Bitcoin Miners Are Racking Up $150,000 A Day In Power Consumption
techcrunch.com
techcrunch.com
"By convention, the first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them."
Only more efficient in that nobody's throwing lots of chunky GPUs at it.
But as far as bitcon presents it, proof of work is needed to resolve the problem of keeping a honest transaction log in an untrusted environment.
So that whole block (which is maybe what you're calling the "output"), does contain the puzzle solution as well as all the latest transactions. But the actual specifics of the puzzle (which is currently brute-force SHA1 reversing), aren't super important. It could always be swapped out for some other task.
You seem to be saying that The Miners have to verify transactions to claim their reward? When you say "which are all verified separately" - you mean verified by the same miner who publishes the block? If so then the bitcoin network as a whole benefits from their energy use.
On the other hand, I see your point that the make-work is not intrinsically linked to transaction verification. But my understanding is, its the difficulty of the make-work that protects the block-chain from being hijacked by ..er... 'the bad guys', whomever they may be.
So, the whole thing kinda makes sense, and the 'make-work' is like an energy commitment that keeps the whole thing integrated. The assumption being, the total commitment of all bitcoin users will always be greater than the commitment of any single attacker/attacker group.
1:http://en.wikipedia.org/wiki/Penny_(United_States_coin)#Meta...
- many countries have eliminated pennies - mining will have to continue even after "coins" aren't produced, to verify transactions.
It's more apt to measure power per transaction, against a traditional bank (or a handful of cash, amortized over it's life.) There was a good explain xkcd about the cost of carrying around physical money in your car.
That doesn't sound right - do you have a reference for that?
Some things are very amenable to solving with technology. Other things are more amenable to solving with people. Only data will tell for sure.
Current estimated USD Transaction Volume is ~$70 Million per day[1], so the transaction fees needed to sustain the $150k per day electricity overhead would be ~0.2%.
All of the parameters in this calculation are in high flux of course (and we're not including total cost to mine here, just electricity), but when I've run this same calculation in the past at various times I've gotten similar results.
Note also that mining is profitable enough due to new coin creation that transaction fees in practice are much smaller than this for now (average ~0.01%), but coin creation will gradually taper off over the years.
1] http://blockchain.info/charts/estimated-transaction-volume-u...
While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable.
Doesn't this also impact the block chain in some way? A ton of small transactions can flood the chain, requiring more computational energy to be spent than the transactions are actually even worth.
http://www.reddit.com/r/Bitcoin/comments/1cc72b/the_maximum_...
"* Electricity consumption is estimated based on power consumption of 650 Watts per gigahash and electricity price of 15 cent per kilowatt hour. In reality some miners will be more or less efficient."
Most serious miners pay less than $0.15/kWh.
An Avalon ASIC does 65Gh/s on 620W (9.5 J/Gh)
A BFL Single FPGA does 800Mh/s on 80W (100 J/Gh)
Even a dual ATI 5970 rig will do 1300Mh/s on 600W (461 J/Gh)
Currently over 1/3 of the network is ASICs (300 * 65Gh/s of Avalons + 7Th/s from ASICMINER) and another 1/3 is probably FPGAs.
Mining new coins and processing transactions are the same thing. So the hardware can remain useful as long as Bitcoin stays in use.
(Could it get obsoleted by better hardware? Of course, but that's true of every piece of electronics.)
Are you sure this is true?
My understanding is that the proof-of-work requirements will be the same even after no new coins can be mined. Otherwise, the integrity of bitcoin would be threatened.
The transaction fees are won in the same fashion as the mining rewards, so given a high enough level of paying users there should be incentive to run nodes (the transaction fees might even overtake the mining rewards before the last new coins are awarded, if things play out in a bitcoin friendly manner).
In other words, doesn't the workload for processing each transaction stay the same over time?
So someone started out mining and their wallet was corrupted or their hard-drive failed or what-have-you but at the time BTC were worth a few ¢. Is it possible to cryptographically reclaim those lost coins by claiming to have a hash or something and seeing if it verifies? Could one test, like a brute force check, in a separate environment so as not to leak that you're trying to reclaim a coin.
Or is this impossible within the restraints of the system.
[I can't see how it can be mathematically impossible, if a coin was verified and placed in a wallet then there's some "code" that says "I have the wallet with that coin"; perhaps though it's impossible at present to mine for that code successfully in a worthwhile way??]
However, I guess it's possible for the network to agree to mine some new coins at some point in the future.
Presumably you could in theory brute force that in a million years or whatever. Also if there were an example of data encrypted with that key (is there in the block chain by virtue of the protocol?) then if the private key system were broken - eg by advance in quantum computing or a weakness found in the crypto used - then perhaps it would then be feasible.
The corollary of this appears to be that you'd then be able to take anyone's bitcoins?
Yes, by impossible I meant computationally infeasible (at the moment)
> The corollary of this appears to be that you'd then be able to take anyone's bitcoins?
Yes, there's no way of recovering long abandoned coins (e.g. the genesis block coins) that couldn't be used to steal newly minted coins
PS: Consider a ten hour 600 mile trip by a 60mpg car and a 6mpg camper. The average fuel consumption is not (60mpg + 6mpg) / 2 = 33mpg, but (2*600miles)/(600miles/60mpg + 600miles/6mpg) or 10.9mpg.
No rational person who bears the full cost of their actions would mine on a CPU anymore. But 1) not everyone is rational and moreover 2) not everyone bears the full cost of their actions.
That would only be botnets though? You'd probably make more money walking around outside and and hoping to find quarters
Wow! That's less than 1.5 percent of the (average) cost estimated by the OP.
Meanwhile the United States will spend 797 million dollars [1] this year in simply printing and transporting physical currency, not including all the other obvious costs in maintaining a modern currency.
Free BTC for me...
If the value of Bitcoins go up, so does the number of miners securing the network, which makes sense. It's pretty ingenious.
It says the network has about 9 million hosts, which at about 200 watts (ballpark, GPUs can consume a lot of power) would consume about 2 megawatts of electricity. Bitcoin consumes 892.54 MWh/day = 37 megawatts.
Edit: oops, I see that some of this is stated in the linked article. My bad. I was just working backwards from the info in the title.