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Comment by bbosh | Hacker News Reader

Here's a back of the envelope calculation. In theory (by supply-demand idea), you would make a negligible profit mining bitcoins. Each bitcoin is worth about $600. If our supply-demand assumption is true, the $2,160,000 dollars of Bitcoins that come into existence every day, that's also about $2,160,000 of electricity used. Or about 18,000,000 kWh per day. Or about 9,000,000 kg of C02 per day (9000 metric tonnes). That's about 3,285 thousand metric tonnes per year, or about the entire annual CO2 output of a country such as Papua New Guinea.

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>If our supply-demand assumption is true, the $2,160,000 dollars of Bitcoins that come into existence every day, that's also about $2,160,000 of electricity used.

I have some first-gen ASIC miners and electricity is 20% of revenues at the current price and difficulty. The current-gen miners that are contributing to most of the increase in hash power are even more efficient and many large scale operations have cheap electricity.

> the $2,160,000 dollars of Bitcoins that come into existence every day, that's also about $2,160,000 of electricity used.

You lost me. What?

A new block gets mined every 10 minutes, each with a 25BTC bounty. That's 600 * 25 * 6 * 24 = $2,160,000 per day. No rational person would spend more in electricity than the reward, hence the 1-to-1 conversion. (In fact, miners do spend more than they earn, collectively.)

That's based on the idea that if bitcoin mining is profitable, more people will get in on it until it eventually becomes break even with the cost of doing it.

This is of course a big simplification, and neglects things like the upfront cost of building the mining equipment.

The assertion is that there's roughly enough miners that miners make only a little profit. If your electricity costs $80 and you're likely to make $100, you're going to do it, and the OP is making an assumption that enough people have made that calculation that the amount of money made per miner is close to the cost of electricity per miner.

Therefore, the cost of electricity used should be close to the value of the bitcoins produced.

The frantic addition of mining hardware (observable in the hash rate) contradicts this.

How so? It would seem to me to say nothing on the issue. The added hardware may be a mix of profitable and non-profitable machines. The question is where is the equilibrium now and over time?

I can't offer a strict logical proof, but I very much doubt that the hash rate is doubling month over month due to unprofitable hardware being brought online.

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