2.3% to support so little economic activity is just insane.
This is the type of tragedy of the commons issue where regulation is needed. For any one actor they can justify spending infinity energy as long as their ROI is positive.
There are enough justifications out there that it's easy to convince oneself that you're doing the world a favor ("I'm just librating finance and fighting the good fight against the central bankers").
The amount of economic activity it supports is somewhat of a poor measure without further information. Yes, it is a complete waste in its current form. But that doesn't strictly mean that the electricity usage will scale with the percentage of economic activity that takes place using it. I would be interested in knowing how this number would change if it supported most economic activity. Surely it would go up, but I doubt it would do so linearly.
I wonder what kind of shape it could take with the current mindset of putting weak signals to steer the market (ie. carbon tax, etc.). Mining bitcoin is far from being the only example of resources waste for pure profit... I can only imagine a vague but serious threat of being accused of ecocide to have an effect.
> 2.3% to support so little economic activity is just insane.
It kind of is!
But honestly that's the price we pay for not having sound monetary systems. At this point BTC is, functionally, just an alternative asset that hedges against inflation. As governments print increasingly more money, and the amount of BTC stays the same, each BTC becomes worth more. It's very simple. The demand for such an asset is apparently quite high; high enough to spend up to 2.3% of total US energy.
If the world operated on non-inflationary systems there would perhaps still be a small need for BTC, such as providing liberty in committing financial transactions, but I doubt it'd be nearly as big as it is today on that basis alone.
> BTC is, functionally, just an alternative asset that hedges against inflation
Bitcoin is a terrible inflation hedge. This is quantitaitvely demonstrable over its entire existence. It's a good gambling asset, and in my opinion, should be taxed as such.
It already exists it’s called gold. There are some hassles associated with physical storage and transport of gold but not 2.3% of total US power consumption worth of hassles.
To people who love gold, I always want to ask what you think should happen if Elon Musk claims a meteor one of his robot ships landed on, that's got 1000 times more gold inside it than there is gold on Earth.
Why should anyone respond and speculate based on a hastily written hypothetical? You need to put in some genuine writing effort for folks to take it seriously.
Offer some substantial, falsifiable, claims/arguments/etc.
If someone wants the world economy to be based on a commodity such as the metallic ore gold, then I wonder what they think would happen to the world economy, and more importantly all of the people in it, if all of a sudden, the world supply of the metallic ore gold went up by three orders of magnitude, all owned by literally one person.
Do they think people would continue to use the metallic ore gold as their currency, and they would just accept the insane inflation? And the fact that 99.9% of the world's wealth is now concentrated in the hands of one person?
Or do they think we would rapidly switch to a different commodity as our currency?
Also, why should anyone respond? Because they think the topic is interesting. I thought that would be clear. If you cannot imagine the nightmare scenario and you need "genuine writing effort" for you to imagine it, then it sounds like you don't think the topic is interesting. Maybe just let other people hash it out.
No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine.
Bitcoin is neither an alternative to the international monetary system, nor a hedge. It's a joke. A gambling instrument for financially illiterate people.
The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Since then, huge increases in the supply of paper money have occurred in a number of countries, producing hyperinflations – episodes of extreme inflation rates much greater than those observed during earlier periods of commodity money.
Hyperinflation is extremely uncommon, especially in developed countries, and when it occurs it's always caused by incompetent or corrupt governments, not by the currency itself.
Wishful thinking. Cryptocurrencies have failed to gain traction even in countries experiencing hyperinflation. People don't trust a fiat "currency" that is issued by anonymous entities and is backed by nothing. Especially when it's been known to depreciate dramatically in the blink of an eye. People trust fiat currencies that are issued by reputable institutions that give credible assurances about the purchasing power of said currencies. This is why such currencies as the US dollar and the euro are used all over the world for international trade, and cryptocurrencies are not.
Trust in traditional currency shaken quite significantly in last 3 years. Especially when inflation ruins many businesses and government justify inflation by war and green energy.
When you cannot make living from money that you get from your hard work, naturally, you are forced to look at alternatives. As more people adopt cryptocurrencies, the less value traditional currencies had and eventually ignores inflation. Which, for now, bitcoins does. It just isn't that much popular yet.
No one would expect ten years ago that some cryptocurrency would survive or be adopted by more and more people. But somehow, it's still there and grows every year.
If crypto wouldn't be a thing, there wouldn't be plans for digital Euro by ECB for example. Basically same thing as BTC, except with regulations with centralized bank.
To be clear, I'm not a fan of digital currencies. Cash is still most private and free way of exchange method. For digital, you need electricity, device and data which many cannot afford to have.
> No, the international monetary system is perfectly functional, as evidenced by the fact that it supports the global economy just fine.
Obviously it is functional, I never said it wasn't!
Inflationary systems have a lot of benefits -- they encourage consumption, erode the value of debt over time, etc. But there are downsides, too. Savings and purchasing power are destroyed over time. They encourage investment in hard assets like real estate and BTC to protect wealth. And so you get some waste, too. There is no free lunch.
The international monetary system isn't a deflationary system per se. It can accommodate a variety of monetary policies, including deflationary policies.
As far as bitcoin being a hard asset, this isn't entirely correct either. Not only does bitcoin not generate income, but it consumes income. You see, the bitcoin network is extremely expensive to maintain, and the owners of bitcoins are the ones who bear the cost. Either they pay with fees -unlikely-, or they'll pay by losing value in their investment -most likely. There's no way around it.
> At this point BTC is, functionally, just an alternative asset that hedges against inflation
You are completely ignorant. I'm not saying that in a mean way, I mean it in the purest sense possible: You have no idea what you are talking about.
According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems."
Bitcoin is obviously a speculative asset whose value goes up when inflation is low and people have money to spend on speculative assets. The fact that we use 2.3% of our nation's electricity on it is unjustifiable.
> According to the graph below, BTC goes up when inflation goes down. That is the opposite of a hedge! It proves that Bitcoin is not valuable due to "not having sound monetary systems."
Could you please refer me to a graph showing the relationship between BTC and inflation? Because inflation over the last 12 months is relatively low, at 3.4%, while BTC is very high, at $47,621. Then again, BTC hit a high of $65,000 back in November of 2021, when inflation rates were indeed high at 6.8%.
This seems to suggest a weak relationship at best between BTC and inflation rates.
I'm not a crypto proponent per se, but I do feel the need to be reasonable about it, and this reads like pure emotional anti-cryptocurrency sentiment.
(edit: while I still can, I'm going to jump in and repeat that I'm criticizing this as a bad article which isn't saying anything very meaningful on its own. Thanks everyone for doing the author's work for them and gathering more data. I won't be upset if it's proven that crypto is intrinsically bad for everything I love - except insofar as I believe it can't be stopped.)
1. There is no comparison made to the energy consumption of the traditional banking industry, which I am sure is not a particularly energy-efficient industry.
2. The title of the article is itself editorializing the content of the article and is speculative according to their own words. From TFA: "[The EIA] released a study suggesting that cryptocurrency mining represents up to 2.3% of U.S. power demand." It could be less, much less, or much less, although I haven't read the actual report yet (I'm criticizing this article only), because "suggesting" could be doing a lot of heavy lifting
3. "Just 137" isn't meaningful AFAIK. Who cares if it's 100 or 10 or 10,000 miners? The point is the amount of crypto being mined. (The number of miners will always be in flux by design anyway.) And the answer to that, from TFA: "The EIA found that the global share of Bitcoin mining that takes place in the U.S. grew from 3.4% in 2020 to a whopping 37.8% in 2022." So roughly ~2% of US power is generating over 1/3 of the world's Bitcoin. This is only obviously bad if you believe Bitcoin is a total waste of energy, which I don't, but I understand that some do.
4. Energy consumption is frankly not a phenomenon I give two shits about, as an environmentalist. Fossil fuel consumption is. From TFA: "We intend to ... quantify the sources of electricity used to meet cryptocurrency mining demand." Meaning this has not been done, and publishing scary warnings is premature. If Bitcoin mining ends up using a higher proportion of renewable energy than, say, traditional banking, it could be seen as a net good for crypto use to rise.
> There is no comparison made to the energy consumption of the traditional banking industry, which I am sure is not a particularly energy-efficient industry.
This is your first mistake: the traditional banking system does not have a security model predicated on the ability to waste power. Bitcoin does, and it’s dynamic so there’s no way to waste less power which isn’t explicitly ceding control.
The second error is treat the two as comparable without recognizing that one of them is used daily by millions of people making billions of transactions, and the other has almost no real world adoption. That matters in two ways because it’s not just that bitcoin uses more power to do so much less but also that the real financial system has higher power draw for work in addition to processing transactions. For example, Visa can do on the order of tens of thousands of transactions per second versus Bitcoin’s 7 but if you are looking at how much power they use, the figures will include running a ton of anti-fraud and other support systems which Bitcoin is missing.
That's an excellent point actually. In the current day, more-or-less every watt of crypto is actually on top of the traditional financial system and totally reliant on it.
That's not intrinsic to cryptocurrency, but it is part of the reality we're living in, which is what I want people to be looking at.
Precisely. I don't know how people can argue crypto power consumption against the banking industry when you can drive down main street in any city and pass 15 bank branches and see ATMs every 100ft.
Bank of America alone has 69m customers and real people have real needs - things like going to a branch occasionally, calling customer service, taking out cash, etc. Not only is BoA itself larger in terms of users than all of crypto (I've done the analysis, checked block explorers, etc) it's actually usable by real people in the real world for real activity that contributes to the real economy and actually provides value and utility other than pancake swapping your doodle coins for poodle coins.
That comparison is also interesting because the same people who make those comparisons are also perpetually perplexed about why statistically nobody uses Bitcoin, and it’s like … BofA employs thousands of MBAs, they have McKinsey consultants, so you really think they’d have all of those employees and infrastructure cutting into their profit margins if their customers didn’t find those services useful? Focusing on the transaction mechanism is leaving out 95% of banking.
I do admit that the comparison is not a strong one. It wasn't intended to be, honestly, it was just an easy example. My point was more that the data presented in the article aren't very useful on their own.
Again, if you think all cryptocurrency has 0 value, then all usage is obviously bad. But the reality is that it has some value, and much of that value is in the form of scams (most types of coins, by number, are scams), and much of the value is just speculative investment, but it is a real thing that people spend real money on. Focusing on miners makes it seem like all the value of crypto comes directly from energy - but nobody would spend energy mining it if others wouldn't buy it.
> My point was more that the data presented in the article aren't very useful on their own.
Yea this is a constant issue in almost all journalism. Numbers are provided mostly without context. E g. "$100k of drugs seized in bust". But was that a single day's re-up? Does it meaningfully impact the local drug supply at all?
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In this case we can dig into numbers somewhat. Bitcoin.com claims the traditional banking sector uses about 2x as much energy. But cryptocurrency handles a tiny, tiny fraction of worldwide banking stuff, so if it was operating at the scale of e.g. 20,000 qps of credit card transactions, for example, it might have substantially higher energy use compared to now.
Your first mistake is assuming that the power used to secure the Bitcoin network is a waste. It is clearly not, since thousands of people believe it is worth paying for.
The second error is implicitly assuming that the number of people Bitcoin serves is correlated with it’s power usage. You could serve the same number of people as the banking sector does now without increased power consumption when you bring layer 2 or 3 solutions into the picture.
Your first point kind of makes it impossible to call anything a waste, right? Everything we do in society is paid for by somebody so it must all be worthwhile.
For the second point, are you talking about Layer 2 solutions that track cryptocurrency in a centralized database, like an exchange, where most transactions happen? Basically just traditional banking but with crypto as the unit of account. Or are you talking about decentralized layer 2 solutions like Lightning Network? I don't think Lightning Network can scale to match what the banking sector does, even if you ignore all the services banks provide other than facilitating transactions. For example you could not pay the US workforce with Lightning Network because it would take several months worth of of blocks just to open a channel to each person, and quickly those channels would run out of inbound capacity and you'd need to open more on top of that, so the Layer 1 capacity still limits the ability to use LN at that scale.
Maybe Lightning Network will scale, maybe not. But VISA or Mastercard could build on top of Bitcoin and allow many more transactions than the base layer does. You would use the base layer for final settlements.
Already now you can get a VISA/Mastercard and use that to spend Bitcoin. But of course, every layer on top of Bitcoin presents its own set of trade-offs in terms of trust and security.
> Your first mistake is assuming that the power used to secure the Bitcoin network is a waste. It is clearly not, since thousands of people believe it is worth paying for.
This is a logic error: securing a financial system is not waste but paying more than you need to is. If my bank secured my money by paying an army of dudes with guns to sit around watching cash and did transfers by putting a check on the corporate jet, I’d say that was wasteful, too.
Similarly, the argument that the current system could be matched by L2 systems is both speculative and conceding defeat: even if that worked as well as the sales pitch claims it’d be using more power, and we know that there’s no plausible scenario where usage goes up while power consumption goes down.
The argument that L2 systems is the answer is also directly undercutting your earlier marketing pitch. If the justification for the inefficiency is that it’s needed for security, telling people that they should switch to your I Can’t Believe It’s Not A Bank is either admitting that the security benefits are either not real or necessary, or that they can be provided more cost effectively.
The only people who are committed to using Bitcoin are the people who’ve already bought in: everyone else is going to look for advantages relative to what they’re already using. It’s not just enough to handwave about how the system might at some point be less distant from parity, you need a serious plan for being better at something before you’ll see any significant adoption. Parity might seem like a far off goal, and it is, but it’s not enough to get most people to switch.
What you call inefficiency (I guess in terms of power consumption) is a misuse of the term in a world where value is subjective. It is efficient and necessary for the use case and value it provides. You can argue it is ineffecient compared to Proof of Stake for example, but Proof of Stake is a completely different system and has a completely different incentive structure.
I’m saying also that L2 (and L3, … Ln) is a way to scale the number of users without increasing power consumption. Every time you add a layer, there are other trade-offs for the benefits gained. But at the base layer you still have the benefits of not having a central authority censoring and controlling exchange of an economic good.
> What you call inefficiency (I guess in terms of power consumption) is a misuse of the term in a world where value is subjective
No, it’s simply recognizing that competing systems match or exceed on security without the same cost. You’ve effectively acknowledged this by saying that the system will be more usable and affordable by using something better designed which eventually clears in Bitcoin to reduce the number of expensive transactions.
No, not something better designed. Something augmenting Bitcoin to make it cheaper to transact while maintaining a base layer for final settlement that is secure and decentralized.
You leave out other characteristics that make Bitcoin an attractive economic good, when you think that matching or exceeding the security at a lower cost is a valid argument against Bitcoin. If it was all about power consumption, Bitcoin wouldn’t keep increasing in demand and price.
Look, you can theorize all you want about the inefficency of Bitcoin, but the market has spoken and continues to speak.
> thousands of people believe it is worth paying for.
Except, in good old libertarian fashion, they tend not to pay for it. First, the vast majority of the around $100 it costs to process a BTC transaction comes not from explicit fees, but from (invisible) money supply increase (the mining reward). That still neglects the environmental externalities, which are probably in the $30+ region.
Just in case, there are solutions to scale transactions count outside "7 per second", where these "7 per second" transactions are used to settle a larger set of transactions happening on the layer 2.
Also, when talking about extra service payment networks like Visa offering, like anti fraud, gotta remember that at least part of problems this service solving is caused by the design of the network itself. And while it is not obviously energy hungry service, it is part of what everyone is paying 2-3% in credit card processing fees.
I would love to see a solid comparison of traditional banking total cost vs Bitcoin (if it would replace traditional fi), but it is certainly not as simple as the above, if even possible...
> Also, when talking about extra service payment networks like Visa offering, like anti fraud, gotta remember that at least part of problems this service solving is caused by the design of the network itself. And while it is not obviously energy hungry service, it is part of what everyone is paying 2-3% in credit card processing fees.
The design of credit cards does suck for fraud. I go to a website to buy a product, I put in my card number, exp date, CVV, and it turns out that site was actually compromised and some attacker got my card info. Now I have to cancel it and get a new card. It would be way better if what I entered on that vendor's site was a one-time authorization code, not the full information with which the attacker can spend from my card at other places.
Crypto is better in this regard since I never transmit my secret information to the vendor! But crypto is also worse, in that, if I do send a transaction to the wrong place (for example, because the vendor's website was compromised and told me the attacker's address to send to), I'm screwed. And if my electronic device is compromised and my private key stolen I'm really screwed.
Ultimately even though crypto has a technically better design, since it also has no support department and no dispute resolution I'm at higher risk. I've never lost money from a stolen credit card. You're right that I pay for that in the 2-3% processing fees... but it's not like Bitcoin is feeless, either.
Payment authorization through credit cards can clearly be improved by providing one-time authorization codes using any number of techniques. Looking back to the theme of the article however, that improvement can be done _completely independently_ of the blockchain and mining ecosystems, with negligible impacts on the power consumption of the existing baking system.
> Also, when talking about extra service payment networks like Visa offering, like anti fraud, gotta remember that at least part of problems this service solving is caused by the design of the network itself. And while it is not obviously energy hungry service, it is part of what everyone is paying 2-3% in credit card processing fees.
Oh, no argument there but that’s not the only part of fraud I’m thinking about. I’ve had a card stolen but it cost me exactly zero because their anti fraud system was able to detect that the person with the credential wasn’t buying the kinds of things I buy at places I normally shop and blocked it. That’s a LOT better than the countless stories of people making a mistake in where they sent cryptocurrency or losing control of their wallet, and not getting help other than people saying it was their fault.
My point definitely isn’t that the current system is perfect but rather that what seems to happen a lot is that people focus on one technical problem like operating a ledger and forget the surroundings. I’d definitely like to see a detailed comparison, too, but my preferred solution to all of this would be an increasingly steep carbon tax to incentivize everyone to do better.
>This is your first mistake: the traditional banking system does not have a security model predicated on the ability to waste power. Bitcoin does, and it’s dynamic so there’s no way to waste less power which isn’t explicitly ceding control.
This doesn't make sense. The power is used to secure the network. Your first mistake here is you must think of Bitcoin as useless and any use of power is a waste. Just to help you, if BTC was useless it would be worth $0 traditional banking dollars, as this is not the case your whole premise is a waste.
Yes, Bitcoin uses proof of wasted computation as its security mechanism. That’s why it’s widely recognized as an inefficient design because you can just look at the alternatives which are faster, more secure, or both and do not require the energy equivalent of a fair-sized country to operate a database.
It’s a great software engineering case study: the algorithm is a neat solution to a problem that almost nobody has, so while it’s cool as an intellectual exercise it’s failed to see much adoption even as it passes the middle of its second decade because it’s not cost effective for most people. It’s kind of like the idea of a supersonic airliner: a neat engineering challenge but a failure in the marketplace because 99.9% of people don’t need the problem it solves desperately enough to pay so much more.
The "security" of btc cryptocurrency is proportional to how much energy it wastes; that's radically different than the banking system.
The more billions it costs to run bitcoin, the more it costs to 51% attack it. If you can outwaste energy, you can hijack the system.
It would be useful it some state, eg., russia or china, would just cut off networks and forge bitcoin network traffic -- and hence bring the whole thing down. Or, do a 51% attack by controlling 51% of the hashing power.
The whole thing is a joke, one only tolerated by states because it's supports joke levels of economic transactions. Were any % of an economy to run on this, states would just seal the network in their borders and end the whole charade.
> The "security" of btc cryptocurrency is proportional to how much energy it wastes
It's proportional to the amount of money it "burns", in the form of capital costs (miners) and electricity costs (for those miners). If electricity prices would rise tenfold globally, electricity use from crypto miners would drop by about the same factor.
How would they seal the network in their borders? Why would that bring the whole thing down? Countries that shut down internet don't seem to bring that whole thing down in any sense
Cryptocurrencies are peer-to-peer systems. If you control the network they're on, you can do anything you like.
Take the peer-to-peer traffic of the cryptocurrency network of any area, prevent it from getting outside that area (ie., just block it talking to IPs outside some range) -- then to that network, you can trivially control the total hashing power.
So split any cryptocurrency network into small segements, then add your machine to that network with a false history, design the network to be small enough, and your machine will out-hash the rest, and so it's history will win. Rinse-and-repeat.
It's trivial for any state to take down a cryptocurrency. There's nothing magic about it; it's an incredibly fragile system whose 'safety' relies on no one owning the network, and if that's the case, no one being able to russle-up huge amounts of electricity.
In both cases, this is false for states. So any state, if it wishes, can really do anything it likes.
The global bitcoin system is well within rearch of a hostile state 51%'ing it, even at the global level -- though the cost would be non-trivial. It would be trivial to do it in its own borders though.
As any state, of course will, if you can ever go into a shop and buy somehting with it. At that point you're imperilling a state's ability to use monetary policy to manage its economy, and that's an existential security threat. So bye bye your monopoly money tokens.
> So split any cryptocurrency network into small segements, then add your machine to that network with a false history, design the network to be small enough, and your machine will out-hash the rest, and so it's history will win. Rinse-and-repeat.
You cannot forge history, even with 100% of the hash power. Firstly, each transaction is cryptographically signed with the keys of the sender address. Secondly, each full node within the segmented network will have the full history.
The only thing you can do is publish different blocks to the segmented network than the blocks the outside network has. You cannot create arbitrary transactions. You can only censor others’ transactions within the segmented network. Since the mining difficulty will not adjust instantaneously your segmented network will fall behind the outside network in block height unless you control more hashing power than everyone else mining Bitcoin on either network combined. So as soon as anyone in your segmented network re-establishes connection with the outside network (and they will, they could receive a physical hard drive with the blockchain on it and rebroadcast to segmented nodes) all your work is for nothing.
You might say “yeah well I’ll publish an entire fake history that is MUCH longer than the outside network with lower difficulty so I can stay ahead”. Well, actually you can’t, because if you wanted vastly more blocks between Bitcoins inception and the present then the difficulty will necessarily be much higher because that’s how difficulty gets set, by how quickly blocks are produced. You would have to change the difficulty adjustment algorithm, creating a fork between your own malicious node(s) and the other nodes in your segmented network. Oh and by the way, you _still_ can’t create arbitrary transactions.
> The global bitcoin system is well within rearch of a hostile state 51%'ing it
I’ll believe it when I see it. They honestly have a better chance outlawing it and imprisoning anyone who’s ever used it.
> The global bitcoin system is well within rearch of a hostile state 51%'ing it
> I’ll believe it when I see it. They honestly have a better chance outlawing it and imprisoning anyone who’s ever used it.
First of all I don't think any state is currently motivated to do this. However, if I were a state agency trying to attack Bitcoin, I would start by creating my own mining pool, which of course would purport to be privately run. I would be the most efficient mining pool in the business, offering miners a slightly better cut than other mining pools since while most pool operators are trying to extract a low-margin profit, I'm willing to break even or, if necessary, run at a small loss. It would be ideally to gradually create several sock-puppet pools that appear to be in competition with one another, while in fact I control all of them.
Even with competitive payouts, it may take several years to build up my pools reputation and gain a significant share of miners. And when I start having my pools mine blocks that I'm not actually submitting to the chain (to support my double spend), pretty soon miners will notice and switch. But I only need a couple hours to cause chaos, and I may benefit from miners confusedly switching to other pools that are also under my control. If I look at the regions where I have the most miners and time to the attack to occur overnight in those areas, I may succeed. And unlike trying to 51% the network myself by throwing hardware at the problem, I won't be left with worthless SHA256 hashing machines at the end of the attempt, nor will I have to pay for power. And I don't have to outmine the entire network -- I've enlisted half of it to be on my side. The only cost is the minimal pool operating expenses (not mining, just issuing work to miners, checking their work and arranging payouts), spread over how ever many years it takes me to gain dominance.
All this depends on how many assumptions are in operation about what the state is doing to these networks, and the machines on them. In the end, it can turn all btc traffic off -- and there's no btc at all. Or it could take over the miners within its borders, which are heavily centralised, and run a different protocol.
If you own the machines and own the network you can do anything you want. Anything at all.
As far as assuming that the state hasnt taken control of the miners (unlikely, this is the easiest thing to do), by dropping communication, delaying it, observing it, etc. much can be done following the protocol, including replaying transactions etc. -- the future can be forged.
There are so many assumptions about the realworld, that do not hold up, behind cryto protocols, they're laughable. Assuming that the system will follow the protocol is itself disconnected from reality, quite literally.
The initial paper's realworld assumptions was that mining would be an at-home affair, ie., decentralised; everyone would run their own. And that networks were not own or controlled by centralised actors.
Neither is true. Mininig is incredibly centralised, as is network control. This makes it trivial for a state to pull an off switch.
Even talking about sophisticated denials of service, transaction replays, forging future transactions... all this takes place in a silly imagined scenario in which the state wants to hide what it's doing. If it didnt care, bang goes the whole thing.
You would be able to control the part of the network you cut off, but if anyone smuggles in as much as a microSD card with the outside blockchain state and syncs it to their client, every client in the segment would see this longer chain (since the outside has more hash power than you) and recognize it as legitimate, undoing all your fraudulent transactions (along with a lot of legitimate ones that never reached the outside network)
0) yes they do, in extremis half a dozen HAEMP would basically take out the whole internet
(b) "seal the network in their borders" is much easier than that, lots of networks basically act like that already due to either voluntary compliance with local laws, or due to direct government interference with the networks
iii. the miners aren't really all that distributed, they group together for the same reason everyone else groups together instead of being free-range anarchists
[δ] all you need to do to shut down a currency within a country is arrest people using it, which is very easy and has a long history
They don’t need to shutdown for everyone , they need to shutdown only for their country .
Countries do this all the time , just yesterday we were talking about internet shutdown during elections and exams , then there are restricted countries like say North Korea.
The US is certainly capable of shutting down the internet with their control of some critical pieces of infrastructure like ICANN. They haven’t ever used it because levers like those are ones you only get to use once before other countries build an alternative, like when China shut down rare earth exports to japan years ago so countries like the US started up mines that were previously not worth it
Yes, but bitcoin is something of an outlier there.. I realize the "top 100" cryptocurrencies by market cap isn't necessarily very meaningful, but like 90% of those are proof of stake, including ethereum, which is the second most valuable cryptocurrency, and actually more widely used than bitcoin in terms of transactions or number of unique wallets.
I'm not an expert here but my understanding is that even if a so-called 51% attack were to happen, it would only be meaningful as long as it could be sustained. The simplest case is a single tainted block, after which other miners could roll back by consensus. If a nation wanted to "permanently" take over >50% of the network, I believe the Bitcoin community would see that coming, and it would be a colossal investment of energy for a not-very-good chance of taking over. Bitcoin.
> The simplest case is a single tainted block, after which other miners could roll back by consensus.
Invalid blocks are rejected trivially by any node as soon as it sees them. You can't "force" an invalid block to be accepted by throwing hashrate at it and miners don't need to do anything to make an invalid block be recognized as such.
The issue is on malicious actors trying to rewrite/replace recent blocks (to double spend, usually) which was the core innovation, but that also includes trying to censor txs or generally DoS the network by refusing to allow txs to be accepted.
You can roll back transactions for whatever duration of time you were able to outspend the network. Critically, that can include your own transactions.
You mine quietly, outpacing the regular network, creating your own longer chain. Perhaps you do this for an hour, several hours, or a day. The only transactions on this chain are those in which you send your own coins to yourself -- maybe plus some random transactions from the mempool you throw in to help cover your own tracks. Meanwhile you spend those same coins (UTXOs) on the "honest" chain.
Once you are satisfied, you publish your longer chain. By the rules of the network the longest chain is the true one. Honest miners immediately begin building their blocks on top of your dishonest version of events. Since you are now working together with them, blocks are produced quickly. The honest chain dies.
Chaos would ensue.
Anybody who received coins on the dead chain can try to republish the transaction to the mempool and hope it gets mined again, so they get their money again. But if the sender is fast, they might realize they have a double-spend opportunity here, and submit a higher-fee transaction in which they sent those coins to themselves. It's a race. Of course, for your own UTXOs that were already spent in the dishonest chain, the race has already been won. Those double spends are successful.
if you split the network, you can add your own machines, that can rewrite the history arbitrarily from the future of that split.
As for "a few minutes", it depends on which one we're talking about. BTC, yes -- but disrupting the global BTC network requires only a few minutes of time. Just dump everything into unusable addresses, and watch the reaction.
No, you cannot do that. Transactions would still need to be signed by the corresponding owners. All you could do is reorder (and thus invalidate) some transactions, drop some transactions, or add some that weren't originally included.
> Just dump everything into unusable addresses...
Nope; that's not possible. You wouldn't have the signatures to do that even with 51% hashing power.
You're right about the dumping; I was thinking more about the case where you controlled the protocol on the machines of a partitioned network (eg., so you release a new version of btc which uses exploitable crytography, etc.).
In the case of a mere 51% at scale, hijinks are still quite possible from replays, reorderings, etc.
I was more preoccupied by the case where the state's acting in its own borders with control over the network, major miners, most machines on the network -- at this point basically no gaurentees remain
> the case where you controlled the protocol on the machines of a partitioned network (eg., so you release a new version of btc which uses exploitable crytography
Such a change would be treated as a "monopoly money" fork by those wanting to transact, and ignored. "No I don't want your fake money; send me real BTC or GTFO". This is why miners cannot arbitrarily change the protocol in their favour even today.
Visa used 189GWh in 2017, worldwide, of which around half was data centres [1]. That handled 111.2 billion transactions, so about 1.7Wh per transaction (half for datacentres).
I imagine much of Visa's data centre capacity goes to serving web pages and all that. I know of a bank that would run millions of transactions per day in a couple of hours on an IBM mainframe (at night, after closing). While they are power hungry machines, I can't imagine them using 1MW. So I think 1.7Wh per transaction is at least an order of magnitude too high.
That is bonkers if true. To put some context around that, our EV can drive around 4000 miles on that amount of energy. Meanwhile, I am not sure you could even unlock the car on 1.7Wh.
Bitcoins are just speculative assets . All crypto is, nobody is actually doing real economic transactions on them, I.e buying and selling services/goods for bitcoin. It is not practical to do so with transaction/gas fees .
If you think of it as an Asset transactions then it makes sense, those are always expensive.
A real estate deal for a house will have buyer agent, seller agent government taxes etc easily 5-10% , if you sell an artwork a gallery will probably charge upwards of 10-20% etc.
A digital currency using ~844 kWh per transaction is absolutely bonkers. This is irrespective of any fees, taxes, or commissions associated with the transaction. If I buy real estate with bitcoin, all of those would still apply, but my choice of using bitcoin would result in an extra 844 kWh of energy consumed compared to using cash. Bonkers.
Digital asset, not currency. That is the key difference, asset transfers being expensive(in transaction fees) is not abnormal.
I don't like it, I don't support this industry, it is still big waste of energy, however if you see it from a lens of asset instead of currency then it kind of make sense that transactions are expensive.
Money has four functions traditionally, Bitcoin does not work for three of them: medium of exchange(too expensive), unit of account(too volatile), standard of deferred payment (too volatile), it kind of works as "store of value", i.e asset despite the volatility as the deflationary pressure due to its by design purchasing power increases.
Smarter economists can explain it better than me, my point is, don't think of it as a currency, it is really not, just an asset class ( still wasteful).
Ah, the old Visa vs Bitcoin comparison. It was wrong when it was first made in 2009, and it's wrong now.
1. Bitcoin is a final settlement system, akin to moving gold bars from one vault to another. It achieves this settlement in minutes and requires no trusted intermediaries.
2. Bitcoin's energy consumption is a function of price, not of transaction throughput, so the two are orthogonal.
What if we have to account for all the bankers and their houses and cars and everything they need to live to continue our current financial order? People focus on simple math, but bitcoin doesnt need all the people to sign the docs and keep track of them, that's the catch.
Bitcoin isn't replacing any of them, so it's a moot point. If someone wants to buy real estate using bitcoin they are still probably going to use a realtor (or at the very least a lawyer) and they still probably need a mortgage, title insurance, and home insurance. If a company wants to go public, there is still going to be an army of i-bankers involved, even in a bitcoin denominated world.
The banking sector exists for a reason. There are certainly parts of it that are superfluous and excessive, but someone somewhere is willingly paying for that excess, and that won't change under a bitcoin regime. And I personally think that most of the excess is due to excessive speculative activity in our financial system, and if anything, bitcoin seems like it will make that part worse.
Visa's count presumably relates to direct consumer small value transactions though, whereas Bitcoin transactions are typically much larger "clearing" transactions. If Bitcoin is scaled up, that would be the only option - each transaction would be a clearing transaction incorporating many individual consumer transaction movements.
This is the relevant comparison! In another comment I asserted that I would be surprised if Blockchain doesn't use at least 2 orders of magnitude more energy per transaction than traditional banking.
Seems I was off by about 5 orders of magnitude, in Blockchains favour!
Traditional banking also does a lot more than what BTC does.
BTC is about 9 orders of magnitude less efficient than the effective work it does.
Look, you can run a full Bitcoin node on a Macbook that uses 20W. It can easily verify 5 transactions per second, put them into a block, and compute the hash of it, and do some network communications.
The actual network uses 20GW, a billion times more energy, because they have thousands of nodes replicate the same work and then add PoW as a cherry on top.
Bitcoin’s transaction throughput is artificially limited (hamstrung) and so not a useful denominator for comparisons.
In theory it’s possible for a Bitcoin-like blockchain to record all of Visa’s transactions in a single giga-block with only a single mining hash attempt.
> Energy consumption is frankly not a phenomenon I give two shits about, as an environmentalist. Fossil fuel consumption is.
Sorry, but this is a ridiculous statement.
Electricity is one of the most fungible things in existence, and renewables don't yet make up 100% of production, therefore any additional consumption _for the most part_ might as well be 100% generated from fossil fuels.
Even if a miner has a contract with a solar farm for all of their power, that's still electricity that someone else could be using instead of electricity from fossil fuels.
I'm not sure this is true, but happy to be proven wrong: if there was a geothermal source, say, hundreds of miles from anywhere, the transmission losses might make it uneconomic to exploit, but it would be usable for proof-of-work or a similar project.
(Not arguing for or against this application, and it may be that this is too rare a phenomenon to matter; just quibbling over the fungibility.)
Most miners are capturing energy through government corruption or through means that are not otherwise usable such as waste gas in oil fields or remote mills.
> Even if a miner has a contract with a solar farm for all of their power, that's still electricity that someone else could be using instead of electricity from fossil fuels.
Not if the infrastructure wouldn't have been built without the miners.
Coinmint operates in an old Alcoa plant in upstate NY near Canada. It runs entirely off a dam that was built to power smelting. Power that would otherwise be going to waste (the location is too remote and too expensive to transmit elsewhere). By using the power, it actually helps keep the dam running.
Update: if you're going to downvote me, see below before you do so. I have been there, I have seen it, I have talked to people who worked at the plant and the dam.
It is rarely if ever too expensive to transmit electricity anywhere . We have offshore wind solar farms in remote places , there is even cross continent lines between Africa and Spain .
I am deeply skeptical it is too expensive for upstate NY to transmit power when there is probably 50 million people living in metro areas within say a 750 mile radius .
Every other dam is remote, every coal plant is remote they are all perfectly able to transmit to urban and industrial centers
Look on a map. There is nothing (in the US) that is close to there that would consume the ~500MW of power the dam produces and sends to the plant.
The plant was shut down and nobody made an effort to direct the power elsewhere.
Transmission is insanely expensive at scale. I've seen their power bills and I talked to their head electrician who worked at the plant when it was operational. That's the best citation I can give you, sorry.
Have you looked on a map? The plant is right next to the largest power line between the USA and Canada, right between Ottawa and Montreal. A (presumably) new-ish wind farm is on the New York state side.
Have you read their website? "With 435MW of transformer capacity at its Massena complex" — that is the amount they can draw from the grid, not the generating capacity of any nearby power plant.
I'm keenly aware of their operations as my last company looked into hosting in their facility and I know people who have hosted there too. I have also physically been there. Too bad HN doesn't allow photos, I've got some good ones.
The map shows what I'm talking about very clearly... all of the power is either used for the local Alcoa plants (there are several) or gets exported elsewhere.
There is little usage for that power locally (it is in the middle of nowhere, frozen in the winters and otherwise wasteland surrounded by superfund sites thanks to the smelting).
It also isn't like you can just plug in 115kv line into a 230kv line and call it a day. It would require new construction to send that power somewhere else, which is expensive and hard to justify over someone just paying for the power to stay right there.
I never said anything about 'generating capacity'. The dam, where I also went for a tour, is ~2k mw total, part goes to Canada and the rest to the US. The Massena facility has an allocation of that power.
There's no evidence at all that the power can't be transmitted elsewhere. There are high-capacity transmission lines in all directions. A ~600MW wind farm was connected to the grid right at the dam relatively recently.
I won't discuss this further.
It is difficult to get a man to understand something, when his salary depends on his not understanding it.
This is the second time, you've misconstrued my statements and inserted your own dialog.
I didn't say it can't be transmitted elsewhere.
I said that it was expensive to do so and I've seen with my own two eyes the proof of that expense. The proof of that expense is that it hasn't been done yet, despite years of opportunities and the fact that it can be done (which I agree with you on).
For the record, my salary does not depend on this at all.
>It is difficult to get a man to understand something, when his salary depends on his not understanding it.
Little sneaky to put that last comment there, useless completely and spiteful? Just because your hypothesis turned out to be wrong doesn't mean you cannot admit it
Why are you touting that as some kind of good? It would have been appropriate to decommission that dam, and there are other energy intensive industries that would have brought some prosperity to the region.
Yeah that's a fair correction. Proof of Work appears to be a much, much better solution from an energy standpoint, although I'm less informed about the nitty-gritty.
Proof of Stake is the widely deployed consensus model which isn't designed to waste energy.
Actually, there are lots of other ones, but Proof of Work is the only one that is designed to add security by requiring a lot of hashrate (which translates to a bunch of energy) to submit blocks ("mining" in proof of work)
Proof of work was a brilliant innovation at the time, but as it turns out, smart people iterate on technology over time to improve it. The fact that bitcoin didn't sink like a stone after being improved upon (just from a resource-usage perspective) by most other blockchains really highlights the greed and single-mindedness of most crypto speculators.
It's entirely possible some of these numbers are wrong or off so please check my math, but it looks like Ethereum is the most energy-efficient of the 3 on a per-transaction basis, maybe an order of magnitude better than Visa.
Bitcoin on the other hand is 3 orders of magnitude worse than visa on a per-transaction basis. I suspect both Bitcoin and Ethereum also transact more value in USD per transaction (if you're willing to consider funny crypto money at spot prices) on average, than Visa, by virtue of them having a much higher transaction fee which is also borne by the address making the transaction.
If you don't consider Ethereum transactions to be "effective work" than this isn't a relevant metric of course, but I'm curious how you're arriving at your figure.
Hi, sure. The nodes in the EVM do not collaborate to split the work, rather, they all perform (basically) the same work. So, you could instead run Ethereum with one node that connects to the net and receives transactions, processes them (around 20 per second - it's not exactly a lot of processing), puts them into blocks, and sends out the complete blocks. It would perform exactly the same as the current network, and would consume, say, 4 W (a Raspberry Pi, say).
The one difference is that it would have to be trusted, which is the big no-no. But that's the effective work being done.
But the validators burn around 1 MW (that lines up with your figure approximately) and are paid $5m a day to do that work. And 1 MW / 4 W is a factor of 250k, which I rounded up to 1m considering all the other activity around Ethereum, though feel free to round it down to 1e5.
I'll be upfront with you: bitcoin is probably the worst "tech" ever mass-adopted. That's my bias.
1. The banking industry is thousands of times more important that crypto for everyday Americans. It's what literally makes our entire economy run. Crypto is used for speculation. What you should be comparing bitcoin against is the energy it takes to list a few ETFs on an exchange, which is essentially the cost of a few hundred servers, aka nothing. Bitcoin is ungodly inefficient and will only become more inefficient.
2. "It could be less, much less, or much less," This is a filler argument. Study says "around" a number, so you're arguing it could be a really broad definition of "around"? Not a serious take.
3. The absolute number matters because it's showing the economic activity is being concentrated in the pockets of just 137 entities. This is NOT a broad-base economic phenomenon that helps employ people in communities around the country, like say running gas stations (another polluting industry). If you're going to use 2% of the nation's electricity, you'd want the benefits spread across at least 2% of the population. Not 0.00002%.
4. Net energy consumption pulls from our current energy grid. Within a grid, if you use more clean electricity in one area, it'll pull more supply from dirtier sources elsewhere. Saying that bitcoin mining helps "green" the grid is a myth because you have to mine it 24/7/365, which means intermittent sources like wind and solar are at a big disadvantage. Battery storage tech is not there yet, thus gas plants and dirtier sources have to kick-in to keep up with 24/7 consumption.
I disagree with your first point mainly because this is more of a symptom of what Americans want, not necessarily some sort of virtuous result of the banking industry. I'd also argue that it doesn't "make our entire economy run." What makes the economy run is people going to work and performing work, producing goods and services. Banking is merely an aspect of that, and it's perhaps propped up into a bigger piece than it may need to be because people prefer being able to (or in some cases need to) access credit to buy stuff.
I also somewhat disagree with (3) because it's ambiguous how many people constitute these mining facilities referenced in the article. You write it as though it means 137 individuals.
But overall I only dislike crypto because it has become a space for charlatans and people who want to get rich quick. Any original principles behind creating a new currency outside of fiat and actually using that for transactions have been forgotten since then and crowded out by people who pretend those principles still mean something but really just want XCOIN to moon.
I'm not sure if I was unclear or if the people debating me are too charged to read my precise meaning, or both.
> "It could be less, much less, or much less," This is a filler argument.
Actually my argument is, "This article claims it could be much less, and that we aren't even sure of the range given, but the title definitively claims the maximum value." I'm saying this article is bad and is FUD, that's why I said the thing about specifically criticizing the article. (Yeah I don't think I was that unclear actually.)
I'm actually ambivalent on the rest of your arguments. They would have made good talking points in TFA, which made none of them.
Regarding 1, I haven't seen comparisons to the overall energy consumption of the banking sector, but a lot of people have talked about the per-transaction energy of bitcoin vs other kinds of transactions, and the ratio is pretty crazy. I don't think banking is "particularly energy-efficient", but there's not a lot of reason for it to be especially energy intensive. The information surrounding accounts/transactions/portfolios etc is all pretty concise.
> 1. There is no comparison made to the energy consumption of the traditional banking industry, which I am sure is not a particularly energy-efficient industry.
I ran the numbers a few days ago (see https://news.ycombinator.com/item?id=39234766). Bitcoin miners plausibly use more energy than the entire traditional banking sector. Not just on a per-transaction basis (which is blindingly obvious if you think about it), but on a gross energy consumption basis.
I’m no expert but I feel compelled to address your points:
1) “No comparison to the banking industry made” - sure, but the banking industry serves the entire world’s financial system, handling billions of transactions a second, while bitcoins transactions take anywhere from 30 minutes to two hours and process, like, 7 transactions a second. There is no reality we live in now where crypto transacts faster, more cheaply, than our current financial infrastructure.
2. Even if the it’s something g much lower, like .5%, point 1 above doesn’t absolve crypto from its share of energy expense for comparatively little work.
3. Again, splitting hairs and taking cover behind technicalities and specific figures doesn’t change the wider picture that crypto is insanely inefficient at what it’s trying to do compared to the financial systems it want to replace. I guess it’s clear I think it IS a waste of energy.
4. Where do you think the lions share of energy generation to feed crypto mining comes from? Even if it was purely renewable energy sources the gross inefficiency of crypto is still notable given its goals. There are better systems to do it.
> Energy consumption is frankly not a phenomenon I give two shits about, as an environmentalist. Fossil fuel consumption is.
If an org has a big polluting coal plant powering a bunch of crypto miners and with a wave of a magic wand I give them an equivalent amount of clean renewable energy, they wouldn't turn off the coal plant, rather they would just double the number of hashes they are pumping out.
Proof of work is designed to be as wasteful as possible, it will never ever be efficient or environmentally friendly.
You're brave to even remotely hint that you're in favor of crypto on HN!
>Energy consumption is frankly not a phenomenon I give two shits about, as an environmentalist.
Despite a few people specifically calling this sentence out as 'ridiculous' or whatever, I think this is a completely valid point. If 100% of the energy powering something comes from renewables, who gives a shit?
Only if 100% of everything is powered by renewables that could be a good argument (but see below), because there's always opportunity costs: The energy production capacity used for crypto cannot be used for anything else, which means something else uses non-renewables now. Maybe an exception could be made if every crypto miner built their own renewable power source which provided all of the energy instead of relying on existing ones, but then the next point still stands:
Renewable energy production has externalities, same as everything else. The power production equipment has to be built, which needs materials. It has to be transported, which needs energy. It needs to be maintained and so on. Just saying "well, we can always add a few more renewable power plants, who cares?" would only be valid if we could produce them out of thin air.
I don't even like it, I kind of wish it hadn't been invented, but rationality is vanishingly rare when it's discussed. And I am certain many will say the same of everything I post.
I've just posted a comment criticising one of your other posts about this, but I feel now I need to clarify I don't think your entire post is irrational, just that it contains a few erroneous assumptions, and in at least one place fails to consider what I would deem a noteworthy concern.
I agree that most arguments in this area resembles tribal war more than rational debate, much like any discussion involving either trump or musk, where rationality is also thrown out the window in favour of signalling tribal affiliation
I dunno. I see your point, but at the same time there's the opportunity cost to consider.
We simply cannot currently generate enough renewable energy to cover all our energy needs, so if you are wasting power that could've been used for something more important, it's a waste regardless of the source of your energy.
The more energy society demands, the more likely it becomes that some of it is generated by coal. And does it really matter which electrons are used for what at the end of the day?
1. Even if the energy consumption of the traditional banking industry is comparable or higher, it supports the daily activities of literally 5 or 6 orders of magnitude more entities and people than the 137 outfits mentioned in TFA.
4. The environmental angle is only one aspect - the other is simply that energy costs have never been higher, and crypto mining adds another energy consumer competing against householders, pushing costs up yet further. (Yes, I know, crypto mining can be set up to happen only when there's spare capacity, and I'm sure the miners can be relied upon to act responsibly in that regard...)
In terms of energy consumption per transaction, it's not even close.
Digieconomist [1] states that a single Bitcoin transaction is "equivalent to the carbon footprint of 1,044,177 VISA transactions or 78,521 hours of watching Youtube."
Statista [2] estimates a similar energy-cost ratio of about 470,000 Visa transactions to 1 Bitcoin transaction.
Energy consumption by banking? We can calculate that.
All commercial buildings in the United States used about 6.8 trillion BTUs, or 2 trillion kWh (2 petawatt-hours), of power in 2018 [1]. That's just over half of the 3.9 petawatt-hours used by the country as a whole [2]. Of that, 16% was consumed by offices [3], so we're down to 8%. That's all office buildings, so what percentage of office building space is devoted to banking? Does banking use more than 1/3 of total office space in the United States? If so, you have a point. That seems highly unlikely.
(Datacenters used less than 0.1 petawatt-hours in 2020 [4], or about 2% of total energy consumption. Again, I doubt banks were using the lion's share of that, so it doesn't move the needle much.)
> Datacenters used less than 0.1 petawatt-hours in 2020 [4], or about 2% of total energy consumption.
FWIW, that's a projection from 2016, but it should still be in the right ballpark.
Comparing Bitcoin power usage to all other data center power usage is also enlightening. Those data centers are hosting the majority of the world's online services as well as providing services used by physical businesses; they're doing a lot more useful work, for more people, than Bitcoin is.
> If Bitcoin mining ends up using a higher proportion of renewable energy than, say, traditional banking, it could be seen as a net good for crypto use to rise
On the other hand if crypto being on renewables is displacing things that otherwise would have been - is that a win?
Thanks for pointing out that the amount of power consumed is speculative and "up to" - it's reported as a fact in the headlines everywhere.
We can get a reasonable upper bound: the block reward is 6.25 BTC + fees (the blocks I saw tended to have around 0.5 BTC in fees), so let's be generous and say 7 BTC per block. 144 blocks per day are 52560 blocks or 368k BTC per year. Currently, they're worth 47k each, so $17.3B/year.
The 91 TWh figure (from https://www.eia.gov/todayinenergy/detail.php?id=61364) seems derived directly from a 240 TWh global power consumption multiplied by the assumed % of mining happening in the US, so since we're using global revenue, it only makes sense to use the global number, 240 TWh = 240e9 kWh.
17.3e9 USD / 240e9 kWh => 7.2 ct/kWh
That's the absolute maximum that electricity could cost in order for mining to be profitable.
That's making some very generous assumptions - I used the current price (annual high!) instead of the much lower average over the past months or year, and it completely ignores the very significant cost of the mining hardware. But given that 7.2 ct/kWh is roughly what industrial electricity costs in the US, and miners might be able to get power cheaper (since they can be more flexible than e.g. an aluminium plant that would suffer expensive damage if power is cut unexpectedly), it's not an entirely unreasonable number for an upper bound.
Getting accurate numbers through mandatory reporting isn't the worst idea, if only to prevent such bullshit headlines.
It's an "estimate" but if the mining operations of these 137 miners have known addresses (which I assume they have to for compliance), it's going to be accurate within 20%. The block reward is irrelevant, we just need to look at the hashrate of the network
Basically, take the overall hashrate of the entire network which is determined from the block difficulty (this fluctuates and was likely higher when bitcoin was more valuable, though not necessarily), and assume all blocks are mined by operators running state of the art mining hardware (realistically 90-98% of blocks will be mined by people running hardware that's 80-100% of the maximum possible efficiency, and any miners running worse hardware will be consuming more energy, but we can pretend they're all on the best hardware)
Using that, you can get the overall hashrate of the network. Once you have that, you can take the percentage of blocks mined by these 137 miners in a year. Again, be generous and assume they're all running state of the art hardware. If 10% of all blocks are mined by these 137 mining ops, guess what, they're using 10% of the total energy being inhaled by the network.
"The results of this survey show that the members of the BMC and participants in the survey are currently utilizing electricity with a 63.1% sustainable power mix."
> Energy consumption is frankly not a phenomenon I give two shits about, as an environmentalist. Fossil fuel consumption is.
Production of any energy causes pollution: those wind turbines and solar panels aren't carbon-free, they took a bunch energy/carbon to produce ("embodied carbon").
Increasing energy use for anything causes the need to produce new plants to be built. If you can use less energy to produce the same results and thus reduce demand it may obviate the need for more more supply in the first place.
Given that renewable energy produced is not infinite, any waste of energy can be assumed to use coal since not wasting that energy would reduce the amount of coal power needed at any given moment.
Now, the above argument is only relevant if we can prove that Blockchain transactions actually are a waste of energy, and you seem to attempt to argue against that as well, by asking for a comparison with the traditional banking system.
I'm not sure that the traditional banking system add a whole uses less energy than Blockchain as a whole, but I AM sure that the traditional banking system handles several orders of magnitude more transactions than all Blockchains does combined, and absent any proof to the contrary, I'm assuming the traditional banking system is not using more than an order of magnitude more energy than Blockchain(since that would mean that traditional banks use around 23% of American energy, which is an absurd amount of energy)
As long as Blockchain uses more energy per transaction than traditional banking, it's a waste of energy, relatively speaking. And while I don't currently have any good sources to prove this point, I see very little reason to believe Blockchain isn't using at least 2 orders of magnitude more energy than traditional banking per transaction.
The difference is that crypto mining is a purely contrived exercise. BTC could just as easily be allocated based on how many trees you plant. It's arbitrary.
You're going to compare the entire banking system, which services essentially every American to this complete waste of time and resources which services a vanishingly small number of people?
>The point is the amount of crypto being mined.
Is it? According to who? You? What's the utility of crypto? I've yet to see any materialization other than casino and funding terrorism.
How would the power usage of bitcoin scale if it did serve every American? Until that question has an answer I don't think this argument can be considered valid. It's an incredible waste as it is, but just dismissing it outright doesn't make sense. If the number of transactions scaled up would the power usage become more reasonable?
Yes, because cryptocurrency is the thing we're measuring. The number of miners is meaningless in this conversation. It would be like talking about how many companies manufacture wind turbine blades.
Former banker here. There's extremely little overlap between traditional banking and what cryptocurrency does. There's more overlap with what a credit card company does.
Most of traditional banking is about financing, not about money transfer. The risk estimation and risk control are the tough parts of financing, and I don't see how on-chain computation is a good fit for that risk modeling.
So, "What's the energy cost of the combined Visa and Mastercard networks" is a much better benchmark than "What's the combined energy cost of the traditional banking system?"
One big energy use I optimized was daily risk calculation for exotic books. Say an Australian insurance company sold a bunch of life insurance in Japan. They want to cap their losses on $5 billion USD notional (maybe 2,500 policies, each for $2 million) over the next 30 years, and they want to cap their losses at $1.5 billion AUD. This extremely bespoke, not something the bank can offload to another entity, so the bank is pretty much stuck with this re-insurance on its books for the next 30 years. How much does the bank need to keep on-hand in case this goes sour? To answer that question, every day the bank needs to run Monte Carlo simulations to cover shifts in the Japanese life expectancy curve and shifts in the JPY/AUD exchange rate over the next 30 years.
It turns out that for some of these exotic options contracts, just compute cost for calculating risk exposure over the lifetime of the trade can end up being a noticeable percentage of the profit from the trade.
Sure, you could pull some of that simulation compute on-chain in smart contracts, but what does a DAO do when it has insufficient reserves to cover its outstanding obligations? I guess you need a diverse enough DAO so its risk exposures are sufficiently uncorrelated, but that means that it needs to do vastly more computation to calculate its current exposure every time someone asks the DAO to enter into an obligation. Either all miners need to redundantly run these calculations, or you push them off-chain.
If you push the risk calculations off-chain, then you're back to the energy consumption being very different than the traditional banking system.
Re 1. The traditional banking industry does a lot (a lot!) more than moving entries in a ledger from A to B. That, in fact, is a minuscule part of what's going on.
Re 3. My rule of thumb is that crypto uses about 1% of world electricity production [1]. I'm surprised that the US has such a disproportionate high proportion of mining, indicative of cheap energy & lax regulation?
[1] Note that electricity is roughly a fifth of energy production (the rest being fuel for transportation/heating).
1. There's no need to compare to traditional banking. 2% of all US power is a lot -- the comparison is to all other uses of electricity. (But per-transaction traditional banking is orders of magnitude more efficient.)
2. "I haven't read the study but maybe it's wrong and maybe the real number is way way less"? C'mon. Give me a break. Trusting that an EIA report is generally accurate is not evidence of being "emotional." Handwaving it away without even reading it is.
3. It's interesting and newsworthy that a small number of players are using a tremendous amount of electricity. The article is about bitcoin mining. "Video games" probably use a lot of electricity too, but dispersed across hundreds of millions of users.
4. You're entitled to that opinion, but I assure you that caring about massive energy consumption is not evidence of an anti-bitcoin conspiracy.
> "I haven't read the study but maybe it's wrong and maybe the real number is way way less"? C'mon. Give me a break. Trusting that an EIA report is generally accurate is not evidence of being "emotional." Handwaving it away without even reading it is.
That's not what I said. I said the author of the article did read the study and describes it as possibly wrong. In fact the article does actually mention a range given, "0.6% to 2.3%", which isn't orders-of-magnitude huge but nearly a 1:4 ratio. Usually if someone says, "I have this big scary number," and you find out the actual number is 25% of what they told you, you're allowed to be skeptical of the conclusions they draw from their math.
> 1. There is no comparison made to the energy consumption of the traditional banking industry, which I am sure is not a particularly energy-efficient industry.
That’s irrelevant. Banks aren’t going anywhere, end of story. Maybe not in a current form, but they’ll stay, just because of sheer amount of infrastructure built on them.
> 1. There is no comparison made to the energy consumption of the traditional banking industry, which I am sure is not a particularly energy-efficient industry.
Despite declaring yourself not one, this (and every other one of your points) comes up _every single time_ crypto proponents are trying to seed FUD in any reporting about the energy usage of crypto. This is especially laughable when you then say
> ~2% of US power is generating over 1/3 of the world's Bitcoin.
It's good to know that it takes 2% of the US power grid to power 2.3 transactions per second.
By your own argument - unless the traditional banking industry tops out at 100% of US power usage for 115 transactions per second - it is definitely not worse than bitcoin.
> this comes up _every single time_ crypto proponents are trying to seed FUD
And it's worth pointing out that it comes up every single time without a shred evidence, just a hunch that the crypto enthusiast ensures us is correct. I'd love to see some actual numbers on the energy consumption of the banking industry vs. crypto.
Or lets be real, let's compare the amount of energy used by the banking sector to provide the same store of value and 3 transactions per second or whatever minor utility BTC provides.
> And it's worth pointing out that it comes up every single time without a shred evidence
What evidence could I possibly provide for the claim "This article doesn't give any evidence of impact."
It is very clear that crypto transactions, for example, are much less energy-efficient than USD transactions. The article could have easily mentioned that, but it didn't.
> Visa used 189GWh in 2017, worldwide, of which around half was data centres [1]. That handled 111.2 billion transactions, so about 1.7Wh per transaction (half for datacentres).
Bitcoin used 844670Wh per transaction.
That's about 500 000x more energy consumed per transaction by BTC than Visa. I guess it goes without saying that it's much less efficient.
For years now I encounter crypto enthusiasts have been suggesting that BTC is an improvement on the energy efficiency of traditional banking, without anything to back up this claim, and ignoring stats like the above over and over again.
> Despite declaring yourself not one, this (and every other one of your points) comes up _every single time_ crypto proponents are trying to seed FUD in any reporting about the energy usage of crypto
You have it backward, it comes up when reporting tries to seed FUD about crypto energy usage. Every point I made is that this article isn't actually saying anything obviously scary, it's just saying some facts in a scary voice.
> By your own argument - unless the traditional banking industry tops out at 100% of US power usage for 115 transactions per second - it is definitely not worse than bitcoin.
That's not my argument. They do different things. Despite its name, most cryptocurrency isn't really used as currency. As you say, it's slow and not very useful for that. I'm just making a comparison because most of the thoughtless FUD discussion assumes that USD is free (in energy terms).
Sure, you must be an anti-crypto obsessed person if you are against something essentially useless like bitcoin having a trillionaire market cap and using 2% of the energy of a whole country.
> 1. There is no comparison made to the energy consumption of the traditional banking industry
Sure, but 2.7% of USA's electricity is almost certainly more than all of traditional banking. Now, I've just tried googling that, but the results are clearly being distorted by the exact things you're complaining about here, with estimates varying from 15.8 GW to 558 GW worldwide and that higher value being about 20% of global electrical demand which is obviously wrong as it's a bit more than the entire commercial/public sector of the global economy combined.
> which I am sure is not a particularly energy-efficient industry.
Compared to what it could be, perhaps. But it would be surprising if it was as bad as a system which specifically regards using as much computational power as possible to be a security measure.
> The point is the amount of crypto being mined.
But that's designed to be independent of the energy use?
Also, mining isn't the value proposition of a currency, transactions are. One of the arguments that I often hear that's supposed[0] to be in support of bitcoin, is that it prevents inflation. But mining is inflation. Unfortunately, Bitcoin specifically has a transaction limit too small for just interbank balancing, let alone for direct personal use — for that, the system-wide limit would only barely cover Berliners taking cash out of ATMs once per week.
> If Bitcoin mining ends up using a higher proportion of renewable energy than, say, traditional banking, it could be seen as a net good for crypto use to rise.
No. To find out why, let's take it to absurd levels: build a Dyson swarm, cover the sun, use all that to mine crypto. What changes, economically or environmentally?
Nothing. Literally nothing.
The rest of the economy doesn't get greener, there isn't any more cryptocurrency than there would have been, the transaction rate hasn't changed.
[0] it doesn't actually support Bitcoin, but why is out of scope for this comment
Most gold is used in a similar way like Bitcoin (hoarded as a store of value because people believe that other people will continue to consider it valuable).
With Bitcoin mining, I believe the only relevant environmental issue is the power consumption (there's also some e-waste but I assume that's negligible compared to the power). With gold, the power consumption is a complete afterthought, the massive amounts of toxic waste and the abuse of workers are much bigger issues.
I'm shocked that both industries seem to be consuming a similar order of magnitude to be honest (I expected Bitcoin mining to be more energy intensive compared to gold).
In terms of value stored, gold stores low double-digit trillions, Bitcoin about one trillion.
The whole idea that you can sort energy usage into useful for society or not buckets is pretty ridiculous.
Ok, Bitcoin bad. What about video games? Netflix? Porn?
The very idea of sorting energy use like that is a very slippery slope. We have markets for a reason. They help us determine how the aggregated society values one or another thing without relying on value judgment.
> The whole idea that you can sort energy usage into useful for society or not buckets is pretty ridiculous.
>
> Ok, Bitcoin bad. What about video games? Netflix? Porn?
As other have pointed out, Bitcoin relies on a larger and larger usage of energy by design. You could to a more energy-efficient Netflix, but you cannot do a more energy-efficient Bitcoin.
It's actually the opposite: its energy usage shrinks and shrinks, by design. Every 210,000 blocks (~4 years), the block reward (mining subsidy) drops in half. At the limit, it approaches zero, and the network can only afford to spend as much on energy as users pay in transaction fees.
Admittedly, "the limit" is quite a few years off, and there's a big subsidy still. I'm surprised we haven't seen taxing authorities go after block rewards specifically - they're why miners are currently willing to spend 10~20x on energy vs what users pay them for transactions.
Sure you can, what is called "Proof of work" in the context of Bitcoin is actually "Proof of money lost" in the form of paid electricity. If you taxed mining at 90%, you would also reduce mining and thus electricity consumption by 90%.
(Ideally, this would be a global tax and not too high, since reducing mining too much would compromise security)
Relying on taxes instead of Proof of Work kind of goes against core premise of Bitcoin: not relying on centralized authority. To make sure that all miners pay taxes you need tax office to collect them. And of course some criminal miners would find a way to avoid those taxes, making it 90% cheaper for them to mount 51% attack.
Bitcoin is designed to be inefficient: the network adjusts to use more power as it becomes available. None of the other things you mentioned have that mechanism where greater usage makes them need more power for everyone who was already there.
The closest you might come is something like road traffic where the situation gets asymptomatically worse as more people start driving, but even that is much better than Bitcoin because people aren’t just driving because they can and will reduce their driving when traffic is unpleasant. Bitcoin is somewhat uniquely poorly-architected in a way which deters adoption but has also become a quasi-religious point preventing the design from being fixed.
It takes both intellectual and emotional maturity to understand and accept the wisdom and power of free markets. Bitcoin is delivering what the market wants an uncensored currency outside the control of governments.
This is only the beginning of the outrage over Bitcoin, wait until it does another 10x gain in value and fiat currency failures grow worldwide. The next few decades will require a lot of popcorn to watch the show when calls to ban it only result in more rapid spikes in it’s value appreciating.
replace "Bitcoin" with "God" in this comment and it sounds like a cult leader. Since the beginning of time there have always been a group of humans who would like the ability to not follow the rules set by whatever accounts for leadership in their group. Bitcoin isn't feeding some novel desire.
And Bitcoin/crypto evangelists still havent grappled with the fact that if they ever actually succeed in becoming a real rival of fiat currencies then they are going to find out what state violence looks like when they continue not complying with regulations.
Like do you really believe if Iran/North Korea/Russia converted over their entire economy to using bitcoin to escape US regulations, that you are going to be able to continue using it without any sort of reaction from the US? Or if Chinese citizens use it en masse to completely avoid government controls, that the Chinese government will just throw up their hands and say "shucks"? You can fill in that statement with any government and a group they intend to control and have the ability to exert violence on
> It takes both intellectual and emotional maturity to understand and accept the wisdom and power of free markets. God is delivering what the market wants an uncensored currency outside the control of governments.
This is only the beginning of the outrage over God, wait until he does another 10x gain in value and fiat currency failures grow worldwide. The next few decades will require a lot of popcorn to watch the show when calls to ban God only result in more rapid spikes in his value appreciating.
Not really getting the cult leader vibes, sorry.
but I sure am getting some creepy authoritarian vibes from your comment. Feels like you’re itching to help hand out this violence …
I know you will smash down the doors of these disobedient Bitcoiners and seize their coins from under their pillows! or maybe bomb some mining facilities.
Good luck with that state violence. It’s obsolete.
It’s fascinating how history informs us about the evolution of state power and its reliance on violence to enforce compliance. Reflecting on the industrial age, we see how the permanence of factories and infrastructure bolstered the state’s capacity for coercion—a tool leveraged to an extreme in fostering ideologies like communism. The physical nature of wealth, exemplified by gold bars, presented an opportunity for straightforward confiscation.
Contrast this with the digital age, where Bitcoin introduces a paradigm shift. The inefficacy of traditional state violence against digital assets is stark. The very concept of borders becomes almost anachronistic when considering the ease with which a Bitcoin wallet can be concealed and transported, unlike the gold coins of yore that families might have smuggled in loaves of bread.
The suggestion that authoritarian regimes would willingly adopt Bitcoin is where the real absurdity lies. Such governments thrive on control and suppression, the antithesis of the free-market principles Bitcoin embodies. To imagine they would facilitate their own obsolescence by embracing a decentralized currency is to fundamentally misunderstand their nature.
Your apprehension that state violence will quash Bitcoin’s rise underestimates the resilience and decentralization of digital currencies. As Bitcoin continues its trajectory, reshaping the financial landscape, it will not be the threat of violence that determines its fate but its inherent ability to provide an alternative to those governed by fiat’s limitations. Your perspective, while rooted in historical precedents of state power, may indeed lead to confusion as you witness the unfolding impact of Bitcoin and its challenge to conventional monetary systems.
Crypto enthusiasts have barely dealt with state violence. You are such a fraction of economic activity that you barely register on the radar of actual powers. Fuck with the money that states control in a manner where one with a military feels threatened by it, survive their reaction, and then ill believe you that crypto has managed to make violence obsolete.
I am going to use a meme to make a flippant point here, but this is what crypto enthusiasts sound like when they say theyre overcoming fiat currencies and there is nothing countries can do to stop them
> Ok, Bitcoin bad. What about video games? Netflix? Porn?
Yes, they're all bad. Markets are no substitute for morality. And if the market properly accounted for environmental damage, all of those uses of energy would be priced out of existence.
There's some irony to posting this on a website, run on a server powered by significant amounts of electricity, by a device operating on electricity, communicating with other electric devices via electricity to reach the destination.
This article completely glosses over the hardest problem in the power industry - grid transmission constraints. What's a transmission constraint? Well, eventually the electrical resistance on high voltage power lines reaches a maximum threshold at which no more power can flow through the line, shoutout Ohm's Law :)
I work in financial power derivatives, and there are entire trading desks devoted to "congestion trading" - ie the financial right to transmit power between grid locations with inherent transmission congestion. From the EIA map of mining operations, crypto mining tends to take place in remote areas where electricity is plentiful but hard to deliver to major load zones (cities) due to grid transmission constraints. On the whole, most crypto mining operations choose to operate in regions where the price of electricity is cheap (remote locations). Paradoxically, these operations running during off-peak times contributes to grid stability by smoothing the load curve and preventing expensive curtailment of alternative generation resources (think along the lines of a wind turbine needing to shut down on a windy day bc it's generating more power than the grid can consume)
I'm very familiar with congestion trading and was in that industry at one point, but cmon, this is a bad crypto talking point. It's already quite apparent that bitcoin mines actually destabilize grids just as much while driving up electricity prices for local consumers far more than any positive net effect from an energy perspective.
Power usage by itself is meaningless. The real question is the power providing utility or not. Like, no one thinks data centers for AWS are bad. They provide real benefit and utility. But, perhaps power wasted on cloth dryers and Christmas lights are a western frivolity.
So, the real argument is Bitcoin useful or not. Which, like most things, is something that probably be left to the free market.
I was just trying to think of how to put this succinctly. Well said!
In addition, it tends to become more at odds with society as wealth inequality grows and that is at an all-time high and growing. Perhaps a signal that more people need to point out, as you did, every time the free market is tossed out as a universal solve-all.
Those same regulators also give tax breaks to large inefficient corporations and tell small businesses they must close down for arbitrary intangible public health reasons, while the large corporations can remain open.
In both examples, it's the regulators whom are detrimental to society, not the free market.
Virtually everyone that champions regulations are not for regulation, but for imposing political will in a way favorable to them. I know this because these people freak out and think it's the end of the world when there's a seat change in politics and the very same regulators they loved are now imposing political will in a way that's unfavorable to them. They also seem to believe in democracy, but only if when they win.
The free market cant solve big societal issues we are staring down the barrel of. We need coordination at the highest levels of human civilization and not some handy wavey hope a million monkeys will reach the answer.
That's probably not what you were expecting, but if that's really the case, it probably doesn't help that society is hyper-polarized. It also doesn't help that the main political opponent in the next election is being railroaded by the court system.
If the idea is to unify and coordinate to solve problems, alienating and demonizing 70M voters and half of the country is not the way to do so. The message half the country hears and thinks is: when push comes to shove, the other half prefer crushing political competition by any means necessary rather than find common ground and work together. Those are the rules one side is playing by, and it shouldn't be a surprise when the other side does the same, or takes their ball and goes home.
It's only through the indoctrination of young impressionable minds by the state that people become persuaded by arguments the state should intrude into things.
I would think it's injuries and deaths from the lack of safety and standards that would be far more persuasive. It's never about trusting the state; it's understanding that unchecked capitalism is less trustworthy. That's not to say it's inherently evil, but quite to the contrary: profit is inevitably self-serving, and only outside forces can ensure that the needs of others are considered.
The only reason every criminal stepping foot on my property doesn't have their head on a pike is because the state will involve itself in their failure to prevent criminals from committing crimes on my property.
My property would be drastically safer if the state was not involved. You might disagree with my methods of deterring crime, but
1. I don't believe in democracy. My rights are not subject to vote.
2. There is literally no rational explanation why anyone should relinquish their natural rights and delegate them to a state. This is what The Concept of the Political by Carl Schmitt discusses at length. Schmitt is often dismissed by Western academics because of his later association with the Nazi Party, but it's a cop-out for a serious introspection of what his works said about the underlying nature of society and human nature. It frightens them, to put it mildly. Hitler was only able to take power after grasping the implications of his work.
3. I would bet my life savings that if I could get away with leaving the heads of criminals on pikes, along with other unspeakably heinous things, there would be a large drop in crime. Most won't dispute this, which begs the question why does the state allow criminal behavior to prosper when it costs far less to not get involved.
Clothes dryers save time, allow people to dry their clothes in their cramped apartments without the humidity going through the roof, calling that a western frivolity is a bit over the top.
Bitcoin however provides what? A tiny fraction of the transactions per second that visa does, without all the consumer protection that credit cards encompass, with orders of magnitude more power consumed. All the while providing 'freedom' to a handful of activists, but most of all money launderers, drug sellers and all sorts of shady businesses.
The entire history of fiat currency is a combination of warfare and currency collapse.
Why was the Bank of England created? To wage war.
Perhaps “wasting” 2% of the world’s electricity supply will look a lot better when civilization scale money laundering and currency collapse is a thing of history, not to mention the curb on national budgets being allocated to war machines!
Are you seriously arguing that money laundering or military spending will go away if Bitcoin is more widely used?
Continuing this, “fiat currency” has a specific meaning in economics: it’s a currency not backed by a commodity. Bitcoin is a fiat currency because the only value it has is based on social consensus, making it exceptionally volatile, but at the time the Bank of England was founded the pound sterling was based on silver (hence the name) as it had been for a millennium and it transitioned to gold for a couple centuries. The reason the Bank of England was founded wasn’t due to the choice of currency but rather credit, and as with war I find it unpersuasive that humanity will discontinue either.
What we’re talking about here isn’t your everyday money laundering; it’s civilization-scale laundering facilitated by central banks. This isn’t some small-time operation; it’s legalized crime on a global scale. Banks pack their balance sheets with worthless securities, then cry for bailouts when the jig is up. It’s a classic con, and it’s happened worldwide numerous time, from small to large countries, and always propped up by the fiat system. Without fiat’s flexibility to, let’s say, ‘creatively manage’ economics, this kind of scheme becomes a whole lot harder, if not impossible.
Bitcoin fiat? That’s way off base. No serious analyst would lump Bitcoin in with fiat currencies. Why? Because fiat currencies are backed by government decree, used for tax payments, and can be issued ad infinitum by central authorities. Bitcoin ticks none of those boxes. It’s decentralized, with no central authority to pump out new units or demand its use for official transactions. Bitcoin is as far from fiat as you can get.
Regarding the Bank of England’s founding in 1694—let’s get our facts straight. It wasn’t about credit; it was about waging a war without the cash to back it up. This move marked a turning point, expanding the empire and cementing the British Pound as a reserve currency. This kind of dynamic isn’t ancient history; it’s alive and well, fueling today’s massive military expenditures. These are bankrolled by the fiat system’s ability to inflate currency and issue debt. And when fiat currencies collapse? It’s usually the losers of these conflicts who feel the burn. So, yeah, Bitcoin offers a real alternative to this endless cycle of warfare and financial manipulation.
Fiat currency is an excellent mechanism for stealing wealth from a population without them realising (well without them realising who took it at least). Each time they create credit by increasing the money supply with new money, they don't create value, they simply dilute the value of the money supply across more monetary units. The value in the newly printed "credit" comes from the existing money. That's why prices go up endlessly. It's not the value of things we buy increasing, but the value in our money leaking away into the money they are creating. The reality is that value of most consumables (food, electronics, cars, toothbrushes etc) is going down in value year on year by ~5% (due to efficiencies in production, automation etc) but by increasing the money supply by ~7% each year (doubling it per decade!), we actually see prices increase by ~2% average (CPI). They are essentially creaming off all the efficiency gains made by the people over the decades and then taking some more just because...they can.
Meanwhile people are accusing the shops of being greedy, and employers accuse employees of being greedy for wanting a pay rise that doesn't even cover half of the pay cut they are effectively getting each year.
It also distorts other fundamental signals like GDP. Devaluing the unit of account by printing money makes the GDP figures go up because you're measuring it with something that's going down in value. Looking at the USA and accounting for money supply increase, it has had falling GDP for decades. You think your savings are going up, but they are going down etc. etc.
Money is proof of work, or it should be. To create it should take as much work as it's worth (this is true for both gold and bitcoin). In reality, the fiat we currently use is proof of work for the population, while the bankers have a free money spigot. They can pour trillions of money out of nowhere with a few keystrokes and then charge interest on it for decades to come, as if it was their own money.. It gives them undeserved, unlimited power. And what's the best way for them to get more free money? Generate more loans/credit. And what's the most effective way to do that? Trigger wars and, if possible, fund both sides.
If all of them were competing then Argentina would be using the Indian Rupee or any of the many other options for their failing currency. But they don't. Fiats are tied to a specific geographic location.
If there isn't an impact on the real economy then the discussions here on how much energy is burned aren't meaningful.
Bitcoin is hardly used in day to day life. It is designed so that energy use increases with coin price. If Bitcoin became a mainstream currency used even by one country for a lot of things energy usage goes up even more.
I am ignoring a lot of things here: transactions per second can’t support it but let’s assume LN works well and also energy required to keep expanding may not be available (only one nearby star) which makes POW more Proof of Asic but potentially makes the network vulnerable.
It's really hard to gauge how much utility cryptos are providing. After all, people who need cryptos the most are those who can't use "proper" channels to transfer money.
Also, some portion of those likely shouldn't be allowed to use any channels of money transfer (criminal organizations and their ilk), as they ultimately provide negative utility to the rest of society.
Implicit in this kind of headline is the presumption that bitcoin is not useful. After more than a decade of scams, I think the burden of proof is on bitcoin to demonstrate utility.
Just in case you don't get it: have you ever seen a company making a high quality, sustainable and save product because of free market? Nope they do it because of laws we as a society make.
And in this particular case, i'm absolutly for banning it globally.
Ah yes, the mythical free market that no one ever questions, the unassailable arbiter of value in this world. This underpinning assumption needs to be pointed out. Clearly, the free market is not infallible. The question is how do mixed economies make best use of markets, regulation, taxation, and have a functioning justice system so that we don't shovel raw human souls into the profit machine.
Most people recognize a role for regulation in matters that concern everyone, particularly when there are large negative externalities that markets can't price in appropriately. I know HN conversations are necessarily curtailed for brevity, but generally, no, wasting vast amounts of energy for temporary profit doesn't seem like the kind of thing that should go unregulated when such waste produces large-scale environmental consequences for us all.
Indeed, many people seem to think the market solves all problems. In a sense it does, but only in a very specific sense. Like, if we there was some loophole in the law that allowed killing people with a pistol, the market would respond by making bullet-proof vests expensive, and by producing cheap, but bad protection vests. And guns, of course. It wouldn't solve the killing, but it would solve the question "how much can you spend to protect your life"? Perhaps it would make food cheaper. The market is a sick joke.
In this case, the free market can solve the problem: how high can the electricity price go, or how many power outages can there be, until people are sick and tired of this Bitcoin bullshit?
I live in a house house exclusively warmed by electric heating (underfloor downstairs, wall-mounted upstairs). The heating system takes electricity as an input and provides heat as an output with no other direct benefits. As a whole the heating system can be quite power-hungry during cold periods.
A crypto mining rig takes electricity as an input and provides heat as an output with the possible benefit of creating some valuable digital assets. Serious crypto mining setups can be quite power-hungry.
Crypto mining for the sole purpose of making money is often considered an egregious and possibly wasteful use of power resources.
Is crypto mining for the purpose of using the heat to warm my house, with the possible benefit of generating valuable digital assets, similarly egregious, wasteful or inconsiderate in some way?
Seriously, I want to know where OP lives, having an all electric heating setup anywhere in the world where it gets cold enough is incredibly inefficient
The town I live in is bisected by a MOD railway and, from what I understand, permission was never granted for whatever was needed to supply natural gas on my side of the tracks. This rules out some of the more common traditional heating systems found in these parts.
We bought the house ~two years ago. The building itself was (and still is) quite sound but was a wreck in terms of features (no heating system at all, no flooring at all, and in terms of a kitchen and bathroom facilities it was quite ... minimal).
My partner had long hoped for underfloor heating downstairs as she loves the feel of walking on warm flooring. I have to agree that it is a delightful luxury and we don't otherwise have too many vices.
Direct electric underfloor heating felt like the least hassle in the long term and the easiest for self-installation. The alternative was a wet underfloor heating system (water filled pipework set in screed). The wet system is capable of leaking and eventually failing with expensive repairs, the electric system less so.
We use infrared wall-mounted heaters upstairs. As far as direct electric heaters go they're quite efficient. They heat the objects in the room rather than the air and it feels like the warmth of the sun on your skin.
I agree wholeheartedly that heat pumps are a more efficient option and could indeed be used as a direct replacement for our upstairs wall-mounted heaters. This is something we hope to put in but was not previously affordable when we were re-working the entire of the inside of the house from nothing.
As far as I understand, we would need a wet system for underfloor heating if we were to utilise heat pumps and at this stage that would be a prohibitively expensive re-work of what we already have.
Hopefully roof-mounted solar and a battery of some sort should even out the costs a bit.
It's pretty common in the Pacific Northwest. Heat pumps are unreasonably expensive here in the US so they're still fairly uncommon and the PNW has abundant, relatively cheap hydro power.
It's been tried and it doesn't work because hardware designed for crypto mining needs to be utilized 100% 24/7 or it won't ever pay back or be meaningful, and it that case you either size it to be such a small heat contribution that you don't mind a small heater on during the hot months, or so big that it is impossible to offset in the summer.
Nevermind the fact that resistive electric heat in this day and age is wildly stupid except for maybe the northernmost parts of Siberia. Why pay X to get A heat plus almost no bitcoin, when you could pay X to get 3A heat using a heat pump?
I've always wondered about this. I think, if the cost is no issue, replacing electric heaters with powerful computers (or crypto miners) is justified and actually beneficial. If you don't like supporting the crypto world you can always run Folding@home or your favourite distributed computing project to contribute to research and heat your home, all with the same amount of electricity.
Of course, buying heat pumps probably has higher ROI than buying crypto miners for heating...
I will admit that is an interesting argument, but it doesn't hold up when applied in the real world.
First off, heating your house directly with electricity is a bad idea. A heat pump could be as much as 4x as efficient as direct heating. Improving the insulation in your house so you don't need as much heating is even better.
After those problems are solved I started to say "If you want to then do the remaining 1/10-as-much-as-before heating by mining bitcoin, then go ahead", but honestly that's still a bad idea because it supports and grows this insanely wasteful industry and that will incentivize other people to build more of these ridiculously wasteful and destructive mining operations.
The nerd part of me thinks bitcoin is super cool. The responsible adult who cares about people other than myself part of me hates it.
The crypto industry financed a 2.3% expansion of the US's power generating capacity.
I don't care what we're spending energy on. Being stingy about it just makes all of us poorer. There's a quadrillion-cubic-kilometer flaming ball of plasma in the sky. We have the ability to generate literally infinite electricity; and quite literally the only way we get to that is by increasing the amount of electricity we're using, and thus need to generate.
Everything gets cheaper when electricity gets cheaper.
Does it work like that? Why do utilities encourage customers to become more efficient when they could sell more power and make more money instead?
And even if it's true, an expansion of generation capacity is only useful if it's eventually freed up for non-crypto uses, right? Otherwise it's just a wash.
> Why do utilities encourage customers to become more efficient when they could sell more power and make more money instead?
Depending on where you live, the State likely requires the utility to spend some portion of its revenue on efficiency. Valois a prime example, overall the state uses far less electricity per person, which is at least partially because of decades of efficiency initiatives.
And secondly, if utilities can get their customers to be efficient at the right time of day, the utility will make more money overall even if the total demand decreases.
Lastly, most publicly regulated utilities make very little on selling electricity, they instead make a guaranteed profit on capital investment. So total kWh sold is less important overall.
> most publicly regulated utilities make very little on selling electricity, they instead make a guaranteed profit on capital investment. So total kWh sold is less important overall
That's what I thought too. Building new capacity is expensive and time-consuming; utilities would rather run their existing capacity at full blast and reduce demand.
Which means these cryto miners haven't financed 2.3% additional generation capacity in any meaningful sense. Unless they have special contracts with utilities to specifically fund new power plants and transmission.
Utility companies absolutely do both. Its not an either-or. Capacity only grows when usage grows. But, reducing usage is important, because if usage grows too fast capacity can't keep up, or it might burst too far above the load they've planned capacity for on the short-term.
Is it common to have more than 2 options for a power company?
I personally pick my power company, if I have a choice at all, based on their rates and proportion of renewable energy generated. Most people probably only care about the rate.
Power companies aren't brands. People don't make choices based on which one is more "woke" or whatever.
This 2.3% mostly came from fossil fuels not new green generation capacity. You need to consider where these miners are located based on electricity costs and what infrastructure is built there not simply a hypothetical grid where arbitrary power can be moved anywhere at zero losses.
> 86% of new energy capacity added in the United States in 2023 was from non-fossil fuel sources
They're using 2.3% of power, not 2.3% of green power. Also, every watt of green power crypto takes is another displaced to fossil. I am sympathetic to the argument that what one does with market-rate power is one's own business. But the environmental argument for crypto is bunk.
Capacity isn’t the same as utilization. Crypto is on 24/7 but the rest of the demand curve isn’t flat, so most of the day there’s excess capacity. During peak demand batteries charged by solar where used to meet demand, but nobody is building battery banks to store solar energy for 2AM.
Non battery backed Solar instead offsets power used in the day but that’s simply a cost saving measure making it independent of increases in demand. This is why China added 210 GW of solar in 2023 year even though demand didn’t rise by nearly that much. Wind faces the same issue due to dependability.
As such the added demand from crypto has ~zero impact on how much non battery backed solar or wind gets added. Instead it simply increased how often fossil fuel power plants get turned off.
Yes, it's hard to get much distance out of that logic. If that was the case there'd be little reasoning for efficiency as incandescent lightbulbs would also be incentive to expand power generation. It delays turning off dirtier generation even if more modern and efficient plants get built.
Can you substantiate the claim that crypto financed a 2.3% expansion of the US power generating capacity? Most power companies are encouraging people to use less electricity, especially during peak periods, instead of encouraging more use to be able to sell more electricity because of grid limitations etc..
Utility companies very reasonably and correctly do both. People, and organizations, can do two things. Maybe even more than two.
On the short term, using less energy is important because it helps smooth over demand curves. If everyone suddenly plugged in an EV tonight, the grid would crash, because demand grew too fast for the utility providers to keep up. That is bad.
On the long term: every metric that measures quality of life correlates with energy usage. On the long term: this is the path of kardashev type 1 for our great-great grand children. Blanket the earth in solar panels, turbines, and nuclear (and sure, some fossil fuels are good to). Solar panels aren't free to build. The market needs a reason to build them. I don't really care what the reason is. "Crypto" feels better to me than "turning on your heater and opening the window during the winter" as someone else in this thread suggested. Trying to quantify "how much better" feels like a waste of time that could be spent building more power plants.
My statement "crypto financed a 2.3% expansion of US power generating capacity" is obviously dramatic; the mechanism isn't precisely A causes B. Its dramatic toward the aim of communicating the message that Demand creates Capacity, and if you believe Capacity is Good (which is not something up for belief or debate, unless you're Ted Kaczynski) then it logically follows that Demand is Generally Good.
That does not mean nor force the conclusion that All Demand Is Equally Good. I never said that. But, generally, it is good.
Increasing usage does not magically increase capacity by the same amount. Even if it did, the increased capacity resulting from the increased demand would not make electricity cheaper, since the corresponding demand would already exist.
In general, increasing demand for a resource increases the price for that resource.
Increasing usage trivially and obviously increases capacity by ~the same amount. A toddler could understand this, because obviously the lights are still on. We use more and more energy every year (except 2020, for obvious reasons). There aren't rolling blackouts. Thus, capacity responds to usage.
I don't know why you're reaching for the word "magically". There's nothing magical about the mechanism of how this happens. Its just market dynamics. If explaining it by calling it "magic" helps you understand it better, though, then that's fine.
> Increasing usage trivially and obviously increases capacity by ~the same amount. A toddler could understand this, because obviously the lights are still on.
It may increase capacity over time, if someone thinks they can profit from bringing new supply online. This is known as supply elasticity, and it’s pretty well-studied. It’s not trivial, and it’s not instant. In the meantime, demand from crypto may also reduce demand from other consumers, who now have to pay more for electricity. Electric usage is more nuanced than “are the lights on or off”—families can and do decide to keep the house colder in the winter if prices are up because some people decided to waste a bunch of electricity on crypto in a data center somewhere.
You’re missing the point, though: the thing that absolutely does not happen when you increase demand for a resource is that resource becoming cheaper, unless that demand goes away later, after the supply has increased. This is a called supply glut—also pretty well-studied.
Now, given that the entire cryptocurrency sector is a con and will eventually vanish like a turd down a toilet, there may very well be a period later on where the result of all this nonsense is that we have lower electricity prices for a while. Until that happens, though, you aren’t making electricity cheaper by using more of it.
Great, that means that when we expropriate the money launderers we get 2.3% more free power.
If a single one of these guys has processed a block with a single transaction for Hamas, they should go to jail for violating the sanctions. Bitcoin nodes should be required to do full KYC on everyone for whom they are processing transactions.
Build more nuclear, build more natural gas (cleanest 'fossil fuel') to replace coal and pipelines to pipe it. Doing anything other than vastly expanding energy production will result in the US economy being left behind as automation rises and demands more and more energy.
Humans have an impact on the environment. That's just what humans do. You typing this comment had an impact on our natural resources and the environment. Me typing this response also did. You can play in the mud of trying to deign whether your comment is more valuable or meaningful to the world than Bitcoin, but you'll just end up muddy and you won't have found a path toward a better and more prosperous world.
The original estimate is "0.6% to 2.3%" -- only reporting the high end of this figure is misleading, even if we accept the premise that the underlying report [1] is correct.
It's a "stop shooting yourself in the foot" win-win.
Like, the last time I did a back-of-the-envelope, physical spam mail was also a surprisingly large (but still tiny) fraction of US CO2 emissions. We could just stop sending spam mail, and save like a quarter percent of the US CO2. Not big, but you're also not losing anything of value.
> Ending crypto mining is the easiest no-brainer in the history of energy systems.
Ending any profit-generating activity is incredibly difficult. I suspect you're not referring to ending it, but allowing it to be transferred offshore and losing the ability to regulate it. But if it's banned in the US, good luck getting every other country on earth to ban it in solidarity.
Considering how broadly unpopular the idea is to average people who don't aspire to own cryptocurrency (especially after FTX publicly ate its own organs) I don't see it being particularly difficult to find support for such laws in more liberal places such as the EU.
If you reduce it by 50% you save 50% waste. If you reduce it by 75% you save 75% waste. You dont' have to entirely wipe it out to save a lot of waste, just make it harder and/or more costly.
Attack the supply side, attack the demand side: tax it, regulate it, cap it, replace it. All of these can reduce the mining so they are all useful.
edit: to answer your idea that they will just move...
If these other places were as good or better for mining than where they are now, they'd already have moved. If you make them move to a worse mining situation, that's just proof that what you're doing is working.
There's an argument to be made for crypto to be used to turn power that wouldn't otherwise be economical / linked to the grid / used into money, which can then be turned back into power (in a purely economic sense) later. For example wave energy could power GPUs in the middle of the ocean, with no need to then transmit electricity to shore. Solar could be captured in the middle of the desert. Some oil rigs are mining crypto with the natural gas that leaks from their wells. So long as there's a starlink satellite above, energy can be turned into money on the spot, and then that money can buy energy in another place and time. (Ofcourse, this doesn't actually create new energy.) Something to think about.
The energy market already works like this today (sans blockchain), any multinational provider is doing energy arbitrage across different markets and energy sources (electrical production, natural gas, etc)
Actually, the idea of a bitcoin operation in the middle of a desert is maybe the only decent defense of its waste of energy I've heard.
Someone harvesting solar power in the middle of the desert doesn't have to connect to any other energy grids to conduct mining, so in theory it's not driving up costs for other consumers or wasting energy that could be used for literally anything else.
It'd still be a waste of the solar panels and resources though, and the setup would certainly involve some externalities with other impact. And realistically the overwhelming majority of mining operations are not doing this, so it's just smoke and mirrors by people arguing in bad faith.
But I'd have much less of a problem with bitcoin if all its mining came from remote locations that would see no development otherwise, using energy harvested from the environment.
It can certainly be banned, prohibited, and censored to an extent (current BTC gossip protocol is unencrypted via TCP, if I'm not mistaken), plus the on/off-ramps can be outlawed.
As I understand it, the regulation is largely on how it interacts with a country's own currency or banking system, which indicates to me that users need to do this in order to have real-world use. You can have all the virtual currencies you like online and as far as I'm aware no government cares, the taxman isn't looking at your millions of gold in WoW or Eve-online ISK, but they would if it's used the same way crypto currencies have been in their jurisdictions.
I coincidentally just came to HN looking for this exact answer following the headlines about BTC soaring. [1]
The use cases for it I see are:
1. Cheaply send large payments without having to pay a bank fee (instead you pay btc fees plus conversion to and from fiat fees).
2. Anonymously transfer money if using a washing service (illegal to offer one in the US) or if you spend rawly mined coins.
IMO, crypto is a US gov invention that was pushed to speculative theater to give threat actors huge incentive to break sha256/512 publically, as the best use of such tech atm is to steal massive amounts of money. It therefore acts as a canary for when someone finally does figure out how to crack it or easily solve prime factorization.
People need a way to store money. Sometimes, the government-approved ways of doing that have severe problems.
Gold would be worth much less than it actually is if people weren't using it to store money. It is easier to store bitcoin than to store gold. (E.g., bitcoin is easier to hide from thieves than gold is.)
I agree with both your statements. There is a tradeoff between friction of a nonapproved system and having your money in it. The US has tried to KYC as much as possible, and the psuedo anonymous addresses have mostly been linked to meatspace owners, so I have trouble completely believing that the currency is completely free of gov intervention.
Any sufficiently large state actor can simply buy a zero day exploit to try and remotely get into a target computer and then steal the pk of the wallet. There are mitigation techniques such as multiparty signing and hardware based keys/wallets, but nothing is perfect. And the most secured active users of it are likely already on gov radar.
Bitcoin doesn't seem particularly useful for evading government controls in the US or the EU, but it does in much of the rest of the world, where the governments are typically incapable of something like the US anti-money-laundering regime. A sensible reason for a US investor to invest in bitcoin would be to sell it in the future for more than he paid for it to some saver in some non-US non-EU country, and most US investors would have no particularly strong motive to hide such an investment from the US government.
What is the value of physical currency, or a balance in a digital system? It's all supply and demand.
When physical currency used to be backed by gold reserves, then it could be argued that gold itself has material value, but nowadays it's all fairy dust[1].
Agreed that gold's value was largely increased it's demand as a reserve currency, but it does have stand alone value. Jewelry, conductivity, etc. all contribute to a baseline market for it.
To me, store of value commodities are interesting when unpegged from a mainstream currency in that they provide no dividends. Their ownly roi is via speculation of the masses. Castles in the skies. That is where I have a hard time underatanding the value preposition of crypto.
Ethereum switched to proof of stake a while ago. So yes. Hardcore crypto fans don't like it because theoretically it could be subject to the 51% attack. Personally, Ethereum is big enough where
A) I don't think that attack is likely and
B) the efficiency gains are worth the risk
Disclaimer: I have Ethereum so i benefit from other people buying it. I do honestly think it's better for the environment.
PoS instead of PoW is about 1000x more efficient, meaning that instead of being about 1,000,000,000x more wasteful than the work it effectively does it's only about 1,000,000x more wasteful.
Exactly. It's wasteful by design, with incentives to increase hash rates in the face of efficiencies instead of taking the savings. And the hashes are absolutely useless computations. No one benefits from the 99.99999% of hash guesses that don't "win" the block.
As someone who has used cryptography† since he downloaded PGP 2.x in the early 1990s, and was around for the Crypto Wars (using the "non-us" Debian repos), I am aware what Bitcoin is technically-speaking.
> The EIA found that the global share of Bitcoin mining that takes place in the U.S. grew from 3.4% in 2020 to a whopping 37.8% in 2022.
What drove that? Since this is the kind of thing that you could do pretty much anywhere, why should a such a disproportionate amount of it happen in the US?
But it does seem like US electricity prices are meaningfully higher than for a number of countries, especially in Africa and the Middle East. I wonder what stops mining from going to places where electricity appears to be cheapest.
China push them out after they figured out bitcoin was a huge waste of resources and also that they couldn't control it like they could their own potential digital currencies
The EIA analysis suffers from lack of comprehensive coverage and equal treatment of energy consumers - e.g. where's the EIA report on energy consumed by running high-frequency trading algorithms, which apparently are involved in 50% of stock market transactions these days? If the EIA's method for calculating cryptomining electricity consumption was applied across the board to all economic sectors, would they end up concluding total consumption was 2X total production or something nonsensical like that?
Same old tired argument. The proof of work employed in mostly Bitcoin by now (most cryptos use proof of stake which has drastically lower energy consumption). Let's compare it to:
1- How much it takes to run the banking industry, even a JPM Chase would do.
2- Bot accounts on Instagram or Tiktok.
3- Gas flared on oil rigs.
Nobody slams the above three for "wasting" energy because they are closed systems that cannot be measured. Crypto is mostly an open system so it's easy to just point to a number with a headline "bitcoin used more energy than x country"
If this is economically unproductive work, why are the miners being rewarded for it? Is it just that the market hasn't figured out what the detractors here seem to know? Or is it that they don't understand as much about economics as they think they do?
Owners of bitcoins pay for all this unproductive work. They pay for it by buying the new bitcoins being issued by the miners every 10 minutes. So long as these idiots continue to buy the coins, miners can continue to waste resources.
because they don't have to pay carbon taxes on it, because the current market doesn't price in environmental damage for nearly no useful return currently.
The energy source of my wall outlets shouldn't be my problem. Electricity is cheap because fossil fuels are cheap because they externalize the true carbon cost. I assume with a carbon tax that less BS would be profitable.
Ethereum, the second biggest coin by market cap and the network that allows for NFTs, completed their transition to proof of stake in 2022. Ethereum’s energy usage is now almost completely negligible.
Since Bitcoin is completely decentralized, there’s no way to change the protocol without everyone just stopping using it, which miners don’t want to do.
> Since Bitcoin is completely decentralized, there’s no way to change the protocol without everyone just stopping using it, which miners don’t want to do.
That's completely wrong though. The protocol gets changed by a majority of miners accepting new protocols, as has happened many times before.
Not only that, when once there were 194bn BTC due to a bug, the miners "just stopped using it", rolled back, fixed the bug, and went forward from there. Blockchain is immutable! Code is law! Sure, unless it isn't.
Due to the extremely competitive nature of Bitcoin mining, the miners must seek out the cheapest power on the market. By definition, cheap power has low demand, so the miners are not crowding out other "higher" uses of the power. In many cases, this power would be otherwise wasted. In some cases, miners are capturing vented or flared waste gasses from other processes (gas wells, landfills).
Many miners have power purchase agreements and curtailment arrangements in place with grid operators that perform two very useful functions:
- Allow grid operators to better plan for demand, since they can anticipate the large load from the miner. Secondary effect: overbuild generation capacity when building new power plants, since there is a ready buyer for the new power.
- Sell energy back to the grid when weather strains capacity. Bitcoin miners can switch off instantly when the grid operator sends a signal, so the grid is more resilient to both predictable (cloudy days) and unpredictable (plant failure) supply changes.
So Bitcoin mining is good for power grids, both from the standpoint of capacity and stability.
Isn't the increased demand for electricity driving the price of electricity upward? In the short term, if demand increases faster than supply, prices will rise. Externalities need to be addressed..
Incidentally, Bitcoin miners make around $15bn a year (45k $/BTC * 6.25 BTC/block * 1 block/10 minutes * 60 minutes/h * 24 h/d * 365 d/a), of which probably more than half is cost, so running a profit of a few $bn a year. On the other hand, the externalities of burning 15 GW amount to about $5bn a year.
So, the mining does not generate economic surplus, but constitutes a transfer of value from the public to miners.
One nitpick: It's not "total U.S. power", but electricity production. Power comprises (broadly speaking) electricity and fuel (which in turn is used for heating and transportation).
Wasn’t this the whole point of bitcoin? To guarantee a slow increasing supply of coins with a fine upper limit of 21 million bitcoins. Only 2 million more left and they get increasingly take more energy to mine.
There was a joke amongst my peers that the last bitcoin will take a Dyson sphere around the sun to mine.
Bitcoin makes sense as an instrument to hedge against inflation, but the charts correlate with stock market. So it is as speculative as the rest of market. Unlike say gold which usually has an inverse graph as a holder of value.
IMO the insane trading fees of bitcoin have ruined it for me.
I love what ethereum is doing with proof of stake.
It is interesting how much media/politicians focus on the energy expended to preserve value outside of fiat currency, but are somehow far less concerned with how much energy (and human life) we expend to prop up the petrodollar and various private interests abroad. It is also interesting how little they complain about the energy we expend on ML training for next-gen spambots and copyright infringement.
The United States Department of Defense is one of the largest single consumers of energy in the world, responsible for 93% of all US government fuel consumption in 2007 (Air Force: 52%; Navy: 33%; Army: 7%. Other DoD: 1%).[1] In FY 2006, the DoD used almost 30,000 gigawatt hours (GWH) of electricity, at a cost of almost $2.2 billion. The DoD's electricity use would supply enough electricity to power more than 2.3 million average American homes. In electricity consumption, if it were a country, the DoD would rank 58th in the world, using slightly less than Denmark and slightly more than Syria (CIA World Factbook, 2006).[1] The Department of Defense uses 4,600,000,000 US gallons (1.7×1010 L) of fuel annually, an average of 12,600,000 US gallons (48,000,000 L) of fuel per day. A large Army division may use about 6,000 US gallons (23,000 L) per day. According to the 2005 CIA World Factbook, if it were a country, the DoD would rank 34th in the world in average daily oil use, coming in just behind Iraq and just ahead of Sweden.[1]
The underlying problem is energy creation, not usage. If we had nuclear power plants everywhere and energy "too cheap to meter", no one would bat an eye at BTC energy usage. We need to stop thinking energy conservation, and start thinking on how we can GROW sustainable energy usage. People live better with more energy.
That's because we're stuck with loads of dirty energy. The ultimate goal should be unlimited energy for everyone, but only sustainable energy. That first portion is rarely mentioned in the climate change community.
Sincerely, every single person involved in a crypto mining operation should be arrested. Just pretend they are financing the Houthis or something and apologize for it in a decade or two, we are way beyond the 11th hour to get our carbon emissions under control and nonsense like this isn't helping.
Never thought a site called "Hacker News" would be so anti-technology as I'm seeing in these comments. Use the energy. We'll start making more of it and cheaper. Everyone benefits.
I would be with you, if bitcoin was only allowed to use carbon-free electricity. The reality is that they sometimes buy coal mines ([1]) and burn coal onsite without paying for the externalities. And that's something to be worried about.
not even remotely in my opinion, bitcoin uses cheap electricity, and if carbon-free is cheaper like everyone proposes then it should be quickly adopted by bitcoin miners
You do know that HN people also might be smart and can calculate things like climate change and other aspects into it?
If you don't hate a technology which disrupts an energy market by combining a local people centric market with global interets, ...
I really don't mind people playing around with blockchains, i hate that people who have access to cheap energy sell this advantage to some global weird fuckedup market and disrupting and overloading local power grids, increase demand for coal and other non renweable energy and waste double amount of resources through also requiring AC.
If every bitcoin miner would just run on real 'overpower', would use the process heat to heat houses and stop mining if energy is needed without compensation money, i would not care.
But thats just not the case for bitcoin.
And it doesn't even solve a problem because you never just transfer bitcoins from a to b and b to c without anything offchain and everything offchain can't be protected by the blockchain. So effectivly blockchain is garbage.
And don't tell me about smart contracts, this is not working. No company in the world will leverage the contract amount because 1. you would need the double amount of capital and 2. big rich companies/entities could destroy small entities because they could just frezze assets.
This ignores the negative externalities - namely, the degradation of our ecosystem - of this increased energy production. Our climate has a carrying capacity, beyond which habitability decreases.
Energy is not infinite. It requires resources to create it. The resources available to us in today's energy grid are finite, and the cheap and accessible resources produce side-effects that cause pollution and change the climate in ways we're still struggling to understand fully (but we know for sure: nett bad).
If the entire US grid was using renewables, the entire stack was carbon-free and the work had been done to offset the building of those facilities and all the transmission gear between production and consumption, your argument would hold up: using energy in this scenario becomes side-effect free. Using more of it would cause the creation of more of it, and more efficiently from a capital investment perspective, and prices would come down for everyone.
But that is not what is happening today.
The grid is already facing capacity issues. The industry is already concerned about "congestion": adding demand via EVs and heat pumps all over the globe is going to stretch the grid as it is. The cost - both time and capital - of upgrading it all is unfeasible, so we need to find ways to reduce consumption.
Add into the mix the need to complete the transition to renewables, and we're in a situation where really, Earth needs to become more conscious about energy usage and more efficient in its use.
If 2.3% of the power was being used to fabricate new technologies that would change the situation - manufacturing of more efficient machinery, building new wind turbines, fabricating new solar panels - we could make the argument that while energy resource is not infinite, this process would help us move to a point of better resource management.
Using it to create magic numbers that libertarians trade with each other, is just silly.
It's especially silly, because they could simply switch to a less energy intensive mechanism, and still have their magic numbers to try and take down central bankers with.
We're still logical and see bitcoin as a drain on society, morality, and damages the environment for zero utility outside of a tiny tiny tiny part of the population who speculate on it, most of who will also lose more than they gain eventually.
Being against miners isn't an anti-technology take. Miners are capitalists. HN is against those interests, in the same sense that it's against a surveillance state, no matter how amazing the underlying technology driving it is.
Were pro-right-tool-for-the-job. The US Stock market is already a free-money generating machine. We need more money in the US Stock Market, not in B.S. toys for contrarian criminals.
....all for a casino ponzi scheme that is creating a very volatile "asset". I'm all for free market, but electricity production in the US is highly regulated and very far from being free market.
Also, I'm not an environmentalist, but one of the things that has hurt electric car adoption has been the cost of charging, especially at DC fast chargers. Getting rid of this waste would reduce strain on the grid and help to drive down electric costs which could alleviate that problem.
It's surprising that environmental protestors have not started to show up at mining faculties.
In the same context: How many top ranking games on steam waste the same amount of electricity? Shouldn't they be responsible for building fusion reactors, too, by that logic? If not, why?
Games are a product and bitcoin is a digital "currency" mainly used for financial speculation, fraud, gray and black market goods/services, and money laundering.
Every piece of inefficient software is wasting tons of energy. But since we're using it for economy activity that makes money it is OK...which is actually the same reason people are mining bitcoins.
To be fair, the bulk of what they do could probably be missed without anybody noticing other than that there would be a large collective sigh of relief. There is so much junk produced that I would not be at all surprised if that dwarfed the crypto computers, but it is much harder to identify.
The only word I can think of is shameful. We should be ashamed. Digital currency with strong cryptographic protection will continue to evolve and will eventually be widely adopted, but the industry and platforms that have arisen concomitant with the Bitcoin hype are simply shameful.
Thanks for sharing this here. A lot of beginners Like me are smashed out there every day. It's a good thing we have nice people here who want others to become successful as they are.
Look how many company are using most of the crude oil. They're allowed to buy this commodity and they profit from using it, what did you expect would happen?
Fun fact: the US military is one of the largest consumers of oil. If you want to equate them to a company for conversational purposes, that's fine with me. This is one of those situations where the gap between 1 and 2 is really big.
Not when it has repeatedly demonstrated over more than a decade that it is completely incapable of supporting a sane, usable model for financial transactions that isn't 99% scams, drugs, and burning giant piles of energy every time someone actually tries to use it as money.
Decentralizing the monetary system is potentially a laudable goal. Bitcoin has failed to accomplish it. Failed. Move on.
Many years into crypocurrency being a thing, we have a non-theoretical answer to this question: apparently not, no. Not for legal purposes at least (people do get value from it as a way to buy drugs or other illegal things/services)
This. Censorship resistance === Cannot undo fraud. A money system that cannot claw back ill-gotten gains is NOT "giving power to the users", but rather giving power to the con-men! Worse, fraud is such a huge return on investment that any system that enables it such as bitcoin does inevitably will have a market driven by fraud, because it easily out-competes the more legitimate business.
Bitcoin isn't full of fraud because "it's hard to track", or "there's nothing better to do" or "because it's new/unregulated"
Bitcoin is full of fraud and only fraud because a system that doesn't allow you to take back transactions unilaterally makes legitimate business HARDER than fraud, and for less return.
The other main "easy fraud" monetary system is gift cards, and they have to expend enormous effort and money on anti-fraud measures and just eating losses so users don't constantly have their money stolen. Crypto doesn't even have that, and in fact, literally cannot have that, because there is no empowered entity to do so.
The cryptocurrency has value! Maybe we agree that it's shitty, but its value is abundantly clear. It has a price and a nonzero trading volume. An economy that prioritized at human wellbeing or moral value (and had the might to impose it) might be nice, but it's a far cry from the current reality of market forces determining what gets produced.
That 'value' effectively doesn't exist. Basically no-one is going out and buying things with Crypto, minus some illegal purchases.
The only reason people are still involved with it at all is as a speculative asset. They aren't using it as a currency - they're hoping it will go up in price and they can pawn it off to the next sucker to do the same. That's not 'value' in my eyes.
fentanyl also has value, but it also kills (unnecessarily) more 18-45 year olds than anything else (USA). Just because people pay for something doesn't mean it's not something that shouldn't taken off the market for the betterment of society. I consider bitcoin in that same area.
which will never work since it doesn't account for greed and self-preservation instincts that are innate in human nature. Communism is just one step removed from anarchy and tribalism OR authoritarian government that says it's "communist"
On this scale? Easily detected and killed. Just check their power bill.
It has gotten completely out of hand. What was intended to be run on personal computers has become a juggernaut of rampant egregious resource consumption.
> Easily detected and killed. Just check their power bill.
except that bitcoin doesn't inherently require any fixed amount of energy and that's why there's a difficulty adjustment, of course this fact seems to go over most people's heads and suggests to me they don't actually understand it
Hey I'm the government man here to audit your power bill.
Please go over everything you spend your power on and the government will tell you whether you can continue to have power/internet.
Hey, why are you nervous? Oh looks like it was just a hot summer.
...oh what's this... sorry you don't have a heat pump, we will take your A/C, now spend 50k on a new heat pump one. Better get started it's going to be a hot one.
edit: do not downvote your government energy auditor, it will not help your opened case.
You can't engineer your way out of a social dilemma. If the government says "anyone caught using bitcoin goes to jail" and actually puts effort into enforcing it, all the fancy engineering in the world isn't going to help you, unless you never want to actually use it in the real world.
But if bitcoin can operate in China now where it's been repeatedly banned and the network chugs along completely uninterrupted it seems like a stretch that governments (of which the entire world would have to band together) have any say here.
Corporations were also engineered to be un-killable. The way to reach them is to go after the people who run them. Obviously, if that’s the analogy, then the miners are quite secure anyway.
You're arguing that it's a poison (it isn't) but even worse you're proposing a cure that's far worse. So "go after them" in other words would mean: construct a global authoritarian surveillance apparatus that hunts down energy consumers?
And how much energy does maintaining the military that backs US currency use? Much more and it's violent. The use of energy to protect bitcoin from attack from nation states is non-violent. It really is an efficient and ethical use of the energy.
Are you implying that we could or should replace USD with BTC? Bitcoin uses over 2% of the energy to process 0.02% of the transactions. Aside from all the geopolitical & economic detriments that would incur, scaling Bitcoin up to the national level would require us to increase our energy production roughly 10000% just to power the mining.
And then you're further implying that doing so meant we could or should disband the military? Uh, I don't know what to say to that other than that there are plenty of non-economic reasons to have militaries.
Bitcoin really is a complete waste of time and energy.
Nope. I'm just pointing out that the energy isn't wasted and it's is appropriately proportional to the task it faces.
It would be a much worse world if basic utilities started refusing to provide service just because they had opinions about your usage and emotionally didn't like it.
Bitcoin doesn't solve any problem: as soon as you do anthing offchain, bitcoin doesn't protect you.
Bitcoin doesn't gurantee that if you give someone money and exchange it for bitcoin that you will get the bitcoin. It will not guarantee that if you want to buy something, that you receive the item in the expected quality, time and condition.
The only use case for bitcoin are ON chain transactions and the only solution to this are smart contracts which also don't solve the problem because its still only for digital things and it requires the same amount of capital which doesn't make sense because rich people could block you from ever accessing your money if they want to destroy you.
Please please please please start reading up on blockchain!1 :(
> as soon as you do anthing offchain, bitcoin doesn't protect you
except that most, if not all, off-chain networks are still based on-chain and have mechanisms for being a relatively secure way for exchanging day-to-day without having to settle on-chain for every transaction
Imagine a world were someone with a private key could send money transparently to someone else by just signing the transaction publicly.
Suddenly you don't need PoW anymore. The only thing bitcoins gigantic energy consumption does is making sure there is only one central blockchain. Nothing more. And for that it needs 2% of total US Power usage...
Except the whole point of bitcoin is that it's a scarce commodity enforced through power consumption (something that's a limiting factor to adversaries)
> The only thing bitcoins gigantic energy consumption does is making sure there is only one central blockchain.
which is how you constrain supply in a decentralized way with an independent time-keeping mechanism
> The Department of Defense spews so much greenhouse gas every year that it would rank as the 55th worst polluter in the world if it were a country, beating out Sweden, Denmark, and Portugal, according to a new paper from Brown University’s Costs of War project.
> Why so much? Well, first off, there’s all those military buildings (some 560,000 on bases around the world) to power, heat, and cool. That accounts for about 40 percent of the total. The rest goes toward operations like moving troops and carrying out missions. The biggest CO2 culprit is, by far, planes. “Aircraft are extremely thirsty,” Crawford said.
This is the type of tragedy of the commons issue where regulation is needed. For any one actor they can justify spending infinity energy as long as their ROI is positive.
There are enough justifications out there that it's easy to convince oneself that you're doing the world a favor ("I'm just librating finance and fighting the good fight against the central bankers").