> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better.
That's bad analysis. Bitcoin energy usage is bounded very closely by the value of the coins mined at whatever the most efficient method is at the time. That is, it's worth it to spend electricity mining as long as the coins are worth a little bit more than the energy input.
So bitcoin growth has absolutely nothing to do with hardware efficiencies, and is entirely a function of the outrageously inflated growth bubble it is experiencing.
Basically: cleaner energy and more efficient computing hardware won't save us from this monster. But thankfully the coming crash will.
The amount of energy used on heating and cooling is several magnitudes larger than whole mining for bitcoin.
It's not a monster, it just sounds ridiculously big, but Internet uses more. Airplanes use magnitudes more, even cow farts are much bigger than CO2 footprint of Bitcoin.
> even cow farts are much bigger than CO2 footprint of Bitcoin.
It sounds like you're trying to joke about "cow farts" but they're a well-known massive source of pollution, I don't think it's a flattering comparison
> but Internet uses more
So the most important innovation of this century, used by billions of people daily, uses more energy than a financial network doing only ~400,000 transactions per day?
If Bitcoin were to replace the entire financial sector, sure, it would be worth the energy expenditure. But as it is, there are solutions thousands of times more efficient for all of the problems Bitcoin tries to solve.
The point is that bitcoin valuation is driven as a bubble. Inbound coin purchasers are expecting another hundredfold increase over the next two years. So there goes your "several orders of magnitude" right there.
Again, it will crash, so this won't happen. But the community expectation (even if the community doesn't realize it) of bitcoin absolutely is that it will eat all the world's electricity.
As it stands right now, Bitcoin's energy use isn't particularly problematic. But that's because Bitcoin is really small. The worry isn't so much that Bitcoin is destroying the planet now, but that if it grows to match the scale of a "real" currency (as its proponents keep saying it will!), its energy usage will become dangerously large.
Compare apples to apples. Take the entire worlds banking infrastructure for credit card processing and banking. (Getting an estimate for that would be an interesting exercise). How does that stack up to the energy usage of bitcoin adjusted for total value, transaction volume, etc.
> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. Not long ago, the Department of Energy was predicting that their electricity use would double every five years, and Google was getting slammed for consuming enough to power 200,0000 homes. In recent years, though, the centers’ total electricity use has flattened even as their number has kept growing. As it turned out, better cooling and power management technology improved efficiency. Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources.
This is just flat out wrong and shows the author has no idea what she is talking about. The rate of BTC production is fixed, so "efficiency" has no impact on the dollar cost of electricity it is using.
If a BTC can sell for $X, it is profitable for the network to spend any amount upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs) mining bitcoin.
At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a day and still remain profitable.
Furthermore, comparing Bitcoin to physical currency is disingenuous even if you completely discount the (gargantuan)scale difference. You would get rid of that energy consumption even if could get everyone to switch to electronic (fiat) money instead of paper currency, and presumably have it be much greener than having them switch to bitcoin.
But just because it's profitable doesn't mean it can't be more profitable right?
If I'm going to set up a mining operation, wouldn't it make financial sense to set it up near a hydroelectric plant where my electric cost is 1/10th of what it is in my home in PA? Any cost reduction is an increase in profit, so there's still motivation to reduce costs, a pretty large one.
As long as there is a non trivial profit margin, more miners will keep entering the game until the the margin shrinks to a small enough figure that nobody else wants to start mining.
TL;DR Bitcoin uses over 75% of the energy used to mint and print all the fiat money in the world for about a percentage point of the transaction volume, but it's okay!
Add in all the costs of the Bitcoin infrastructure to Bitcoin's usage, too - exchanges and so on. And then you still have an instrument so unstable that you can't actually buy anything with it; Steam discontinued BTC purchasing recently because the system is unusable for retail. So you still need that fiat money infrastructure to, you know, pay for anything.
> Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up.
That's unfair. A more reasonable comparison is with credit card transactions. Several European countries are positioned to go cashless you know.
> While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.
That's a really stupid argument to make, but while you're at it, factor in the cost of Bitcoin robberies of people getting hacked, more and more every day. There's even a story around of a guy robbed at gunpoint.
The more popular it gets, the bigger as a target it becomes ;-)
Bitcoin loses that comparison, because it cannot become energy efficient. The energy it has to waste in order to continue functioning necessarily scales up with its total value.
The computation has nothing to do with minting. The computation allows every Bitcoin user to “vote” on the correct sequence of transactions in the last block, and the reward for solving a block is just to make sure that people keep hashing. You can’t have a blockchain without a large number of people doing some kind of easily verifiable computation.
Stopped reading once they tried to say Bitcoin is green because it uses less energy than modern money production. Bitcoin handles many orders of magnitude fewer transactions that pretty much every other monetary system - the fact that the energy usage is even comparable shows how much energy Bitcoin truly uses.
Even worse is that energy use is a feature. All the energy used in other monetary systems is incidental, so if lower energy usage becomes a goal, it can be actualized. You can't make more digital Beanie Babies while reducing power consumption since the power consumption itself is what makes the whole idiotic thing work in the first place.
On the other hand bitcoin doesn't need to be reprinted every few years and same coins can be reused millions of times, especially if transaction rate goes higher in the future.
I still don't know if that comparison is something to care about.
Transacting with bitcoin requires mining. Mining is what validates blocks of transactions. Mining does create coins, but that's sort of a side-effect. Eventually the mining reward will go away, but the energy costs of transacting will remain.
> Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources
My sense was that this was only the case in countries that have effective environmental regulation, and that coal was cheaper in countries where you could legally operate super-dirty plants. Is this no longer the case?
The marginal cost of hydro energy is nearly nothing. If you build a dam but the local city or factory no longer needs the energy, it costs you nothing to keep sending the water down the turbines. The coal plant might have been cheaper to build, but to produce electricity you need to keep on mining coal for it.
An even better scenario is if the government subsidizes the building of the hydro plant - then you get cheaper up front cost and cheaper recurring costs. This is the case in Austria, according to HydroMiner[0].
So, something I've never quite understood: I believe the computational effort (and energy cost) to mine a coin keeps going up - by design. *
If there is a sudden insta-crash in bitcoin value, is there a point where miners just won't bother anymore?
If the mining energy cost is higher than the value of the bitcoin mined, doesn't it become un-economical and the whole block-chain seizes up? 'Someone will invent a more efficient method' doesn't seem a reasonable justification. If a major crash occurs would the route out be a fork to a variant where mining is reset to be easier/cheaper?
edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for mining a block will halve over time, but not necessarily the difficulty or value of the bitcoin. https://www.coindesk.com/making-sense-bitcoins-halving/
As you note, the difficulty adjusts based on the amount of computational power being used.
However, there's a really fun corner case failure mode. The difficulty is supposed to adjust about once every two weeks to make for a roughly 10 minute interval between blocks. If more power is added to the network such that the interval is, say, 9 minutes, then when the next adjustment hits, the difficulty will be bumped up by 11%.
But! That "every two weeks" thing is based on the block interval. The actual adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that works out to two weeks. If they're mined faster, the network adjusts faster. If they're mined slower, the network adjusts slower.
When the changes in hash rate are slow, this is fine. But what happens if there's a sudden massive change in the hash rate? Like, what happens if the hash rate somehow changes by a factor of a thousand in a brief period?
If it goes up by a factor of a thousand, then the network will start mining blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block interval will hit and the difficulty will also go up by a factor of 1000, then everything continues as usual. No problem.
The problem is if the hash rate goes down by a factor of a thousand. Then the network will start mining blocks roughly once a week. The difficulty will readjust to bring that back down to 10 minutes... eventually. But the interval to the next readjustment is measured in blocks! Let's say you're halfway through the adjustment period when this crash happens, so you have 1008 blocks to go before the next adjustment. That would have taken about a week, but now it will take about twenty years! Unless you can get the hash rate back up substantially, the network will be in extreme slow mode for a long time.
Let's also acknowledge that the "sky is falling" proclamations around Bitcoin mining energy use are based on numbers that aren't even close to accurate. Current network hash rate is about 12EH/s, and an Antminer S9 does about 14TH/s at 1372W. Thus,
(12000000THs / 14THs) * 1372W = 1,176,000,000W
Which is about 1.176GW. The article cites 8.27TW, which is off by several orders of magnitude.
QED.
Edit: numbers maybe not so far off after all, as it appears to say 8.27TWh/year now.
Those Antminer numbers don't actually take into account cooling, other than the fan on the system. Those are the "at the wall" numbers. Since these machines dump their heat into the datacenter presumably if you're running any significant number of them you'll need a cooling system.
You're also operating under the assumption that every miner is already using these systems, which I don't believe is the case. Lots of people are likely running older systems, and as the price of bitcoin gets higher older less efficient machines become more profitable to turn back on.
Opinion piece written by "a blockchain engineer at... a financial technology company in San Francisco."
The premise is simply that Bitcoin uses less energy than physical cash production. Obviously this implies that Bitcoin will replace cash. If it doesn't -- if say the primary use case for Bitcoin remains currency speculation -- then the argument falls apart.
Readit News
That's bad analysis. Bitcoin energy usage is bounded very closely by the value of the coins mined at whatever the most efficient method is at the time. That is, it's worth it to spend electricity mining as long as the coins are worth a little bit more than the energy input.
So bitcoin growth has absolutely nothing to do with hardware efficiencies, and is entirely a function of the outrageously inflated growth bubble it is experiencing.
Basically: cleaner energy and more efficient computing hardware won't save us from this monster. But thankfully the coming crash will.
1. severely reduce number of transactions on main blockchain, which will:
2. allow for lower transaction fees (due to less competition), with will:
3. cause mining to be less profitable, which will:
4. result in fewer miners, which will:
5. reduce energy consumption.
The current power consumption simply a "growing pain".
It's not a monster, it just sounds ridiculously big, but Internet uses more. Airplanes use magnitudes more, even cow farts are much bigger than CO2 footprint of Bitcoin.
It sounds like you're trying to joke about "cow farts" but they're a well-known massive source of pollution, I don't think it's a flattering comparison
> but Internet uses more
So the most important innovation of this century, used by billions of people daily, uses more energy than a financial network doing only ~400,000 transactions per day?
If Bitcoin were to replace the entire financial sector, sure, it would be worth the energy expenditure. But as it is, there are solutions thousands of times more efficient for all of the problems Bitcoin tries to solve.
Again, it will crash, so this won't happen. But the community expectation (even if the community doesn't realize it) of bitcoin absolutely is that it will eat all the world's electricity.
Dismissing it as not a problem or potential problem by pointing out even bigger problems doesn't make it not a problem. See https://en.wikipedia.org/wiki/Whataboutism
Not only that, but some entrepreneurs are selling bitcoin miners as heaters that make money! :)
This is just flat out wrong and shows the author has no idea what she is talking about. The rate of BTC production is fixed, so "efficiency" has no impact on the dollar cost of electricity it is using.
If a BTC can sell for $X, it is profitable for the network to spend any amount upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs) mining bitcoin.
At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a day and still remain profitable.
Furthermore, comparing Bitcoin to physical currency is disingenuous even if you completely discount the (gargantuan)scale difference. You would get rid of that energy consumption even if could get everyone to switch to electronic (fiat) money instead of paper currency, and presumably have it be much greener than having them switch to bitcoin.
If I'm going to set up a mining operation, wouldn't it make financial sense to set it up near a hydroelectric plant where my electric cost is 1/10th of what it is in my home in PA? Any cost reduction is an increase in profit, so there's still motivation to reduce costs, a pretty large one.
While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.
That's unfair. A more reasonable comparison is with credit card transactions. Several European countries are positioned to go cashless you know.
> While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.
That's a really stupid argument to make, but while you're at it, factor in the cost of Bitcoin robberies of people getting hacked, more and more every day. There's even a story around of a guy robbed at gunpoint.
The more popular it gets, the bigger as a target it becomes ;-)
My sense was that this was only the case in countries that have effective environmental regulation, and that coal was cheaper in countries where you could legally operate super-dirty plants. Is this no longer the case?
An even better scenario is if the government subsidizes the building of the hydro plant - then you get cheaper up front cost and cheaper recurring costs. This is the case in Austria, according to HydroMiner[0].
[0]https://www.hydrominer.org/faq/
If there is a sudden insta-crash in bitcoin value, is there a point where miners just won't bother anymore?
If the mining energy cost is higher than the value of the bitcoin mined, doesn't it become un-economical and the whole block-chain seizes up? 'Someone will invent a more efficient method' doesn't seem a reasonable justification. If a major crash occurs would the route out be a fork to a variant where mining is reset to be easier/cheaper?
*edit - aha I see the mining difficulty can go up or down over time: https://en.bitcoin.it/wiki/Difficulty
edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for mining a block will halve over time, but not necessarily the difficulty or value of the bitcoin. https://www.coindesk.com/making-sense-bitcoins-halving/
However, there's a really fun corner case failure mode. The difficulty is supposed to adjust about once every two weeks to make for a roughly 10 minute interval between blocks. If more power is added to the network such that the interval is, say, 9 minutes, then when the next adjustment hits, the difficulty will be bumped up by 11%.
But! That "every two weeks" thing is based on the block interval. The actual adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that works out to two weeks. If they're mined faster, the network adjusts faster. If they're mined slower, the network adjusts slower.
When the changes in hash rate are slow, this is fine. But what happens if there's a sudden massive change in the hash rate? Like, what happens if the hash rate somehow changes by a factor of a thousand in a brief period?
If it goes up by a factor of a thousand, then the network will start mining blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block interval will hit and the difficulty will also go up by a factor of 1000, then everything continues as usual. No problem.
The problem is if the hash rate goes down by a factor of a thousand. Then the network will start mining blocks roughly once a week. The difficulty will readjust to bring that back down to 10 minutes... eventually. But the interval to the next readjustment is measured in blocks! Let's say you're halfway through the adjustment period when this crash happens, so you have 1008 blocks to go before the next adjustment. That would have taken about a week, but now it will take about twenty years! Unless you can get the hash rate back up substantially, the network will be in extreme slow mode for a long time.
http://bitcoinandtheblockchain.blogspot.com/2017/08/chain-de...
https://cointelegraph.com/news/how-close-did-bitcoin-get-to-...
QED.
Edit: numbers maybe not so far off after all, as it appears to say 8.27TWh/year now.
You're also operating under the assumption that every miner is already using these systems, which I don't believe is the case. Lots of people are likely running older systems, and as the price of bitcoin gets higher older less efficient machines become more profitable to turn back on.
I think reading the original source of their power consumption numbers will give a much better insight to where those numbers came from- http://blog.zorinaq.com/bitcoin-electricity-consumption/
Deleted Comment
The premise is simply that Bitcoin uses less energy than physical cash production. Obviously this implies that Bitcoin will replace cash. If it doesn't -- if say the primary use case for Bitcoin remains currency speculation -- then the argument falls apart.