What a colossally stupid waste of resources. Right now its costing somewhere between ~3500 and ~9000 USD to mine a single bitcoin (on average). To me, we've essentially engineered a mechanism to capture and trade something that represents the value of squandered electricity.
1) we're generating a ton of co2, further destabilizing the planet ecosystem
2) if we ever _do_ sort out cold fusion energy, crytoholes are going to abuse the shit out of it.
I feel like cryptocurrency and perhaps nuclear weapons are a built in 'kill switch' by nature to make sure only useful species ever get off the planet.
Bitcoin as it stands is the definition of inefficient. Consuming vast amounts of energy for no purpose. Yes, there are ever-changing explanatiins for Bitcoin's usefulness. But there is no fundamental reason why massive energy consumption is required to store digital value, or to make a transaction across borders.
As it stands, Bitcoin is actively bad for the world. We need more energy efficiency, not get rich schemes combined with electric heating for empty warehouses.
There are likely good uses that will come from crypto tech, but this doesn't seem to be it. (And I'm not knowledgeable enough to guess what they will be)
I think it is kind of funny, in a tragic sort of way, that just when humanity is coming around to the idea that climate change is real, someone goes and invents a get-rich-quick scheme that involves burning large amounts of electricity.
At the end of the day there's greed and inefficiency in the existing banking system and there's greed and inefficiency in crypto banking systems and there's going to be greed and inefficiency in any subsequent banking system. Turns out that greed and inefficiency were part of us the whole time. The devil we know doesn't seem so bad when you see it in perspective.
There's no comparison here. The world financial system may have inefficiencies, but competition will sort them out over time. In POW crypto-currencies, efficiency improvements will be canceled out as quickly as the next difficulty adjustment. In POW, by design, competition leads to more inefficiency, not less.
Luckily we can design systems that aren't influenced by greed, and are as efficient as technology allows. I'm seeing greed more and more as a battle between short-term vs. long-term thinking, selfish vs. holistic.
I agree with selfish vs. holostic, less so with short-term vs. long-term. You could have someone doing the long con and in my book they are just as greedy as the short con. Better at deferred gratification perhaps, but just as greedy.
Squandered electricity has no value, bitcoin are not imbued with any value from the mining process, their value is strictly a function of what someone is willing to pay for them.
There is a relation though, although admittedly it's the other way around: the more expensive bitcoins are the most money can be invested into the mining process which correlates strongly with the total amount of energy "wasted" mining it. If BTC was worth $4 the hash rate would probably be a tiny fraction of what it is today.
I think he/she misspoke about what they meant by "squandered electricity."
I think what they were referring to is how electricity is allocated or stored. Currently, we cannot do so effectively. It is ironic that Bitcoin is being referred to as a store of value.
I would hesitate to say that squandered electricity has very little value but it is all dependent on what your definition of value is, potential or realized.
Squandered electricity is like burning cash. It's obvious waste. Hesitate all you want.
Note that chemical batteries and pumped storage hydroelectric both store large amounts of electricity very effectively (there lots and lots of deployments that were done by commercial interests seeking to improve the economics of their operations, some going back decades).
Burning cash is a poor analogy, apart from the destruction of the physical paper (which is very cheap). Burning cash causes a small amount of deflation, which increases everyone else's fortune a tiny amount, but does not waste any human effort.
A better analogy would be digging a hole and filling it up again. Or maybe better, causing a small amount of destruction to something that other people value.
So if I take a truckload of 100$ bills, a bottle of gin and a can of gasoline, drive into the dessert, out of sight of the authorities, and burn the entire lot, then the next night all retailers will have a vision which tells them to lower their average prices by 0.573%?
It's a hypothetical point; a small reduction in money supply will affect prices far less than the uncertainty or random fluctuation in the measurement of prices.
By the time you fill your truck with those $100 bills, the prices will have already adjusted. If you decide to not burn them, but spend them quickly, the prices will adjust again.
We were “storing” that electricity as natural gas or coal until someone fired up more bitcoin miners and someone else adjusted production upward to keep the power lines steady.
Bitcoin is the single largest coordination of encryption in history, and this delivers a store of value which cannot be seized. This has incredible value to those who already utilize offshore banking havens and complex legal coordination mechanisms to protect their wealth. Within a growing number of use cases, bitcoin via the lightning network provides access to financial services to the unbanked who are able to also establish their self soverign identity. To those individuals these edge cases are incredibly valuable.
Police can absolutely seize the physical artifacts on which your wallet resides. And if that storage is encrypted, consider https://www.xkcd.com/538/ - You may not be able to seize the bitcoins, but you can absolutely seize the person owning them.
>Police can absolutely seize the physical artifacts on which your wallet resides.
They have to find it first, which can be easy or difficult, depending on how motivated you are to make it difficult. You can quite easily make it more difficult than it is for them to walk into a bank and say “freeze this account”.
Yeah, but if they can't get to it before you are aware of what's going on (as is the case with most asset seizures) then you can deal with the situation first. For example, a judge issues an order for you to turn over the private keys, and jails you until you decide to comply. Someone you trust that has access to the private keys transfers funds out of that wallet, then you turn over the private key. You have complied with the order to turn over the keys, and you have deniability ("someone must have seen news of my arrest in the press and broken into my storage shed...the one you guys didn't check...where the keys were stored!").
And private citizens don’t like it when judges order their money to be taken without warning or consent. I was just saying that crypto gives people options that might enable them to maintain more control over the situation than they would have if their money is just sitting in a bank.
Certainly the police seize property citing dubious reasons, but are there examples of judges seizing financial assets without legal authority to do so?
Police can use civil forfeiture to seize property; but can't use civil forfeiture laws to compel you to give up your gmail password. That requires a court order/warrant. Hence the original comment about a judge could compel you into turning over your BTC Wallet.
Whether the reason is valid or not doesn’t matter much to the target of such an order. They still lose access to their funds. People who care about that possibility may want to take steps to make it more difficult for someone to do this to them. That’s all I was saying.
As a practical matter, you get held in contempt of court until you decrypt stuff, and God help you if you're in the UK where they can hold people if they have a suspicion that you're hiding something.
> That is fundamentally unenforceable...as much as ordering someone to turn over cash.
Defying the courts authority is Contempt of Court. If you fail to comply with a judges order, that can lead to incarceration. Continue to defy, can lead to criminal incarceration.
Honestly not sure why you're being downvoted here. Your point seems reasonable and true based on how easy it is to create a paper wallet and make that paper sheet all but unfindable.
Reading this sounds like a cult. Outside of politics, I don't think I've experienced so much groupthink and unreasoned responses as I have w.r.t Bitcoin.
And it seems like anytime it's challenged or perceived as threatened it's almost a copy paste of the exact same content as above completely ignoring the original poster's comments.
Crypto or distributed banking may be a useful concept, but Bitcoin is horrible to the world. Energy is one of the single most important and fundamental resources. To get really theoretical this hold from the cellular level all the way up to societal. We are burning and trashing a significant portuon of society's energy to run a simplistic financial network. And this percentage will only grow, and it's built into the system that it must be wasted.
Bitcoin is our first planet level grey goo, and we're somehow still arguing about it. 30% of our planet's energy cannot go to running a simple financial network, it's ludicrous.
Other than governments stepping in and banning it, what will prevent that?
By definition it can only get worse or fail. The amount of energy spent defending the blockchain must be proportionately more than the amount of value stored on the blockchain. So if we organized the entire human economy on bitcoin, we'd spend 51% of our total global economy on energy to burn running the currency.
Isn't it just the cost to mint a new coin that has to be proportional? As in, it can cost more than a cent to make a penny but each penny is used in more than one transaction.
I understand that the transaction cost is also quite high with Bitcoin but that isn't intrinsically necessary (like the cost to mint is).
You're going to need to show your math for that one. It's somewhat similar to the argument that you can't put a value on a human life, therefore [insert position] is unassailable.
Burning of "real" value for something of symbolic value that often locks in value is fairly common. Designer watches and bags and 500$ shirts basically create a flame that says "look at meeeeee"
Price to extract gold and value of gold is also an interesting dynamic. Fiat tokens also seem to have value built in via trust via the burning of value to create organizational systems to reduce friction. Expensive apparel also reduces certain types of social friction.
If it's any comfort, electricity isn't all the same. It's more valuable if generated at the right place at the right time.
At some point, after hardware improvements plateau and competition heats up even more, this turns into a competition to find the cheapest electricity. In a ideal electricity market, this should be surplus electricity that's not used for any other purpose yet (wind farm not yet connected to the grid). Or perhaps generating bitcoin as a byproduct of electric heating? Any better use for electricity should result in higher prices that make Bitcoin mining unprofitable.
But before that happens, the electricity market would have to get a lot more rational, and externalities need to be fixed. For example, carbon pricing would ensure that bitcoin mining only uses clean power.
In the current economic system new national currency is created through 3 ways.
1. By banks when they extend a loan (likewise it gets destroyed upon repayment)
2. By the government when it deficit spends into the economy (destroyed through taxation)
3. By converting foreign currency through running an export surplus (ejected by import surplus)
It is worth noting that appart from printing actual dollar bills (typically <5% of total money) the production cost (“seigniorage”) is effectively infinitesimal.
So yes, both gold and bitcoin are stupendously wasteful when your goal is to create currency for transactions. But at least in the case of gold the material is useful and you can use it to diversify your asset stock.
Correct me if I am wrong, but my understanding is, that it is not the mining itself which creates the bitcoin, but an arbitrary challenge set up to earn the bitcoins. So by definition, any energy used is completely wasted.
That's right, the difficulty adjusts to match the level of competition so that a bitcoin block is mined on average once every ten minutes. If fewer people were competing or if they competed with less powerful hardware, the network would adjust and the same amount of bitcoins would be mined. Increasing your hash power increases your odds of getting that block though.
But when bitcoin prices are high, there is an increased risk that someone could launch a 51% attack and start double-spending bitcoins. Keeping the level of competition high does protect the network to some extent. But really it only has to be expensive enough to be unprofitable to launch an attack. Pushing difficulty right up to the point of any mining being unprofitable is a waste.
People tend to think of the rewards as set in stone, but they're completely arbitrary (they just have to be agreed-upon by participants). For example, there's no need for them to taper off over time, we could keep them constant.
It's just a question of what you can get consensus for. The geometrically-decreasing rewards of Bitcoin are probably not optimal, but without centralized control there has to be some kind of pre-determined issue rate.
We could just as easily agree to halve them right now (which would probably reduce electricity utilization as well as network security, as miners go offline). And that's essentially what Ethereum is planning to do - a major decrease in block rewards in the near future, so that they can create deflation (dumb as hell, but that's what happens when you let a 17-year-old run an economy, he has big holdings of Eth and just wants to see the number go up).
Yeah, I think a decreasing block reward was a good idea, but I think it's on the wrong schedule. Following something like Metcalfe's Law, the value increases geometrically but the reward isn't decaying fast enough yet. That means at some point in the "middle", the value of the block reward will be increasing much faster than the amount of the reward is decreasing.
That's where we are now, and it means the reward will be large enough to drive bad behavior at least until the next halving (probably two years from now http://www.bitcoinblockhalf.com/ ).
The whole idea of discrete halvings of the block rewards at specific block heights also grinds me in general... why is this not a continuous function? Oh yeah, because that's how some guy set it up in 2012 before he disappeared.
I don't think that's strictly true. When the last bitcoin is issued, "mining" per se will cease. But "miners" will still be rewarded by transaction fees.
Sure, but electronics and other industrial uses for gold are a small percentage of its demand. The demand for those two are 9.1 and 6.2 percent in 2017, respectively, according to Statista. The same stats attribute more than 50% to jewelry.
I can roughly see the relationship but not smart enough to see immediately what it means without more thought. FWIW AFAIU the broken window parable is itself not without controversy.
Well you've flipped now to discussing the definition of useful, no?
First, gold is plenty useful outside value store: only ~30% of new gold per year is used for investment (this is per GS in 2015, I believe, and this is unlikely to have changed significantly one way or the other, pls feel free to correct me). The majority of remaining is used in mainly in jewelry & electronics (again per same source).
Second, on its way to providing for the point above, it employs hundreds of thousands of people full time that take that money to spend, save, invest aka. it works in the economy.
I'm not saying that bitcoin can't function like this or some similar way in the future, but it's a fact that it doesn't right now, and per this criteria I would say it's both more wasteful & less useful than gold. Bitcoin is simply plugged into your outlet right now and quite literally wasting energy unless you're using it to heat your home. That people have assigned value to the record of energy being spent is a separate phenomenon IMO.
I've always found it hilarious that block rewards are the literal definition of Keynesian stimulus - "burying money in bottles in the desert and paying people to dig it up". Early-stage cryptocurrencies are effectively economies where near-100% of employment rests on government employment.
People just think it's totally different, because this time they are the government. And because cryptocurrency is so steeped in libertarian ideology, they are unable to acknowledge any of the lessons of traditional economics, and are thus doomed to repeat its mistakes (eg: deflationary/hyperdeflationary currencies).
As a form of Keynesian stimulus, it's totally possible for block rewards to represent a net positive gain of economic activity as they "prime the pump". Gold mining is probably quite mechanized nowadays, so I wouldn't really care to guess which is more efficient at translating stimulus into economic activity, though.
It is a waste of resources. I do agree with you. The good news, I suppose, is that all possible the bitcoins will be eventually mined (https://www.investopedia.com/news/what-happens-bitcoin-after...). At that point, it will likely be transaction fees that drive the economy, not mining.
That's incorrect. Mining will still be required it just means instead of block rewards driving miners it'll be transaction fees. Bitcoin will never not require miners because they provide the entire validation/verification process for transactions.
It irks me that the wastefulness of bitcoin is proportional to how valuable it is, and I don't think that changes even when miners are only competing for transaction fees.
edit: Waste might even be exponentially proportional to bitcoin value...?
In economic equilibrium, the world-wide energy cost to mine one block would be approximately equal to the revenue from mining the block (transactions fees + newly generated bitcoins).
This is nonsensical and wrong. Transactions aren't what causes energy consumption in Bitcoin, you can process all the transactions in the whole Bitcoin or Ethereum network on a Raspberry Pi. It's the proof-of-work hashing that makes Bitcoin energy-inefficient, and that's purely a make-work problem, just a way to make mining arbitrarily difficult so the block times hit the expected average.
The problem with scaling to larger numbers of transactions is that block sizes become bigger and it takes more disk space and bandwidth to run a node. But, the bigger we make them, the more transaction fees there are, so incentives for miners would actually go up.
(very marginally so - block rewards are like 100x as high as the transaction fees, which actually leads some miners to not include transactions at all - trading off a 1% lower payout for faster propagation times and an increased chance of "winning" if they successfully mine a block at nearly the same time as another miner)
Maybe I wasn't clear in my original message. I meant that with lower block rewards and lower transaction fees (through lightning and other advances), the total reward for mining would go down, removing the incentive for the large number of mining operations.
On the large scale, I don't see mining efficiency affecting total bitcoin power usage, but I do see rewards impacting it. (higher BTC price => higher economic incentive to mine => more investments in mining operations => more power usage)
I think a lower bitcoin Hashrate would actually be a good thing (for power consumption and pollution)
Bitcoin is entirely arbitrary. Given that the concept of cryptocurrency (as a get-rich-quick scheme) has been proven, there's nothing stopping people from creating another one. And then another, and another, and another. The problem really is with the whole concept of cryptocurrencies.
I'm not aware of any cryptocurrency that has successfully implemented a decentralized PoS system. There have been a few that have "master keys" to sign blocks, however.
Have you been sleeping your entire life. Why can't you bring the same points up for gold. Civilizations have been destroyed for gold, let alone electricity.
It's not a waste. Each miner is expending resources in order to get something valuable. (Bitcoin.) They will continue to do so until the value of the resources they're expending is higher than the value of what they're receiving in return.
You don't get to decide what's wasteful and what isn't; each person decides that for themselves. That's just how economics works.
I don't think the people claiming that Bitcoin mining as a waste are using the economic definition of "efficiency" either. They just see Bitcoin as worthless, and therefore consider Bitcoin mining to be expending energy for nothing. That's very obviously wrong though, as I've just explained.
People mining Bitcoin are doing so out of their own self-interest. If Bitcoin were not valuable enough to overcome the cost of mining it, they wouldn't be mining in the first place. Whether or not there's a more "efficient" way of doing things is irrelevant to this point.
Bitcoin is fundamentally wasteful because the energy expended to facilitate a transaction is a function of the network's size rather than the number of transactions that need to be processed, it's hard to think of a less efficient system.
But, for the sake of argument: less efficient compared to what? Prior to Bitcoin, there weren't any other transaction mediums that offered the same capabilities and security properties that Bitcoin does.
Every technology has advantages and costs associated with it. You can't consider the costs in isolation and use that to claim the entire technology is a waste.
> They just see Bitcoin as worthless, and therefore consider Bitcoin mining to be expending energy for nothing.
No, to reiterate, they see bitcoin mining as inherently wasteful because energy is burned without regard for useful work done. A centralized system can process multiple orders of magnitude more transactions than a PoW based one where more energy is only needed when more useful work (transactions) needs to be performed.
> less efficient compared to what?
To every other system for processing transactions that is not based on PoW, for example, the centralized banking system. Yes, I understand that those systems don't have all the same capabilities that a PoW system does, but the incumbent systems already work well without whatever added capabilities a PoW system provides and is also incidentally much more secure in practice compared to PoW based systems.
>the incumbent systems already work well without whatever added capabilities a PoW system provides.
Would you consider Wells Fargo's employees setting up fake accounts on behalf of their customers and charging for them, an example of these systems "working well"? Blockchain alternatives have really only seen anything close to mass adoption in the last 3 to 4 years. These are emergent solutions which are already pivoting to hybrid versions that run on renewable energy (it is afterall a race to mine with the least cost possible) and while unproven, proof of stake gives a hint towards the ongoing work to mitigate the negative impact of the underlying resource consumption. It's important to be highly sceptical and rigourous in evaluating blockchain technologies, but could it be advantageous to do so with a longer timeline as the base for analysis? Many critics here seam to treat this as if the verdict were already in.
> Would you consider Wells Fargo's employees setting up fake accounts on behalf of their customers and charging for them, an example of these systems "working well
I would consider that fraud; if fraud is our metric then blockchain based systems are definitively the loser.
> Blockchain alternatives have really only seen anything close to mass adoption in the last 3 to 4 years.
They haven't seen anything close to mass adaption ever and there is no foreseeable future where they will since they provide immense utility to a very tiny subsection of the population and have so far been demonstrably useless for anything else.
> These are emergent solutions which are already pivoting to hybrid versions that run on renewable energy (it is afterall a race to mine with the least cost possible) and while unproven, proof of stake gives a hint towards the ongoing work to mitigate the negative impact of the underlying resource consumption
Unfortunately the stewards of the blockchain ecosystem have squandered all credibility with regard to unproven solutions because there is just too much grandiosity compared with what has actually been produced.
> but could it be advantageous to do so with a longer timeline as the base for analysis? Many critics here seam to treat this as if the verdict were already in..
I don't think it matters; if anyone discovers a generally useful function for blockchain tokens or a way to sustain the network without an inherently slow and wasteful PoW system then the critics will look like idiots and they'll have no defense because something actually useful needs no defense, it's utility is apparent in its widespread adoption.
Apples to oranges. The existence of traditional banking systems does not negate the demand for alternative systems with properties that traditional banking is incapable of providing.
You're, of course, free to ignore Bitcoin if those properties don't appeal to you. But the fact that you don't see value in them doesn't change the fact that others do, and if those people choose to expend their resources maintaining that system then that's, frankly, none of your business.
If the cost of maintaining the system reaches a point where it outweighs the value it generates, then and only then will people choose to stop expending their resources to maintain it. That's why your concerns about efficiency are irrelevant to my point; no matter how inefficient _you_ might think the system is, it's obviously still generating enough value to sustain itself otherwise it would cease to exist.
>Apples to oranges. The existence of traditional banking systems does not negate the demand for alternative systems with properties that traditional banking is incapable of providing.
I never argued this, what I'm saying is that it's fallacious to suggest that incumbent systems are not comparable to bitcoin, they are, because they compete to replace those systems in their feature-sets and are marketed as such by the stewards of these blockchain projects. Your reasoning is akin to suggesting that a Tesla can't be compared to a Hummer because it does not support the capability running on liquid fuel which has desirable properties such as high energy density and rapid refueling when compared to lithium batteries. Obviously they are not the same thing, but fuel density can be likened to decentralization in that it doesn't make a difference to the vast majority of people one way or the other as long as they can reliably get form point A to point B... except one vehicle fills the air with poison as a necessary byproduct of operation and the other does not which is clearly preferable if you don't care about fuel density (decentralization).
> no matter how inefficient _you_ might think the system is
It has nothing to do with what I think, the inefficiency is an objective fact and clearly demonstrable when you look at the numbers, your only argument seems to be "yes, one is more efficient than the other, but don't think about that because decentralization outweighs everything else"
> it's obviously still generating enough value to sustain itself otherwise it would cease to exist.
That's a tautology, "it exists so the prerequisite conditions for it to exist are obviously fulfilled". Just simply existing isn't a counterargument to criticism of waste.
> it doesn't make a difference to the vast majority of people one way or the other
Probably true. But for some people it _does_ make a big difference, and those are the people who will use and support Bitcoin as an alternative medium of payment. Again, if there was no demand for Bitcoin, it wouldn't exist.
> Just simply existing isn't a counterargument to criticism of waste.
It is though, because unless you're arguing the "waste" in this case is an externality (which it's not; miners are paying these costs out of their own pockets), Bitcoin's continued existence proves that it's generating enough value to sustain itself; even despite it having to compete with traditional banking systems.
Using your own analogy, what you're doing is akin to arguing that Tesla is a waste because cheaper electric cars exist that can get you from point a to point b just as well. (Those cars take less resources to create, therefore the more expensive Teslas are "a waste of resources".) That argument would be flawed for the same reason: you don't get to impose your definition of value on everyone else. The people buying Tesla cars obviously see some value in them beyond their competitors. If they didn't, Tesla would cease to exist. Tesla's continued existence proves their cars generate enough value for enough people to be worth the additional cost. In other words, it's not a waste.
If it isn't too obvious to bring up, is it possible that we don't necessarily know for certain that using energy to mine Bitcoin is a waste? For example some may have considered manufacturing computers a waste of energy, but the productivity gains of that use of energy has far surpassed the cost of manufacturing computers.
That's just completely incorrect and demonstrates an ignorance of the history of computers.
>And the internet.
Once again, this statement demonstrates an ignorance of history. The early internet was a monumental research and engineering effort funded by the U.S. military because its utility was completely apparent before it was even built.
You might want to re-consider your claim of my ignorance of history and maybe think if I might have a point, even though it opposes your opinion. Nevertheless, certainly you're not claiming the USG knew that expending X resources on the early internet would result in Google?
[edit]
For those reading this who are perhaps a bit more open minded, it is not clear what the future productivity gains will be from moving capital allocation out of the hands of central banks into the hands of Bitcoin hodlers. To beat a dead horse, If 51% of energy is devoted to securing btc, but capital is allocated in a way such that productivity increases x%, where x offsets mining/transaction costs, what's the problem?
> certainly you're not claiming the USG knew that expending X resources on the early internet would result in Google?
Of course not, why would you even think that? What about a technology being obviously useful implies the need to make arbitrary predictions multiple decades into the future?
Ok then how can you say that Bitcoin mining is wasteful? How can you be certain that it will not lead to massive productivity gains? What is the standard you are comparing Bitcoin to for resources required to enable censorship free payments? And how do you know precisely how much censorship free payments is worth now or at any time in the future?
Ton of CO2 is generated by christmas lights. It trumps BTC or is very close.
Yes, producing a lot of cheap energy is an opportunity to use more of it.
There's a bunch of stupid things people do with energy and increase their CO2 impact. Bitcoin is just one.
I'm pretty sure abstaining from flying planes throughout all your life is more CO2 not emitted than building a small mining operation and mining for life.
I'm pretty sure if we summed up the CO2 impact of increased dietary requirements of athletes and body builders and similar would get to huge numbers.
If everybody stops using fiat money and switch to bitcoin, the consumption of energy will be the same by miners, but the consumption per transaction will be much lower.
Consumption per transaction will go up, actually. Bitcoin's value has to appreciate to accommodate everybody using it as a fiat replacement. And once it goes up, people will add even more energy to mine ever valuable bitcoin.
bitcoin's value is not important in the long run because the block reward (number of bitcoins created every 10 minutes) drops every 4 years and eventually go to zero by 2140. More people using bitcoin will definitely attract more energy in the short run, but the energy alocated to mine bitcoin is not going to consume the whole world as some people say. The increase of energy consumption by bitcoin miners will probably look like a sigmoid function in the far future.
No. The block reward will be replaced by increasing transaction fees. If at any point the net income of miners is negative, miners will stop mining, and bitcoin becomes impossible to spend, driving transaction fees up. If the total amount of electricity wasted is ever small relative to its market cap, there will be a financial incentive to launch a 51% attack on the blockchain. Bitcoin does not scale. Bitcoin's design relies on not scaling.
Bitcoin will either be wasteful in proportion to its market cap, or it will be vulnerable to attack. There are no other options.
> there will be a financial incentive to launch a 51% attack on the blockchain
Anyone with that computing power will use it to earn transaction fees, not to attack Bitcoin by sniping funds through double-spends. If Bitcoin were ever attacked such that transactions were not immutable once confirmed, people would stop using it and the value of Bitcoin would drop. A 51% attack only destroys Bitcoin. There is no financial incentive (at least not in terms of Bitcoin).
But generally, it's a fair generalization that if step #1 in taking down Bitcoin is acquiring >50% of mining power, most rational actors will go off-mission and decide that step #2 is mine Bitcoin, not screw with it.
As Lightning Network ramps up, and if it is able to get a significant amount of usage, the upper limit in terms of transactions per time period is basically infinite.
Without Lightning then yes the amount of transactions-per-time-period is very limited.
Cryptocurrency is driving both improvements in computational efficiency and in cheaper clean energies. Most of the big mining operations are run on 100% renewable energy sources.
Even if it was "renewable energy sources" (lol), that's still energy consumed which could be doing things like supplying light, refrigeration, or, you know, useful computation.
Can we stop the "bitcoin has no use" game? It might not be the most efficient, it's absolutely not the most scalable in its current state, and it isn't a physical product, but it has value, and it has uses.
Every single thread about bitcoin like clockwork people will say stupid one-liners like "but at least X has value" or "but X is useful" and like clockwork someone will bring up that Bitcoin has use and value, and then the whole discussion will derail into insults and what-ifs on what-ifs.
Bitcoin has value, Bitcoin is useful. You may not think it is that useful, or has that much value, but it has some. Many feel that it's value is a way to transact without trust, others feel its value is a way to store money outside of any single government controlled currency, others find its value is in the pseudonymity that it can provide, others find that being able to put small amounts of data on a globally immutable ledger is immensely valuable, and many people find its value as a way of gambling on the price.
Well, to be frank.. if I buy solar panels and mine bitcoin with a portion of the energy who are you to tell anyone they shouldn't? Of the number of things that are wasteful in this world Bitcoin is just the latest scapegoat and no one really has evidence to show how the mining is powered.
Because that’s not how the majority of coins are mined, so your hypothetical pissing-in-the-ocean operation wouldn’t even warrant praise or scorn.
and no one really has evidence to show how the mining is powered.
The majority are mined in China, and that’s for the utility of cheap coal. If you have some evidence of massive solar farms powering mining in a China, please do cough it up.
The number of times I've seen mining have a double use leads me to believe that it isn't so clear cut as this statement. It generates heat, and I use that heat in my greenhouses and no longer need a heater. It's not the most efficient way to heat the greenhouses but it's more profitable that using a normal heater.
Other than individual-scale mining being an inefficient greenhouse heater, (or just heater in general) what are some of those dual uses you’ve seen so many times? On what scale compared to the bulk of mining activity?
Aside from the electricity usage concerns, this presents a big risk for bitcoin.
Centralization of mining power was one of the biggest issues of the BTC vs BCH debate. BCH proponents wanted bigger block size. While BTC proponents argued that bigger block size will lead to centralization, as not everyone will be able to propagate bigger blocks. So, if Bitmain et al. do end up controlling 90% of the hashing power, they might be able to control voting and other aspects of the network. They could prioritize their own transaction, pay lower fees etc.
Now this will lead to two things. First, cryptocurrency circles love perfect game theory. The argument is always going to be - Bitman etc are not going to harm the network even if they take over. The reason being it will always be in Bitmain's favor to ensure bitcoin's sanctity. If things go downhill they will lose tons of money and mining worthless coins. So, people should not turn away from bitcoin.
Second, we are talking about human nature and not a perfect prisoner's dilemma. So, Bitmain etc will be sneaky and maybe even vote against some BIPs they don't like. Some of their behavior will warrant people to leave bitcoin. But, then bitcoin supporters will bring up the first point again. Game theory, hence HODL.
This will at the end become a roundabout discussion:
Step 1 - News - Bitmain etc does X which is very bad. People should leave a centrally mined coin.
Step 2 - Bitcoin supporters - Game theory says Bitmain etc wont harm the network as their coins will worthless too. HODL.
Rinse and repeat.
The irrational belief in perfect math and game theory will give lot of leeway to anyone who captures Bitcoin's mining power.
> The argument is always going to be - Bitman etc are not going to harm the network even if they take over. The reason being it will always be in Bitmain's favor to ensure bitcoin's sanctity.
Wait wait... there are bitcoin supporters arguing this?
Now s/Bitmain/US government/ and this is basically the argument for dollar. (Or any fiat currency, for that matter.)
Satoshi said as much in the Bitcoin paper. To quote:
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
That's a dumb promise, since all it takes is one third party with the desire and means to control multiple entities for non financial reasons; for example, a state actor with treaties and regulations.
Which won't stop someone from trying to ride that line if that promise carries any connection with reality. Or the promise is just naive and once people are invested in using it they'll refuse to give up the value and will tolerate single entity control.
Similar thing happened with the internet when a lot of bedroom servers disappeared. A very similar thing also happened to radio some many years before. If anything, this could be a sign of maturity.
What happened to radio was due to limited spectrum availability and laws prohibiting its use. This can't really be compared to the others.
Bedroom servers still exist, and are probably more popular than before. It just appears there's not so many because they've been largely eclipsed by big players and the ability to just spin up new instances on demand.
Having a bunch of people making millions by racing to compute SHA256 collisions is very much extraordinary IMO. Drawing parallels with the server and radio markets is not very convincing.
Furthermore the way mining happens is pretty irrelevant to Bitcoin adoption and maturity at this point. Having a million miners or only 10 doesn't really change much in terms of usability or price volatility.
The bedroom servers have disappeared in favor of cloud computing like AWS. I'm not sure I'd consider AWS being a major single point of failure a good thing. Not to mention, isn't one of the big selling points of blockchain its distributed nature?
> I feel like cryptocurrency and perhaps nuclear weapons are a built in 'kill switch' by nature to make sure only useful species ever get off the planet.
There are a lot of potential Great Filters [1], but crypto currencies doesn't seem like one of them. They will might slow mankind down and waste a bunch of energy&resources, but beyond that doesn't particularly hurt our survival chances. Kind of like a lot of entertainment we produce has marginal benefits. But prof of work based crypto currencies have real chance to end up irrelevant once their novelty wears off (and the interesting parts of it might even be adopted elsewhere).
Just imagine how bad space heaters based on electricity are. Baseboard heating, radiant electric heat it's all terribly inefficient and turns 'steak' (electrons) into hamburger (IR radiation).
Aren't the "guy in a dorm-room" operations already pretty much out of the game? Couldn't GHash.io do pretty much whatever they want with the blockchain at this point?
Yup. As a self-described guy in a dorm room throwing his single GPU cycles at some crypto for self-education purposes, people are using multi-coin pools that mine ASIC-resistant coins and flip around depending on which is most profitable (often monero/litecoin).
That said, pools like nicehash pay out in BTC anyways, effectively locking altcoins to the BTC index price. Where goes bitcoin, so goes the market.
Even though Bitcoin isn't mined with GPUs (other cryptos are), the GPUs have already come down in price, and most vendors now have them in stock, close to MSRP prices.
Many Bitcoin Miners Are at Risk of Turning Unprofitable, they will go bankrupt, and after two weeks bitcoin difficulty gets adjusted and mining is easy again, just as designed. So the problem is not really a problem for people that understand how the system works. But it's far easier to bikeshed about electricity, gpus and everything related to cryotocurrencies but not the topic submitted.
If a single org does end up with 51% mining engine de-facto control of BTC, what happens next? Would people transition off of BTC to another ecosystem, or would people just accept that BTC is now under the auspices of a (one would hope) benevolent dictatorship?
If this happens to too great an extreme, it’s a major security problem. If at any point there is enough old-and-not-quite-profitable mining hardware around to mount a 50% attack, then a 50% attack becomes reasonably cheap.
Like many things with computers, scales can be deceivingly large.
I want to preface this with a note that I haven't done even napkin math on this, so there's a good chance my numbers are WAY off
All of the CPUs in the world probably won't be able to match even a handful of ASICs. It's probably the same with GPUs.
Each generation of ASICs is hashing about 4x faster with roughly the same power usage as the last. So after a generation or 2, you quickly run into the same sorts of issues where there is a good chance that all of the Antminer S3s in existence won't be able to hold a candle to a medium sized current-gen install.
And to mount an attack like that, you'd need to buy and power a monumental amount of these devices. The current hashrate is roughly 30,000,000 TH/s The current generation of Antminer can do roughly 14 TH/s
You'd need a million current-gen antminer S9's running at 1.3 gigawatts of power to get 50% of the hashrate (and from my extremely rough guesses, 4 million S7s, 12 million S5s, etc... Each generation also multiplying the power needed by some amount as well). And that kind of buying, manufacturing, and power generation isn't going to be easy to conceal.
Not to mention that evidence of a 50% attack will basically end bitcoin, making all of the money, time, and power spent on that attack truly worthless as you are left with a million completely worthless SHA256 hashing machines.
If you are able to pull off that kind of hashrate, you might as well just be a good player at that point, as you would be making $50,000 every 10 minutes at current prices.
> If you are able to pull off that kind of hashrate, you might as well just be a good player at that point, as you would be making $50,000 every 10 minutes at current prices.
You’re missing my point. If there is a pile of unused unprofitable hardware (because energy efficiency is too low given the mining rewards), then you can’t use it to make an honest profit. That means that it has very little value to honest miners and might be sold for a non-crazy amount of money. A dishonest buyer could use it to mount a 50% attack for a few million dollars of electricity, but I bet a dishonest miner planning such a thing could arrange to benefit in an amount far exceeding a few million dollars.
(I bet that the actual major cost would be the connections involved in acquiring the power, not the power itself. But there are many, many GW of working-but-idle non-base-load power plants in the world. You can’t buy their power at rates that make honest mining profitable, but short-term dishonest mining may be an entirely different story.)
Some people may attach considerable value to the destruction of bitcoin if nothing else.
But you missed the fact that the difficulty is increasing at a rate that makes old un-efficent hardware mostly useless, even in big numbers.
Even ignoring the power required, you'd need 67+ MILLION AntMiner S3s, and those still are just barely profitable if you are able to get power for $0.03 per KWh, and are still sold for over $100 a piece.
I'd be willing to wager that even if you were able to buy every single S3 that exists you wouldn't even be close.
So... what happens if the price of Bitcoin stabilizes and then drops enough such that even the most recent generation of miners are no longer profitable if all of them are running?
In that case Bitcoin might be caught in a "big freeze". Bitcoin takes about 2000 blocks to adjust difficulty, so if it becomes worthless overnight, the amount of hash power could drop enough that no new blocks will ever be found, and without any new blocks the difficulty will never adjust.
So one player would need to buy the vast majority of all miners, and even then they would only be capable of doing a double spend attack on a dead blockchain.
I'm really curious about the logic of this move. As I understand it, PoS will award miners who have the most coin with an increased likelihood that they'll be able to mine a coin. In other words, the more coins you own, the higher probability you can mine more.
This seems to be designed to fail, or at least designed to create a mining market which is highly central to only the wealthiest players.
I don't know much about PoS, but as it was explained to me, it should equal out to the same. Eg, if you have 1% of the wealth you'll get 1% (on average) of the awards. Likewise if you have 10% of the wealth, you'll get 10% (on average) of the awards. On average you're getting the same percentage of rewards as you originally held, meaning on average everyone ends up with the same percentage of coins. No stake holder inflation. That's just how it was explained to me, not my words.
Now, with that said, if it's purely coin based and not distributed based on some type of percentage, than I imagine it would start to get out of whack.. no?
Eg, if you have 10% and you win the next coin giving no one else money, then at the next lottery you have 10.001% to get the next coin. If that is how they design the system, I imagine that would start to snowball a bit.
Still, on average not nearly as bad as it immediately sounds, but nevertheless a problem I would think.
You could say the same thing regarding PoW - the rich can afford more ASICs which allows them to mine BTC faster and in turn buy more ASICs and so on. The difference is that with PoS, anyone will be able to stake profitably with a staking pool. Small players will lose money in a mining pool due to electricity costs.
But the price of altcoins is correlated to that of BTC.
Miners benefited from investors wanting to get into the next potential BTC, but if that bubble bursts, doesn't that imply investor money drying up, and altcoins going back down to being nearly worthless?
Bitcoin is getting harder and harder to mine. Small players (e.g. students/hobbyists) cannot afford to invest 70% of whatever revenue they generated, and will sensibly be forced out of the game. It's easy when you play against Villabajo, and it gets more expensive when facing Barcelona :)
I would assume that with the current technologies, the game will end being played only by the big players, when the currencies will be reaching their top tier (getting more and more difficult to generate).
I wouldn't mind building a small box with a used up GPU for $50 (original $400) for FortNite.
And anyway, I believe that the way forward is cloud-mining. I prefer logging into a website and check how much I made last week, than going through the pain of owning, maintaining and having an asset depreciating.
Plus with cloud mining one can switch (as one already commented about switching to ETH).
ps: Yes I know, they take a good part of the profit, but hey, they are working for it!
If these cards were run in proper systems, they would be fine.
The concern is that mining rigs are literally made by stuffing 64 AMD cards on risers in a filing cabinet with minimal airflow, running at 100% usage and 90+ Celcius for months on end.
The high heat for extended periods of time will degrade silicon, which is why manufacturers may refuse to RMA cards if they find issues related to mining[0].
The short of it is the probability of a used mining card failing is much higher than a used card from a regular gaming system.
ASICs, are, by definition, purpose-built for a a specific computing. Stands for Application-Specific Integrated Circuit. ASICs for mining are useless for AI.
Mining at current prices is a $5 billion a year industry, mostly run on specialised chips at scale. Dorm room miners aren't a significant factor.
Regardless, there's also capital expenditures on the equipment.
The problem is that the price is so volatile. As with any industry, new entrants will keep joining in until total cost will approach total revenue. But if total revenue can just drop by 50% in the span of a few months, that can put a large portion of participants out of business, even if hypothetically one of their cost factors (electricity) is free, some participants will have to go.
Come on, dorm room miners do not have the majority of hashrates out there. Even with free electricity when they mine $5-10 per day (very optimistic) it doesn't make them rich.
No, the difficulty adjusts every 2016 blocks (so about every 14 days). So when miners stop and blocks take longer to mine then the supply of new bitcoins is only reduced for a short amount of time.
That's the problem, all things may not be equal. Bitcoin may not end up being worth what people thought it was going to be. It may continue to drop (or stagnate) over time with zero miners active. It's not an exaggeration to say that nobody knows whether that will be the outcome.
I like the possibility of having tons of high-end GPUs being sold for bargain basement prices on eBay.
One of my never-started projects is to build a big GPU=based cluster shaped like a Cray-2. The original machine had, IIRC, 11 lobes and, therefore, having 11 GPU cards feels right (or 10 and use one lobe for the motherboard controlling everything. A Xeon Phi (if we are going crazy with GPUs, we should go crazy with the motherboard as well) has 36 PICe lanes, so I assume it'd be a fine choice. All this would be immersed in 3M's Novec 649 to keep the bubbly looks.
He wants a gpu compute cluster, not a notebook mining machine. They would be on the market because bitcoin's price is so tightly linked to many others including ethereum.
1) we're generating a ton of co2, further destabilizing the planet ecosystem 2) if we ever _do_ sort out cold fusion energy, crytoholes are going to abuse the shit out of it.
I feel like cryptocurrency and perhaps nuclear weapons are a built in 'kill switch' by nature to make sure only useful species ever get off the planet.