important point to understand because it helps us understand that the energy expenditure in Bitcoin is not going away and would in fact need to drastically increase if it ever became a universal global financial market, and in fact is incompatible with goals of cheap or universal access to abundant power or minimization of energy waste -- the security of the network depends on that outcome not happening.

And that is the primary environmental objection to Bitcoin. That it by design is impossible to secure without using so much electricity and compute power that they become scarce resources that cannot be accessed or used on a scale by an attacker to overwhelm the network and double-spend.

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I want to avoid getting bogged down in definitions because a common rhetorical tactic from Bitcoin advocates that I've seen online is to go deep into specific terminology as a way to distract from the overall points of the conversation.

As an example of where this kind of argument over definition can be a problem: I could say, strictly speaking, your statement ("Miners don't validate the transactions ($100 nodes people can run at home do that)") is technically just wrong even under your own definitions. Miners do validate blocks, that's part of the mining process -- they have to do some validation in order to know whether or not they're being handed a valid blockchain to mine on. So if we wanted to get really technical and nitpick, even under the lightest most minimal definition of validation miners are doing many of the same validation computations that the $100 nodes do, just they're doing other stuff in addition and at a larger scale.

But honestly, I think we both would agree that the above paragraph is unnecessary quibbling, and I think it would be disingenuous and unhelpful for me to argue that technicality. I know you didn't actually mean that miners literally don't run any validation code at all. It's not a gotcha for me to bring that up that they do. You meant something larger about the mining process and its purpose and the role of PoW in the network.

And that is the main thing I'm taking issue with, not individual words or definitions. My reading of your comment is that you describe mining essentially as a method of converting "waste energy" (a thing that largely does not exist at the scale Bitcoin operates) into some kind of value. But in fact, mining is a security measure, it is not a conversion of energy into value, it is a way to secure transactions and to prevent double-spending.

That energy expenditure does not drive the price of Bitcoin up. The opposite is true, the price of Bitcoin drives up that energy expenditure, because by design the amount of energy spent necessarily needs to be high enough to make 51% attacks unprofitable. That energy expenditure also does not go down if the coin price stays steady. Energy continues to be spent in perpetuity in order to continue to secure the network and to prevent double-spend attacks. And that energy expenditure is the most important part of the Bitcoin design. Satashi does not spend the majority of their whitepaper talking about the specific rules of validation, they leave that as an afterthought, suggesting that those problems are trivial. Satashi instead spends the majority of their whitepaper talking about proof of work as a system for providing distributed, trustless validation of transactions without a central authority. It's through that lens that we should understand and think about mining.

At the risk of going on for far too long, I also think it's worth digging into the final question being raised above: what problem is Bitcoin solving and is it important enough to solve to justify the energy expenditure?

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> And so we first need to agree on what problem bitcoin is solving, before we can determine whether it's efficient or not.

This is a great point and one that I fully agree with. But it's a good opportunity to bring up what might be the primary fatal flaw of the Bitcoin community and why I feel comfortable calling Bitcoin a speculative asset even though I know a significant portion of the community would take issue with that description.

The problem is that there is no consensus answer to this question inside the Bitcoin community. There is no answer you can give me about what problem Bitcoin is solving that everyone in the community will agree on.

On this very thread (and this is a normal occurrence on every HN thread on Bitcoin) I'm seeing different answers from Bitcoin proponents about whether Bitcoin is intended to be a currency. If I go and talk to 20 different Bitcoin proponents and really dig into their beliefs and question them about what the coin is good for or bad for, I will not find a consistent philosophical or ideological position about what Bitcoin is and what it's meant to be and meant to accomplish.

This makes these conversations very frustrating because Bitcoin proponents simultaneously say (as you have) that critics just need to do more research, while ignoring the fact that the research very often disagrees with itself and offers incompatible philosophies about the nature of the coin, and that community consensus or goals are regularly ignored in conversations about Bitcoin. As you yourself put it above, you don't really care what the original goals of the coin were or what its original proponents used to want or predict. This all leads to really cagey and vague answers about what Bitcoin proponents actually believe, and it turns out those beliefs are really flexible. I can promise you that if I bring up your points to another Bitcoin advocate in the future, if they think that dismissing you will help their argument they will in a heartbeat tell me that you're wrong and don't understand the coin. So when talking about Bitcoin, what I've found is that there's no transferring points between discussions because the community isn't in agreement about either the purpose of Bitcoin or about what Bitcoin actually is, but rather each individual faction within the community believes that they are the unique ones who actually understand what's going on.

Note that this is the case even for "experts" in the field. You're coming to me out of the school of Michael Saylor (a man who jumped into the space in 2020 after "allegedly" committing financial fraud in his previous ventures, but whatever, that's maybe a low blow for me to mention). Saylor has made a huge name for himself in the crypto space, and simplifying a bit, my best explanation of his beliefs is that he describes Bitcoin as a democratizing/"fair" financial system that can serve as a base for other systems to build on top of (lightning network for transactions, exchanges to help manage contracts, etc...). And the way he approaches Bitcoin practically in terms of his purchasing and usage is as an investment vehicle; he's proud of the fact that he holds Bitcoin as an asset rather than selling it.

And notably, his views and behavior are not universal or even necessarily mainstream within the entire Bitcoin community. So in a way, there's another question that needs to be asked alongside "what is the purpose of Bitcoin?" That question is, "according to whom?"

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So given the above, why do I call Bitcoin a speculative asset? Because Bitcoin proponents don't agree with each other about much, but there is a small subset of points that they do mostly agree on: that Bitcoin is going up in value, that its rise is inevitable and should be assumed regardless of what the market indicates, that Bitcoin being deflationary is critically important and that the earliest adopters should be rewarded most heavily, and that FOMO should be a baseline argument for adoption and evangelism.

The philosophy that actually unites the Bitcoin community is that it's going to the moon. Everything else is secondary: agreement on whether Bitcoin should have price stability is not a necessity, agreement on whether it should be regulated is not a necessity in the community. Agreement on whether it should anonymous, on whether exchanges should exist, on whether lightning network is the right approach, the community doesn't even have completely universal consensus on PoW vs PoS -- there is disagreement on all of these issues. What's left is the speculative asset part. The beliefs that align with Bitcoin as a speculative investment are the only beliefs I can count on being present in a conversation with a Bitcoin advocate.

And honestly, it's also basically the only thing Bitcoin is actually good at. Bitcoin is terrible for transactions and has weak privacy guarantees. The rise of regulated exchanges as a chokepoint has made it less useful as a censorship-resistance engine, and it's not particularly reliable during disasters because it depends on a globally connected Internet and ready available power in order to transact. PoW tends to centralize governance; it turns out that "one CPU one vote" is not a great voting system given that both electricity and CPUs are fungible resources that can be purchased with money. It also turns out that leaving governance decisions up to miner consensus is not really the same thing as giving power to actual users. Its use as an independent value-store outside of government control is questionable, coin value appears to fluctuate with economic conditions and with stock market health. And of course as a way of avoiding financial corruption or manipulation Bitcoin has been a complete failure: the space is rife with pop-up companies and financial fraud, and has spawned whole new innovations in the field of pumping and dumping junk coins.

I'll give that it's not completely useless: for medium-value transactions with medium privacy requirements it's better than nothing and there are (proportionally to its energy expenditure) very limited minor instances where people have been able to use Bitcoin to avoid institutional censorship or to transact anonymously -- so it's not that it's literally never managed to to help with problems with fiat. But the issue is that even in those areas it has been surpassed by many other better options in the cryptocurrency space, and the Bitcoin community is actively hostile to efforts to make the coin better for those use-cases. This is part of the reason why there's been increasingly less and less adoption of Bitcoin for transactions that would heavily benefit from low-to-medium anonymity censorship-resistant payment methods like in the sex industry or with activist groups -- despite a clear market desire for additional payment options in those spaces that don't suffer from the many flaws of existing online payment systems.

But despite all of those failures, Bitcoin is and has been really stinking good at being a speculative asset. As a way of transferring money from late adopters to early adopters through a regularly repeating hype cycle that can be planned and influenced by large purchases, press, and evangelism -- Bitcoin excels and has been shown repeatedly to excel in the real world.

And to be fair, value is subjective. To a lot of people (Saylor included) a good speculative asset is probably enormously valuable no matter what the necessary costs are to maintain that asset. I have no doubt that Saylor would happily burn the entire world into dust if it meant he could sell the ashes at a profit. But for everyone else, the enormous energy expenditure is not justified by the creation of yet another speculative investment vehicle for people to gamble on.

Unfortunately I'm no longer given the option to reply to your latest comment. But I've said everything I wanted to say.

That you can't entertain the idea of money containing a form of energy or the quantitative theory of money, and believe in Keynesian economics tells me there is little point in me going further. It will simply take too much time to explain.and my energy is better spent elsewhere.

One last thing I want to leave you with is that anyone is free to do whatever they want with electricity they've paid for, be it computer gaming, drying clothes or lighting the outside of their house at Christmas (all of which use comparable amounts to bitcoin mining).

Energy use is a good thing and correlates heavily with the level of civilization. How we create the electricity is the crucial thing.

> One last thing I want to leave you with is that anyone is free to do whatever they want with electricity they've paid for, be it computer gaming, drying clothes or lighting the outside of their house at Christmas (all of which use comparable amounts to bitcoin mining).

I'm happy to head off here, but quick note that Bitcoin mining also does use substantially more energy than all of these activities, it's not comparable.

HFSP :-D

I'll ignore the unnecessary personal attack in the first half. You were the one that accused me of being too invested in bitcoin to change my mind, and I retaliated by pointing out the reverse can be equally said. I'm certainly not using it as some sales technique or reason to invest.

I can see why Satoshi Nakamoto famously said "If you don't believe me or don't get it, I don't have time to try to convince you, sorry.". This is quite tiring and we aren't getting very far very fast. Please don't turn this into another lengthy character slur and let's focus on bitcoin itself.

Yes I agree that technically the miners do vote on what bitcoin is, but they have no more power than the light-weight validation nodes. Ultimately, its the people that decide what bitcoin is, not the miners.

So onto the energy expenditure: I completely agree that the energy expenditure is used to secure the network and the transactions within blockchain. I also completely agree that most people would see the energy expenditure as a waste. On the face of it, it's massive amounts of energy that's just flushed down the toilet in the name of doing some maths problems, almost all of which are discarded. It's absolutely true. I get it, okay! How can it not be a waste? It only took a 2 minute conversation back in 2012 for me to write off bitcoin as a waste of energy for 8 years on this very basis!

The fact is that you have to zoom right out and see a much bigger view to understand why it's not a waste of energy and is actually the opposite. This is where the problem bitcoin is trying to solve comes in. And once you see the whole picture, it becomes clear that bitcoin has solved the problem in the most efficient way possible. In fact it's a work of art. It's beautiful.

So we've dealt with the technology side of things to the point where we have enough agreement to discuss the bigger picture.

There's a couple of maxims to lay out first:

The first maxim is that if we double the amount of currency units, each unit will gradually have half the value compared to if we hadn't.

The second is if it's possible for humans to create money without exerting work of equal value, then they will take advantage and inevitably create more and more money. This has been demonstrated throughout history and is currently repeating once again with the fiat currencies around the world. We can't trust - we have to verify.

Combining those two maxims shows us that if we give certain humans the ability to print money with less effort than the money is worth, then they are essentially incentivised to do this as much as they can get away with. They get to create and spend the money at the current value while it slowly goes down in value as the rest of the population spend it. At the extreme, where they can create the money for free (e.g. centralised digital/paper money) then they essentially have a faucet of free money, the value of which is sucked out of the money owned by the rest of the people.

Along with it's other fundamental properties (divisibility, portability, fungibility etc), the reason why gold stood the test of time as a good store-of-value was because there is no way that you can mine gold without exerting at least as much energy as the gold is worth. If the demand for gold goes up, the price rises, more gold miners are incentivised to mine and the increased supply brings down the price again. In reality this has stabilised at an average supply inflation of 1.5% - the amount of above-ground gold doubles every 50 years.

Even though this natural tying of value to mining effort has maintained the scarcity of gold for thousands of years (about as well as it can be done in the physical world), the other monetary properties of gold were not a patch on the later paper money that represented gold and so bank paper took over the role of money in society. However, in accordance with second maxim I gave, it wasn't long before bankers figured out a way to print more and more paper currency without people realising and ultimately we now have digital fiat currencies that they can "print" almost freely with no limit.

This leads to a massive wealth transfer due to the Cantillon effect, which ultimately can be seen in the currency unit leaking value right out of your hands. You can put your money in a concrete vault buried 10 miles under ground and still the bankers can steal the value out of it by simply turning on the money printer.

So in order to fix this, and obtain a better money, more like gold but with the digital qualities of fiat, standing on the shoulders of giants, Nakamoto solved the long-standing computer science problem for decentralised digital currencies - the double spend problem.

Essentially bitcoin solves the problem of a digital asset with scarcity. And history shows that the only way it can do this is to require that the creation of the units of the asset demands the same amount of work as the unit's value. We can't simply trust humans not to create more, cheaply (or as you might put it, efficiently). Money is energy. And it's perfectly natural to require the same amount of energy to create it. If it doesn't then the value in the existing money is essentially stolen by the people creating the money cheaply, to make up the difference. You simply can't break the laws of nature in this way. Money is energy, and you can't create energy out of thin air, you can only convert it from one form to another. I know it's not physical energy. It's a more abstract form of potential energy.

The proof of work required by bitcoin is an abstraction of work. It could equally demand proof that miners have dug a hole and then filled it in again, before being rewarded with newly minted bitcoin of equal value. It turns out that getting them to find the nonce to generate a hash within a range is a form of work impossible to fake, and is in a digital form native to the network. If we try to make the work they do useful in some other way, they can monetize it and are then essentially getting the freshly minted bitcoin for less than the net energy they exerted (their energy cost is offset by the monetized returns of their "useful" work).

Understanding and seeing money as energy (or more accurately, a container for energy) along with the then obvious constraints on creation in this way is crucial to understanding why any sound digital money requires equivalent work for its issuance, and any alternative will simply lead to a weak money that goes to zero in time. You can't break the rules of nature.

Bitcoin doesn't need to be a currency - all it needs to be is a liquid asset, with hard scarcity, accessible by anyone in the world, and it will succeed.

Success to some simply means it will go up in value enormously and make them fabulously wealthy and free. To last adopters it means they can store their wealth without it being stolen, or having to gamble it on the stock market , or buying extra housing enslaving yet another person stuck in the rental trap. To others it means that it provides an escape hatch from the enormous wealth transfer system that's central banking, ultimately shutting down the central banking scam, and fixing so many of the problems we see in the world caused by it (wars, third-world poverty, government corruption - the list gets longer the longer you look)

The fact is that first it needs to prove itself as a store of value. As it does this more and more people will store their value in it. Once it has saturated its market and the value as stabilised, it will be suitable for unit of account and certainly medium of exchange on an inter-bank, inter-nation scale. Once enough people have enough of it and once it's stable enough to be used as unit of account, only then will we need to worry about it being capable of medium of exchange to buy your coffee with. If all else fails, it will run on centralised payment rails like Paypal.

In the meantime, the current banking system/government/media machine will do everything it can to kill it, as it takes away their power. Somehow magically, it turns out that it seems there's nothing they can do to stop it. All they can do is eventually accept it and join it. But that's probably something for another day.

> I'll ignore the unnecessary personal attack in the first half

To be clear, extremely necessary and no apology extended, I'm willing to be abstract about a lot of this but I am not willing to pretend that FOMO isn't FOMO and I am not willing to gloss over an extremely prevalent attitude within the Bitcoin community about disregarding risks, an attitude that has very directly harmed people in the past.

You can choose to view that as a personal attack or not, the reality is that the marketing behind Bitcoin is extremely reminiscent of MLM schemes and uses much of the same logic. I'm not going to pretend otherwise just because it makes proponents uncomfortable. On other topics I'm willing to be abstract and nice, but if you make gross arguments that have historically been used to hurt people I am going to call the arguments out. Doesn't mean you're bad, but the arguments are bad.

Heavy financial investment into systems does decrease objectivity.

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> I can see why Satoshi Nakamoto famously said "If you don't believe me or don't get it, I don't have time to try to convince you, sorry."

Weirdly enough, my experience is that Bitcoin proponents as a whole seem to have an abundant amount of time to try and convince people of the coin's value and seem to expend an enormous amount of effort doing so at every opportunity.

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> Yes I agree that technically the miners do vote on what bitcoin is, but they have no more power than the light-weight validation nodes. Ultimately, its the people that decide what bitcoin is, not the miners.

Debatable, but once again this has really nothing to do with the energy use, I'm not making an argument here about the governmental structures of Bitcoin or about how forks are handled.

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> This is where the problem bitcoin is trying to solve comes in. And once you see the whole picture, it becomes clear that bitcoin has solved the problem in the most efficient way possible.

Proof of work is not the only system for enforcing digital scarcity. Proof of stake is not even the only other system. Multiple other coins have built other consensus mechanisms around other forms of work and/or stake that are pretty arguably better than Bitcoin's energy-specific version. I take issue with the claim that Bitcoin would be efficient even if Bitcoin was actually solving the problems it claimed to solve.

"Proof of" systems do not inherently require that the planet be destroyed; Bitcoin's implementation does. That scarcity could be enforced more efficiently by using a different proof system that didn't specifically rely on spending energy.

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> if we double the amount of currency units, each unit will gradually have half the value compared to if we hadn't.

This is more complicated than you're making it sound, currency value is partially related to direct spending power. You're not halving value just by printing money, that money has to actually make it into the market and increase the overall supply.

The way that money is introduced into the market also matters; there are ways to introduce money into a market specifically through the sponsorship of new economic activity and real-world development that increases the overall real-world value that the total money supply represents.

But otherwise yes, you are correct that inflation exists.

> This has been demonstrated throughout history and is currently repeating once again with the fiat currencies around the world. We can't trust - we have to verify.

More on this in a second, but you're making an unproven leap here towards the notion that inflationary currencies are inherently a bad outcome. That's not really backed up by history, what we find in practice is that inflationary currencies broadly are better for everyday transactions than deflationary currencies because inflation incentivizes spending and economic activity. Yes, Bitcoin was founded on the theory that deflationary currencies could work, and it was an interesting theory, I remember at the time thinking they might be right. But they weren't, the deflationary nature of Bitcoin severely limited its use as a currency and continues to do so today.

> Along with it's other fundamental properties (divisibility, portability, fungibility etc), the reason why gold stood the test of time as a good store-of-value was because there is no way that you can mine gold without exerting at least as much energy as the gold is worth.

This is a pretty huge oversimplification of how gold worked and how regulated it was (and is). It also paints an overly rosy picture of the effects of gold and why it was ultimately abandoned as a currency standard. Gold didn't prevent massive wealth transfers to the elite, it was not a democratizing currency.

> and ultimately we now have digital fiat currencies that they can "print" almost freely with no limit.

Once again, this is a pretty big oversimplification of how currency enters the market. Also you can't just print money with no limit, not unless you want the dollars you just printed to be worthless when the economy crashes. Again, we've got historical examples of this, countries that try to transfer wealth or solve economic problems by mass-printing money without constraint or economic theory end up with useless currencies even for the grifters. In contrast, while USD monetary policy is admittedly not fantastic, it is a far cry from totally unconstrained printing.

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> This leads to a massive wealth transfer due to the Cantillon effect

Deflationary currencies also have their own version of this problem, because deflationary currency inherently incentives hoarding and inherently tends to concentrate wealth in the hands of early adapters, which can in the extremes lead to deflationary spirals that also result in economic crashes and worthless currency. In less extreme situations you get Bitcoin, where the majority of the coin's worth today is concentrated in the hands a small number of actors.

While the Cantillon Effect is a real phenomenon with real world implications, it does not imply that deflationary currencies are necessarily immune from those problems or that inflation is not still a necessary component of incentivizing actual wealth transfer and spending within an economic system. In short, there is not strong evidence that deflationary currencies are a better way to build an economic system; resources like gold largely weren't deflationary during their heyday and were regularly augmented with new supply which exhibited the same effect you complain about (note that the "work" of mining does not inherently remove the Cantillon Effect, new supply is still being introduced and centralized into the hands of the biggest stakeholders, even if they had to work to get it).

The history of how Bitcoin has played out and the concentration of wealth within the Bitcoin ecosystem and lack of incentive to actually invest Bitcoin into real economic activity rather than hoarding it -- that is all decently strong evidence that deflationary currencies are just kind of not a great idea in general for everyday economics.

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> Money is energy.

No it's not, it's an abstract representation of value based on social consensus. Bitcoin included. Money is not energy.

> Understanding and seeing money as energy (or more accurately, a container for energy)

No, this is exactly what I was getting at in my previous comment about why understanding proof of work matters. The work being expended during mining is not for creating new coins. In fact, Bitcoin has a hard cap of new coins and at some point they're going to run out. That energy is not being stored in the network. It is a security measure. The creation of new coins is a temporary incentive designed to encourage mining by transferring a portion of the network's value to miners as part of every transaction. It is not the primary purpose of mining, mining exists to validate transactions.

If the price of Bitcoin never rose again from this point, the same amount energy would still need to be spent to secure the network every day. That energy is not going into a container, it is being lost. Furthermore, as the price of Bitcoin rises, the energy requirements to secure the network also rise. It is more accurate to think of Bitcoin as an expenditure of energy rather than as a container for energy.

The "Bitcoin as a battery" notion that has become popular in this space is complete fiction, there is zero grounding in reality to back up that idea. Nothing about the coin indicates that the work being expended to secure it is somehow being "stored" somewhere, and even Bitcoin proponents would see that the idea is absurd if applied to other systems. You don't say that the USD is a battery that stores regulatory and military expenditure, do you? You understand that securing a system is not the same thing as using it as a battery.

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The rest of this post is a breathless advertisement for investing into crypto, which doesn't really need discussion other than to point out that the majority of things you're talking about haven't happened; Bitcoin has not lead to a democratization of wealth, the coin has unusually high levels of wealth concentration. It is highly manipulable and evidence suggests its value tracks with the stock market, it is not a secure store of value because of its extreme volatility, and that has demonstrably led to a large number of people losing huge amounts of money that would not have been lost if they had invested in traditional markets or in gold. The coin has not stabilized and shows no sign of stabilizing, and has done basically nothing to reduce corruption, war, or international conflict.

But by all means, if that stuff does happen, that will be a great outcome and I'll be very happy. But I'm not going to blindly believe in it.

Animal agriculture feeds human beings.

You can't eat bitcoin.

You can eat steak.

The primary difference is that animal agriculture provides a societal benefit.

A benefit that's entirely unnecessary, just like DeFi

A better comparison would be to non-mining datacenters, which are far more prevalent and resource consuming.

Current bitcoin price is around 35k USD. This means that mining of one BTC going to cost you up to 35k USD (including the cost of equipment, electricity and everything else like the probability of finding a block). Why so? If the cost of production was higher than market BTC cost then it would be not profitable to mine. If cost is much lower then it's worth to buy a mining rig and start mining.

1 block gives 6.25 BTC for the block and around 0.5 BTC from transactions. 1 block contains 4k transactions.So 35k US/BTC * (6.25 BTC + 0.5 BTC) / 4k transactions ~= 59$ per transaction. That includes all energy spent by all active miners and full cost of equipment.

Not sure if a "swimming pool of water" costs 60$. I guess not.

Can they just reuse the same water over and over?

That's basically what we're all doing.

I never really get this "used up the water". Unless it seeps deep into the core or "evaporates" into space we should be fine. Only bother might be at some point needing to use more energy for desalination and use cases for the brine that results.

What is used is not water, but fresh water flow. In a given unit of time, in a certain region, a certain amount of water that will flow through it, due to rivers, rain or water stored in a dam.

You can use some or all of that flow in that time period. If that flow is not used, then it is gone. If you use part of that flow on one thing, usually you can't use it for something else. The last tradeoff is what is often concerning.

They don't even need to reuse the water, it will find its way through the water cycle most of the time.

Can we run these computers in space using tiny nuclear reactors where water cooling won't be necessary?

Absolutely we can, nice idea - although Antarctica might be more economically viable. Not that the water concern is at all legitimate.

only useful if compared to e.g. a visa transaction though, right? we gotta have a payment system of some kind

How is this the future of finance?

This is such a waste of energy on an unprecedented scale for a 'coin' with no legitimate usecase other than ransomware payments and crime.

Only useful for ransomware and crime?

You forgot the most important use-case of all: pump and dump scams!

My most important use case is paying my monthly online services bills (like VPSes, domain leasing, etc). But I guess we're all touching different parts of the elephant.

For a totalitarian definition of crime, perhaps.

I don't do many bitcoin payments, but I can safely say that none of them have been for ransomware or crime.

Not so sure I buy the "future of finance" part, but this framing is equally fanciful.

I pay my VPN with Crypto and I love that I have the possibility to do this.

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