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Comment by mseebach | Hacker News Reader

I don't have hard data, but I would suspect the effort going into Bitcoin mining is orders of magnitude less than the effort going into securing traditional monetary systems, even systems comparable in financial size to Bitcoin.

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The fact that Bitcoin transactions are broadcast to the entire network should tell you that you are way off. Think of all the work that goes into processing a VISA transaction, and then imagine if tens of thousands of other payment processors had to do the same work.

"Processing a transaction in the VISA network" != "securing the monetary system".

First you have to have the VISA network in the first place, that's no mean feat. Then there are the banks themselves, hardly trivial. Only then do we get into central banks and financial regulators. All part of the package.

The same sort of reasoning applies to Bitcoin. Someone has to secure all that Bitcoin mining hardware, and as the effort that goes into mining grows, the energy spent on securing mining hardware will grow. I would also include the cost of producing ever-faster mining hardware; honest miners have to continuously upgrade their equipment just to keep pace with attackers.

Really though, the fact that every single transaction is broadcast and that every single transaction must be verified by the entire network (in theory) is what kills Bitcoin's energy efficiency. Whenever a new mining rig is brought online, the energy efficiency of Bitcoin decreases -- and Bitcoin is designed to incentivize bringing more mining equipment online.

> Really though, the fact that every single transaction is broadcast and that every single transaction must be verified by the entire network (in theory) is what kills Bitcoin's energy efficiency.

It is also the fact that ensures it's distributed nature, and the purpose of its very existence in the first place (we have plenty of centralized digital currencies).

> Whenever a new mining rig is brought online, the energy efficiency of Bitcoin decreases -- and Bitcoin is designed to incentivize bringing more mining equipment online.

This is not necessarily true. The efficiency (number of SHA256 operations per joule expanded) will increase over time. It has already increased by a factor of 1000 compared to CPU mining. So it's definitely possible for both the security and the energy efficiency to increase simultaneously.

Securing traditional monetary systems also had to deal with the fact that we cannot trust each other (enough, in aggregate), and I think that's where most of the expense goes.

The point is, Bitcoin can end up saving a lot of energy, by replacing traditional banking transactions, while everyone seems to be seeing it as "wasting" energy. Everyone sees the glass half-empty. Bitcoin only needs to be mined for another few decades, and then it won't need to be mined anymore.

Bitcoin will still need to be mined - the whole 'trust' system is built on it, just the block reward will be zero. Miners will then profit only from transaction fees, so either the fees will go up or difficulty will go down to adjust for smaller income from mining.

Bitcoin mining is how the blockchain is built. If everyone stopped mining, there would be no new transactions.

The actual purpose of mining is to extend the blockchain. It just currently has the incentive-producing side-effect of creating bitcoins. In the end, mining will be funded through transaction fees.

Others have addressed a point on which you're mistaken, but it could still be that bitcoin proves cheaper.

My concern about bitcoin winding up more expensive is that it's a bit of a red queen's race. Unlike most applications of encryption, attackers and defenders are on even footing (except, like in most human spheres, in that defenders hopefully outnumber any coordinated group of attackers). This means that whatever latest best tech we have for efficiently turning power into hashes, we've still got to burn about the same amount of power to keep things secure (and continually update to the next newest tech). In other spheres, technological process makes doing the same work cheaper - but in bitcoin it stays the same; you've got to run as fast as you can just to stay in the same place.

It may well still be worthwhile, though.

securing existing financial systems is useless so long as central banks can print money, bailout TBTF banks for brazen theft, sheer criminality, money laundering the whole lot and seize the assets of honest bank customers and investors to keep them afloat.

The growth of Bitcoin is nothing but a symptom of the lack of faith most of the world have in the policies of the US Govt, the Fed, their politicians and other Central banks in general. They have proven that they simply can't be trusted.

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