I am beginning to wonder if energy is what will eventually doom Bitcoin. Currently, Bitcoin consumes more energy than Argentina [1].
Another article suggests the carbon footprint of Bitcoin is equivalent to New Zealand [2].
It's not just the cost of mining new coins (which will ultimately end) but the cost of maintaining the network. The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
To the apologists claiming there's no other good use for that energy, it's not simple. Using too much electricity can raise the price that everybody pays [3].
Miners will keep chasing cheap power but I expect, much like ArbBnB, municipalities, states and even countries will increasingly clamp down on it.
The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies. Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen.
I realize there are corner cases (eg sending money to and from Venezuela). There's also a lot of illegal use cases.
Thing is, blockchains aren't really as immutable as pundits suggest. Bitcoin and Ethereum have had forks.
Just the other week an older relative asked me to help get them set up so they could buy Ethereum. Another friend asked me to help them setup an account to buy Doge. Neither have any intention of using it as anything besides a speculative store of value because they hear other people are buying it, which would be fine if it didn’t actually have such poor environmental externalities.
Around the time of the late 1990s Internet bubble, I read someone's observation that you can identify an investment bubble when barbers and nurses and taxi drivers start investing on the assumption that prices will just keep going up. That matched my own experience of having lived through the stock and real-estate bubble in Japan in the late 1980s: I knew shopkeepers and rice farmers who borrowed money to buy stock and land and condominiums, certain that their value would continue rising. The American real-estate bubble that led up to the 2008 crash looked very similar, as does Bitcoin now. It seems certain to collapse, though I can’t predict when.
Same thing happened when it peaked at 20k - the hairdressers were talking about Bitcoin and altcoins. The difference this time is big time investors started gambling with it - so who knows where it's going to go.
I'm guessing a lot of people also tried to get in on the dot com bubble, does it mean we write off the internet as a speculative bubble that's not providing any value?
It's not fine even without environmental impact: getting yourself into an asset class with zero understanding about it is a recipe for disaster. There are tons of examples of real estate investors burning their money because they lacked fundamental knowledge and etc. Even the management meetings I attended are now peppered with crypto news and how x gone by y%, even by the sound of it everyone would have been better off just buying some ETFs, instead of pouring money on random peaks or troughs.
As I understand it, Doge works on auxpow now so it's not nearly as bad as it used to be, or as bad as eth/btc is currently (and asic mining is not as profitable as daggerhashimoto for retail miners; ASIC miners will already be located in a DC where electricity is cheap/likely underutilized).
>The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies.
Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
There is a reason every asset is going up right now. Real estate, stocks, commodities, and crypto. More money is being printed this year than ever before. The financial media and the fed can claim minimal inflation but the markets are exposing that claim as dubious.
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
I don’t think any of my family in Algeria are using Bitcoin, and same for my wife’s family in Bangladesh. In Algeria at least, generally you’ll go to a hawala money changer who gives you better rates than the banks and exchange your local currency into Euros. If you need to send money abroad you use the same old Islamic hawala system to send it to France or wherever else.
There will probably be some useful things built on top of blockchains, and I don’t think crypto has zero value, but I don’t think it’s going to reasonably fix a situation of a failing state.
Yeah, and how many citizens of these countries buy and use BTC? Particularly with how unstable it is compared to other assets like e.g. gold.
Mind you, I speak as someone who is a citizen in a country that experienced that. Not now, but back in 2016, our currency got halved. Nobody, and I mean absolutely nobody ever thought "I should have bought crypto."
When the 2017-2018 crypto rush happened, and people started mining ETH, well-off people* here got onto it and started mining ETH.... only to immediately sell it as they mined. Nobody held onto it.
*well-off because GPUs were absurdly expensive due to the inflation, and it only got worse when the shortages hit.
EDIT: I also want to add that very, very few people here in my country actually understand what bitcoin even is (or cryptocurrency or blockchain). The people that I have seen support mining here only really view it as a way to earn some money while doing nothing.
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight
At best, this argument turns Bitcoin into a massive subsidy by stable countries of unstable ones. A subsidy paid for in the form of higher energy prices, environmental damage and opportunity cost.
There are other safe-havens against inflation which have existed for hundreds of years. Bitcoin didn't invent the concept of an inflation hedge, and the citizens you refer to had and still have standard alternate solutions. Which in all honesty are a lot safer than a digital collectible token with no intrinsic value that's primarily used for speculating and drug deals, which can be regulated, shut down, or taken over whenever your or another country wants to shut it down.
> Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
Yeah, it's almost as though they had invested in Bitcoin during one of its crashes. What do you think they will say next time Bitcoin crashes back to 10% of its value?
I agree with you of the idea that Bitcoin's doom is going to be energy. In my case, I do think Cryptocurrencies are here to stay, and other approaches like the ones used in ETH2, IOTA, Nano, etc will come to replace PoW.
I think at some point, government is going to ban PoW mining in the same way they ban gasoline based cars or plastic bags.
> The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies
That's the key: citizens of stable countries are just speculating, but for people of not so stable countries (Mexico, Argentina, China, among several others) where people just do not trust their government & their banking system, Cryptocurrencies deffinitely have value.
In my case, I have part of my portfolio on Bitcoins, because there is no easy way to open a USD account in Mexico, and storing USD or gold is just not practial. And with our stupid president having 4 more years to go, the country is quickly going to a deep recesion. I don't doubt that when a recession come, the government will "lock" the banks to prevent a "cash run" as they did before (and as it has happened in other countries like Venezuela and Greece)
>but for people of not so stable countries (Mexico, Argentina, China, among several others) where people just do not trust their government & their banking system, Cryptocurrencies deffinitely have value
Fair point, but curious in how many shops in those countries you can buys groceries or how many landlords take their rent in Crypto? Because if you can't use it to feed or house yourself then what's the point of owning it other than going back to BTC's only real use cases so far: storing it for speculation, drug trafficking and ransomeware payments.
Plus, can you imagine paying a $26 transaction fee every time you buy a $0.30 loaf of bread with bitcoin?
I'm sorry, this directly contradicts the principle of ever-increasing difficulty for the proof-of-work hash.
Bitcoin and other proof-of-work (no actual useful work being done here either, opportunity wasted!) based crypto-currencies increase the proof-of-work algorithms complexity factor as a means of controlling the rate.
Bitcoin cannot scale up without using an ever increasing literal waste of electricity. Want a better system? make a new crypto-currency trust basis... (proof of stake, etc.)
The capability of performing a 51% attack and sustaining a 51% attack are very different. Performing a 51% attack by mining a single gets you nowhere (at most you can revert some transactions, that block will eventually be orphaned).
Today i believe, most usage of Bitcoin is for legitimate purposes. There is always lots of illegal use cases for anything with value, if it has value, people will do illegal s** to get it and will use as payment. Human nature.
The energy used since the inception of the network is what makes the network valuable.
Think of it this way: to create a cryptocurrency you need some "value" attached to it, Bitcoin does this by converting energy->work->bitcoin, you add "value" to the network in the form of energy and get bitcoin back (you get your "value" back in the form of money when you sell the mined BTC). Ethereum took a different approach (token sale + PoW) and now are moving to PoS.
Pure PoW seems the only way to launch a completely anonymous and decentralized crypto
Look into how miners are making use of stranded methane that is otherwise flared and contributes greatly to global warming (23:00 to 1:11:00 in video below)[1].
Also, consider the massive dis-incentivization of consumption that BTC will encourage. The environmental effects are ambiguous, and probably not nearly as bad as mainstream media suggests. It could even be net positive.
> The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
I wonder how afraid one actually needs to be of 51% attacks. How would the attacker profit from a 51% attack? They might double-spend, or rewrite known history somehow, or decide to only include certain transactions in their blocks and leave other transactions stranded. In each of these cases, it would be clear to everyone that Bitcoin has been broken, and that it has lost its usefulness and the properties it became famous for. The attacker might then control a large amount of Bitcoin, but having lost everyone's trust in it, that large amount of Bitcoin would be worthless. It's not in any attacker's interest to actually break the system, since they would need a gigantic initial investment and get no return on it. (Except if it were very cheap and the attacker's motivation would really be to destroy Bitcoin.)
I don't think we need to fool ourselves that miners are in it to "protect" the network. They're in it to make money.
It’s a clean energy subsidy. Be it hydroelectric, wind, nuclear, or cold fusion - create it and the returns are yours indefinitely.
Indeed, much of mining is already hydroelectric, and much is overage that can’t be stored. This is not just sugarcoating or PR. Miners are highly incentivized to find these situations and exploit them. The more that happens, the less “bad” miners can even compete.
"Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen."
I lived in a period without debit and credit cards. You dropped your cash it was gone. I'm not sure not having a reversal transaction is the killer missing feature.
I know what life is like with the existing feature of getting thousands of stolen dollars back by relying on the banking (and/or legal) system. I won't willingly adopt a system without it.
Bitcoin is just a way to funnel money from financial markets into energy production.
Since we need huge investments into renewables production, every mechanism for such capital reallocation should be welcomed. Our future is electticity. Currently we are producing a fraction of what we'll need.
It's not just Venezuela that is a corner case. China is another one, a one billion "corner case".
Lots of banking problems in your so called "stable" countries like your account getting blocked (try running a business on transferwise or paypal) because of some shit algortihm.
You know what else consumes more power than Argentina? Canada and Saudi Arbia[1] (among others) both countries with less population than Argentina but with higher overall consumption. Is that "good"? Is it "right"?
How much energy do all atm machines (on idle) waste compared to miners? At least miners have incentive (dependent on local regulation/costs) to find cheaper sources of energy because it directly affects their bottom line.
I think what will doom Bitcoin is the uncertainty around the identity of Satoshi. Imagine bitcoin growing by a few orders of magnitude, now it's 10s to 100s of Trillions. Is it close to becoming a world reserve currency? At this point, just who is Satoshi becomes a matter on the level of nation states.
Bitcoin grows by a factor of 100x, Satoshi is now a Trillionaire. He has vast reserves of money he can move around anonymously. Does he still exist? Well his coins haven't moved. Will the world be okay with the mystery?
So no one knows for sure of course but many suspect that early mining by likely Satoshi owned wallets (2009 era) yielded some 1.1m BTC, worth >$50B today.
So the likely reasons someone sitting in a notional value of $50B+ who hasn't cashed in any of it include:
1. He (or she) is dead (I believe the last confirmed post was 2012?);
2. He (or she) has lost access to these coins;
3. He (or she) has cashed in some wealth from wallets not linked to Satoshi; or
3. He (or she) is sitting on this mountain of wealth and not cashing any of it in.
There's the possibility of course that Satoshi isn't one person but several.
Let's consider (4). You would need to be an incredibly committed ideologue. We have ways now of essentially laundering crypto (ie by converting it to other crypto through a pooling mechanism that makes it difficult to identify the source wallet for what comes out).
It's stated that perhaps Satoshi fears government persecution (eg the tenuous connection to Wikileaks). To me that seems... unlikely. It's not like Satoshi controls the network. Lots of people hold crypto now.
Maybe Satoshi just really likes his, her or their privacy. But given that wealth... (1) or (2) become increasingly likely as time goes on.
Unfortunately, Ethereum did infact mutate its chain. Bitcoin never mutated the chain, but once a fork was done to abandon the original chain from a few blocks back, and start mining a new chain from there, thus invalidating some transactions. However Ethereum did something which is essentially a crypto-blasphemy. They reversed a single transaction without a valid signature. Ethereum-Classic is the original chain that still contains that transaction.
Chains are amended, not mutated. Consensus about what new blocks to accept to the chain can change at any time. For example the chain following the original Ethereum rules is now called Ethereum Classic and its market cap is less than 0.5% of the new consensus.
The bitcoin mining equipment have no other purpose than mining bitcoin so eventually once the block subsidy halves these miners will be sitting idle until someone need to process a contentious transaction (paying high network fee).
Didn't read the rest, btw forks of a chain like bcash doesn't have much to do with immutability.
WARNING: BITCOIN MINING IS GOING TO EAT THE WORLD’S ELECTRICITY SUPPLY. READ WHY BELOW.
I realized something very sad this year.
I used to think that Bitcoin was a poor currency, and if someone just made one that was actually scalable and better, then this whole first-gen system would fizzle out, like Friendster or AskJeeves in the presence of better technology.
But no. You see, Satoshi had us all fooled with the title of his paper: “A peer to peer cash system.” FORGET about Bitcoin being a currency. It is a store of value. And it has all the features you’d ever need to store value and not have it be diluted. There is nothing that needs to be improved over and above those features, and that is its killer app: being a black hole of value. Constantly growing versus fiat.
You see, just like gold, Bitcoin is a store of value becaus others say it is. It has reached critical mass and mindshare for “storing value” even from companies now. From here on out, even if a better system arises, if it becomes a sidechain of bitcoin that locks up the coins, then there will be less and less “unlocked” coins, and therefore each coin will be more valuable. Also, bitcoins are constantly lost as dust or misplaced private keys or other things. And so the supply shrinks.
But bitcoin is divisible into extremely tiny pieces (satoshis) so this merely helps one bitcoin get more and more valuable. You can’t kill bitcoin by making something better because even if 1/1000th of it remains, it will actually just be more valuable. The scarcer bitcoin gets, the pricier bitcoin gets, like the Hulk.
Ok so what does it mean for electricity consumption? Here is where the sad part comes in! You see, bitcoin miners are rewarded in bitcoin, and as long as the price of bitcoin outpaces the halvings, mining rewards will grow.
Read the story again, and extrapolate. The year is 2035, and households are fighting for electricity against bitcoin miners, who are easily winning. Governments trying to ban bitcoin mining meet similar fate to Mexican governments trying to ban the drug cartels’ activity, that is to say their families are threatened and they do not have power anymore to stop it, etc. Their feeble attempts to print money fall short of the ever growing rewards.
Everything in the article about bitcoin using “only” 6% is misunderstanding the expontnential function. In 2021 those stats are outdated and the Bitcoin network consumes more electricity than half the world’s countries. We are five minutes to midnight. By the time we realize it’s consuming more than half the world combined, it will be too late to stop this activity. It will be “too sweet” and too financial lucrative.
If you think we can stop it as a society, then let’s see how we have done with killing off insects, reducing biodiversity and species, polluting the world with plastic and pumping greenhouse gases into the air. Take that last one for example — have we been able to make a reduction in the greenhouse gas emissions, or merely their rate of growth?
What exactly will change between now and 2035, or 2135 that will make bitcoing mining NOT be more economical valuable than, say, airconditioning homes?
It is clear that you don't believe in Bitcoin ("Bitcoin solves a problem for almost nobody") and thus want to use this energy angle to take it down. Good luck. But if you are more open minded read this thread and educate yourself: https://twitter.com/yassineARK/status/1360343382556483587?s=...
My take on this is the following. Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do not. A few years ago Bitcoin didn't really register there, and it was okay to disregard. Now with so much energy/efforts spent there, one should ask oneselves, is it good allocation of resources? Is it good that so much cheap electricity is used for mining bitcoin? Can we think of a way of either taxing, or changing incentives, so that society benefits from this. I don't know what's the best way of changing the incentives, but it must be done in my opinion.
The problem with bitcoin, or the issue to be more honest because it is not really a problem, is that right now there is no "better" use for that electricity than bitcoin. That is the truth you must grapple with. Or as Google would say, the best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads. That that is true, that is your problem and everything else is noise. If you really want an environmental problem to tackle go fight the oil industry killing thousands of animals every day, destroying communities every day, destroying them literally.
But, if you insist you must "fix" something about the current crypto boom because somehow they do not adhere to your morality then you should look at everything else but bitcoin and ask yourself, why is the thing I consider moral not attractive to the market?, what can we do differently to make doing something else at least as profitable as mining bitcoin? If you just tax it or try to ban it they'll just move and you'll be a)poorer and b)left without a say.
> If you just tax it or try to ban it they'll just move
Which is exactly what the locals would want, is it not? I mean, if I live in a place with cheap power, I don't want some outsider to come, take advantantage of that fact, and use so much power until the prices approach average power prices.
Hydroelectric plants usually require flooding huge areas of beautiful nature. People accept that because it's better than burning coal. But if people are just going to use it for something that doesn't help the local community at all, why bother destroying the local scenery?
There's more to the economy than just money; local governments often subsidize local companies if they think it's good for the locals even if it would be more profitable to move production overseas.
We don't need to find a way to make the "moral" thing more profitable. We can just make laws that prohibit the "amoral" thing. If we would let the market decide everything, why bother electing a government in the first place?
> Why is the thing I consider moral not attractive to the market
Because markets are notoriously unable to price in externalities on their own.
I realize there is a temptation here to throw up your hands and say "well, all human activity emits carbon", especially if you are long bitcoin, but it's a false equivalency. Bitcoin is an energy consumption monster by design, and its difficulty adjustment mechanism neutralizes any attempt at making mining more efficient.
>is that right now there is no "better" use for that electricity than bitcoin.
You can't abstract away the fuel for energy production. I'm sure bitcoin miners would be fine with mining every last bit of coal on the planet and using it to run their rigs if they can do it cheaply (which they probably can as coal prices drop and renewables ramp up)
Majority of bitcoin mining is run on fossil fuel power.[0]
A better 'use' is keeping it in the ground.
Here's a byproduct of bitcoin mining, basically throwing a lifeline to dying coal plant: "Bitcoin miner Marathon signs for coal-fired electricity in Montana"[1]
“ If you really want an environmental problem to tackle go fight the oil industry killing thousands of animals every day, destroying communities every day, destroying them literally.”
It’s not one or the other. I’m critical of Bitcoin just like I’m critical of other things affecting the environment.
“If you just tax it or try to ban it they’ll just move”
Good. Let them move. Not everything is about acquiring as much money as physically possible. Getting more money out of people is not a tenable argument for whether something is appropriate or not.
Markets are wildly inefficient and do not account for everything. The areas that had low electricity prices were doing just fine for themselves before Bitcoin miners moved in, and will do just fine afterwards. Saying we should allow things because “money” is just sickening. At least come up with a better argument.
> The best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads.
Ridiculous.
A counterargument from Warren Buffett:
> If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing.
The market isn't a God - it selects silly, suboptimal things all the time, especially in the short run. It often selects things which are very bad for the many and good for the few, it has no regard for negative externalities, it's often subject to irrational speculative bubbles.
I'm not sure regulation is the answer, but bitcoin absolutely can and should be criticised as a poor use of energy.
> is that right now there is no "better" use for that electricity than bitcoin [...] the best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads
That's more about the fact that it's not measured in terms of dollars and shareholder return.
Would it be beneficial to have this electricity being used for other things or have those engineers do other things than optimize an ad click factory? Probably, we could use this electricity to have cheaper power for lower income households, or those engineers could work on improving other things.
But the market doesn't necessarily pay for those things, and if the system is geared towards optimizing for more dollars, then the only one gets is more dollars with all the non-priced externalities dumped onto the society at large.
> is that right now there is no "better" use for that electricity than bitcoin.
I've never heard of a clearer statement that our society is broken. We are literally destroying our own biosphere by generating energy, nearly all from fossil fuels, and yet we can't find anything "better" to do with that power.
It's madness.
> what can we do differently to make doing something else at least as profitable as mining bitcoin?
Not destroying our ecosystem will _never_ be profitable. We should do it because we want our grandchildren to live, not to make a buck.
A society that values immediate gain over its grandchildren's safety is, as I said, profoundly broken.
We're willing to concede that the best minds of our generation should be in the business of manipulating others to click on ads, but god forbid if some try to liberate us from total control and tyranny placed on civilization.
Awesome response! I love that @ HN for every shortsighted person there is a longsighted one providing a non-mainstream view. What ratio do we have on other platforms or even in real life? 1 to 100?
This comment perfectly encapsulates the logic of neoliberalism and inadvertently provides insight into how it is sending us full speed on an ecological collision course.
Show me a list of what you do in a day and I’ll find questionable, selfish uses of cheap energy that don’t benefit society. That’s not a game you want to play.
People making noise about Bitcoin energy consumption seem to have little idea how much energy anything else uses kinda like how Americans only compare everything to Hitler because WW2 is all we’re really taught in school.
People suddenly act like they care about how others choose to spend their energy when it comes to Bitcoin but not anything else, like the incredible amount of land and energy it took to bring that pound of meat to your table that you only eat because it pleases your tastebuds. Or the tech gadgets you own.
Seems convenient to only turn on the ol careface when it’s something you don’t happen to indulge in, yet it makes you blind to the inconsistency of your position. There are a lot of necks on the chopping block long before you get to Bitcoin mining when you start bringing up the metrics that you think damn Bitcoin mining, probably your entire way of life.
Fixing bad things in somewhat inconsistent order is absolutely a thing we want to, and need to, do.
Otherwise we'll be gridlocked by trying to be foolishly self consistent, and we won't be able to rein back developments that make things worse in new ways.
While taxing carbon usage is a good idea, there is something fundamentally wrong with the idea of allocating so much resources, in servers, in power and in space, for what essentially doesn't improve people's lives.
That this craze receives so much attention and funding while we face very real existential challenges is maddening.
yes please, that would be the holistic approach. externalities like carbon need to be priced in. if it's in the price, then the market will adjust accordingly. a $4 [thing] will jump to $12, people will buy fewer until producers figure out ways to reduce externalities in order to bring the price down.
what's free will be overused. price it in to force efficiency and alternative seeking.
I agree, taxing carbon usage is the correct way to go about this. All the ways I can think of taxing Bitcoin directly wouldn't modify the right behaviors. It seems like the options would be:
* Tax Bitcoin holdings - this is already accomplished via capital gains taxes, and again, it isn't the holding or usage of Bitcoin that causes the energy usage. It's the fact that Bitcoin has value that causes usage.
I think it is probably good to tax for Co2 production as a way of addressing global warming. I just don't think we should equate bitcoin production with other CO2 producers. I.e. I personally think that the CPU-cycles used for science on HPCs are much more valuable than the bitcoin mining (that's just my opinion though).
You tax carbon, country B now has an advantage over you.
You loose!
Now all your products are produced in country B, you've changed nothing and country B is probably using coal so you're worse off from your initial goal.
I agree with every part of that sentence except the "just". People have been trying desperately to do that for 40+ years without success, it's clearly not easy.
Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
There are tons of things the society could do without and be better off. Or maybe not, who decides? Surely it shouldn't be majority as then we will approach Idiocracy level of civilization in no time with Kayne designer flip-flops getting a yay and NASA or a new semi-conductor start-up getting a may.
I think there are two problems with crypto currencies:
1) Pollution and carbon emission is not taxed but should be.
2) Regulators allowing the situation where magic token is the only way to do certain kind of trades while competition faces insurmountable mountain of regulation and requirements. If it was possible to make fast money transfer system without hiring the army of lawyers in every country you want to operate then BTC would never gain any traction.
>Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
Considering the array of competing cryptocurrencies that consume far less energy while providing more transactions per second and additional features like smart contracts, yes it is. For example. Ethereum has twice as many transactions per second while consuming a third of the energy.
Given that bitcoin would also work without a Proof of Work, yes, it's a more stupid way to burn resources than pretty much anything else. Bitcoin without the ridiculous amount of energy consumption is possible, though I'm personally doubtful that will happen.
As an example Cardano and Tezos are two blockchain based on Proof of Stake, they both require a very low amount of energy compared to bitcoin or ethereum (no mining rigs, a node can run on a raspberry pi 4).
> If it was possible to make fast money transfer system without hiring the army of lawyers in every country you want to operate then BTC would never gain any traction.
I don't know where you get the idea that BTC is being used primarily to transfer money fast between countries without lawyers being involved, because as far as I can tell that's mainly a hypothetical use case rather than one that happens often in reality.
> Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
Even looking at the usage of graphics cards specifically, is Bitcoin an objectively worse usage of those chips than playing video games? Than running ML models at Facebook?
Do we not realize the massive incentives Bitcoin is providing for energy production? If we could just agree to tax carbon emissions (the thing most of the world agrees is bad), then we should encourage this behavior as much as possible.
We’re creating a wonderful scenario where miners would be investing in as much cheap energy as possible. If their cost gets to close to average, then they can just leave it to the market.
Miners are interesting in extracting the cheap energy from the market. There's literally no incentive for any of that benefit to fall to anyone else, and in fact using up low-carbon electricity for cryptocurrency PoW "mining" takes away the benefits of the low-carbon investment from everyone else.
I do not understand this argument. The fact that bitcoin mining is profitable inherently means that society has already deemed it useful, no? Users would not pay for it if it were not useful.
> Everything we do as a society I think should be from time to time evaluated
Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
> the incentives should be updated to support things that are consider useful, and to penalize things that we do not.
Please define useful. Humans have different needs and value things differently. What is useful to one may not be useful to the other. Any system that picks winners will also pick losers.
> I do not understand this argument. The fact that bitcoin mining is profitable inherently means that society has already deemed it useful, no? Users would not pay for it if it were not useful.
Just because there is a market for something doesn't mean that "society" as a whole has decided that it is useful. There's an underground market on taking out hits on someone else, that doesn't mean that "society" has decided that murder is good.
> Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
A public body that is democratically constrained.
> Please define useful.
Welfare enhancing for humanity. Sometimes, a welfare enhancing step will involve losers and winners, you're right. For instance, if one person held $200 billion and the rest of humanity held $1, redistributing that money would almost certainly be a welfare enhancing step given diminishing marginal utility of the $.
The fact that tulips are selling for 10x their prior year price inherently means that society has decided tulips are more valuable than gold. People wouldn't be investing their life savings in tulip futures if they weren't a stable store of wealth, right?
I’m truly shocked by the number of people who totally fail to grok the economic logic behind a lot of the projects being built on blockchain tech. Many dismiss such work as totally worthless.
I suspect such dismissive types lack the combination of deep technical ability and profound economic intuition that made the Collison brothers wealthy. Or maybe it’s just that they don’t care to think these things through. Like PG says in his exploration of the aphorism “a word to the wise is sufficient:” “Understanding all the implications — even the inconvenient implications — of what someone tells you is a subset of resourcefulness. It's conversational resourcefulness.”
> My take on this is the following. Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do not.
Who is “we” and why to “we” get to decide instead of “they”? This approach to governing only sounds good when you’re not in the sights of those with the legislative pen.
In Iran, “we” (the government) have decided that “they” (gay people) should not be able to live openly gay.
I am not an anarchist or libertarian, so I believe in democratic governements. And I do believe it's their job to establish rules/regulations/laws that benefits society as a whole. Obviously and important point is the government must be democratically elected, to be able to control/revert things if the governement screws up.
You're making the mistaken assumption that people care about whether Bitcoin is being mined. They only care about it not being mined in their backyard because the low electricity prices are just meant to be a subsidy to local residents. The electricity is being exported to a different location for a fat profit. If that other location is mining Bitcoin you're just giving the local residents more money. It's a pure net loss for Bitcoin miners.
You say that as if having an industry based around a speculative asset that is more volatile than OTM stock options sucking up a third of your countries energy resources is actually an advantage in some way.
bitcoin is now significantly contributing to an existential threat. Its not alone of course...most things we do daily do so. However, I wish it wasn't such useless work.
Capitalism seems to be the best of the possible solutions to the resource utilization problem.
Bitcoin seems to be just the latest in a long string of events suggesting that humans are irrational, not necessarily that capitalism or markets are bad.
If Bitcoin were processing a zillion transactions at a very very low fee per transaction, I believe few people would be saying it was a waste of resources.
my point exactly! The only reliable indicator of whether btc is good or bad overall is time. I was of the latter opinion, but what am i compared to the Great Musk? (judging by past experience, the answer is nothing).
> Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do no
This is vague to the point of meaninglessness. On one level, it describes democracy and lawmaking. On another level, it describes communist-style state control of economic factors.
That’s my town! And it’s actually totally unnoticeable, 98% of people in town have no idea.
The real only effect it had on most citizens were the fires that got started at a few mines, from electrical overloads. Now it’s a big pain if you want a large load of power, which makes starting a high power demand business a lot harder around here.
We also have a ton of indoor pot farms, this is the best place in the country to grow indoors because power is so cheap.
Since article was written a Diamond foundry opened up, pretty cool use of tons of power, and just about as useless as Bitcoin.
Diamonds aren't quite as useless as bitcoin currently. Bitcoin - as far as I'm aware - is currently mostly used for speculation. Whereas diamonds are very useful in many industrial processes which require hard materials (think cutting/grinding tools).
One could argue that diamonds are considerably more useful than bitcoin, most of the world's diamond consumption is for industrial use rather than jewelry.
Fantastic real-world viewpoint! I was beginning to wonder if all these useful / useless arguments are just exaggerated drama. In reality Bitcoin mines are extremely low-profile operations.
There is an old shipping container hidden behind our 7-11[0]. Only way to tell what it is, is by the excess venting and security. They popped up everywhere but no one knows what they are. Most are in really rundown, old, or temporary buildings.
Another one that they learned some very expensive lessons about heating and cooling is inside this big tower [1] that used to be where they made apple juice by the millions of gallons.
On the one hand, we have the biggest crisis to ever face humanity, where all of our lives literally hang in the balance and daily we're seeing the effects from wildfires to cold blasts.
On the one hand, we have the biggest crisis to ever face humanity, where all of our lives literally hang in the balance and daily we're seeing the effects from wildfires to cold blasts.
So many of you on here are eager to form a government committee to determine what is and isn't appropriate use of electricity. How are you going to feel when this witch hunt comes to shut down the activity that you deem useful? Maybe it'll be all the kilowatts you're drawing for an experimental ML project. Sorry, the committee just didn't see value in it! Are you really advocating to raise the barrier to experimentation and halt the pace of future technological developments? On a forum like HN nonetheless!
I can think of any number of energy uses that could be classified as wasteful, are you ready to part with them?
Turning your heat above 60 degrees in the winter
Driving more than 10 miles a day
Driving at all
Owning a videogame console
Spinning up too many cloud resources for an experimental
startup
Having a house larger than you need
Having multiple cars per family
Flying internationally
Flying anywhere
Buying a new TV, phone, laptop, or other gadget
I can imagine a really horrific dystopia where an AI is given control of the Bureau of Moral Energy Use. It starts out nice enough finding low hanging fruit to reduce energy usage with minimal impact to peoples lives. And then it's a slippery slope, all the way to the final conclusion by the computer brain that the lowest energy users are DEAD HUMANS.
The only holistic solution is to tax carbon at the time of production. Really, all economic externalities (pollution, garbage, aquifer use, etc.) should priced in at the point of production. It's too easy to never price it in if you punt to deal with it further downstream.
I love reading HN, but every time Bitcoin comes up I feel like I'm hanging out with a bunch of virtue signaling luddites. You all need to stop being butt hurt that you missed the boat and look up at the revolution that's happening.
There is such a trivial solution to this as well, set up a carbon tax or some other method that phases out all fossil fuels and charge what it costs to do this as the cost of electricity. Then at that point, who cares what you do with the power because the problem is solved.
Specific laws targeting individual causes are always a useless whack a mole exercise when you can simply decentivise problems and the causes will rearrange themselves to not be problems.
Also eating meat, buying new clothes every few weeks/months, browsing inefficient websites, using social media with huge data centers to process personal data and target ads... These could be outright banned with no harm to society.
"you could buy electricity for around 2.5 cents per kilowatt." this is a typo. they meant 2.5 cents per kilowatt hour.
i think its really interesting that elon musk has changed his public stance on bitcoin. originally, and for a long time, he described bitcoin as an alternative to cash but not an alternative to centralized banking because the primary purpose of money is to act as a database or tool for resource allocation. i had never thought of it that way and it intrigued me. overall he was basically dismissive of crypto. but then recently he has endorsed bitcoin, offered to buy out dogecoin investors and other things. and he hasnt elaborated on why he turned around, and joe rogan was too stupid to ask him when he came on the podcast recently.
i think tesla stock is essentially a meme and lost
it’s luster so he had to do something to get the sheen back. especially to distract from news that chinese regulators were clamping down
The North American crypto mining landscape and trade has evolved alot since this article, it is the most robust in the world as the hardware shifts from location to location to prevent becoming waste
In my opinion, Bitcoin's Proof of Work is the biggest downside of that cryptocurrency (mostly due to extreme power consumption of the network). Moreover, the conservative approach of its developers to new concepts means that it's quite unlikely that the situation is going to change in coming months or years. Regardless, I wonder whether there are alternatives that could significantly reduce power usage of the whole network without making it more susceptible to various attacks. I've heard of Proof of Stake (Ethereum is planning to switch to it) or alternative PoW algorithms (such as Monero's RandomX), but I'm not experienced enough to tell how would these solutions scale for a cryptocurrency as big as Bitcoin today is.
Employing PoW to protect against Sybil attack in anonymous network is the very invention that made Bitcoin possible.
Without PoW you must ID participants, which makes system trivial to regulate or shutdown (see Facebook Libra, or security fraud case against Ripple). And no, PoS isn't the answer, because PoS implies a handful of biggest exchanges control the coin, because they genuinly stake the most.
If Bitcoin was PoS, Mt Gox would run Bitcoin to this day!
Proof of Work and Proof of Stake are not too different in terms of what it would take in order to control the network. Stake and access to computing power are both just functions of being able to assemble sufficient resources so as to represent a sizable enough portion of control.
What's interesting is that all of the magic of crypto comes from:
- Signed transactions being broadcast onto a p2p network
- This network being visible to anyone who is interested
The much less important part of crypto is exactly how the shared ledger is assembled. So long as these transactions are put together in a relatively timely manner, and no transactions are being willfully excluded, whatever mechanism used for assembling the ledger doesn't really matter that much. Proof of work is literally just a time-gated lottery for some entity to be the one that gets to say "I am submitting the next update to the ledger." They're not providing any service to the network that a single shitty chromebook couldn't provide on its own, the time-gated proof of work is literally just to arrive at a consensus. There are so many alternatives that make more sense than this.
> The much less important part of crypto is exactly how the shared ledger is assembled
No! It is of *critical* importance how the shared ledger is assembled, because Bitcoin's threat model assumes the World's governments descending upon the shit, eventually!
Readit News
Another article suggests the carbon footprint of Bitcoin is equivalent to New Zealand [2].
It's not just the cost of mining new coins (which will ultimately end) but the cost of maintaining the network. The more valuable the collective Bitcoins are, the more energy you need to spend defending it against 51% attacks.
To the apologists claiming there's no other good use for that energy, it's not simple. Using too much electricity can raise the price that everybody pays [3].
Miners will keep chasing cheap power but I expect, much like ArbBnB, municipalities, states and even countries will increasingly clamp down on it.
The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies. Try and see ordinary people deal with a Bitcoin wallet and discover there's no recourse if a vulnerability in their computer means the contents are irreversibly stolen.
I realize there are corner cases (eg sending money to and from Venezuela). There's also a lot of illegal use cases.
Thing is, blockchains aren't really as immutable as pundits suggest. Bitcoin and Ethereum have had forks.
[1]: https://www.bbc.com/news/technology-56012952#:~:text=Cambrid....
[2]: https://www.cnbc.com/2021/02/05/bitcoin-btc-surge-renews-wor....
[3]: https://www.pbs.org/newshour/show/cheap-power-drew-bitcoin-m...
Just the other week an older relative asked me to help get them set up so they could buy Ethereum. Another friend asked me to help them setup an account to buy Doge. Neither have any intention of using it as anything besides a speculative store of value because they hear other people are buying it, which would be fine if it didn’t actually have such poor environmental externalities.
What a time to be alive.
Deleted Comment
Tell that to citizens of countries who have experienced hyperinflation and whose currencies became worthless almost overnight.
There is a reason every asset is going up right now. Real estate, stocks, commodities, and crypto. More money is being printed this year than ever before. The financial media and the fed can claim minimal inflation but the markets are exposing that claim as dubious.
I don’t think any of my family in Algeria are using Bitcoin, and same for my wife’s family in Bangladesh. In Algeria at least, generally you’ll go to a hawala money changer who gives you better rates than the banks and exchange your local currency into Euros. If you need to send money abroad you use the same old Islamic hawala system to send it to France or wherever else.
There will probably be some useful things built on top of blockchains, and I don’t think crypto has zero value, but I don’t think it’s going to reasonably fix a situation of a failing state.
Mind you, I speak as someone who is a citizen in a country that experienced that. Not now, but back in 2016, our currency got halved. Nobody, and I mean absolutely nobody ever thought "I should have bought crypto."
When the 2017-2018 crypto rush happened, and people started mining ETH, well-off people* here got onto it and started mining ETH.... only to immediately sell it as they mined. Nobody held onto it.
*well-off because GPUs were absurdly expensive due to the inflation, and it only got worse when the shortages hit.
EDIT: I also want to add that very, very few people here in my country actually understand what bitcoin even is (or cryptocurrency or blockchain). The people that I have seen support mining here only really view it as a way to earn some money while doing nothing.
At best, this argument turns Bitcoin into a massive subsidy by stable countries of unstable ones. A subsidy paid for in the form of higher energy prices, environmental damage and opportunity cost.
Savings rates have exploded, and those funds need to go somewhere.
Yeah, it's almost as though they had invested in Bitcoin during one of its crashes. What do you think they will say next time Bitcoin crashes back to 10% of its value?
Dead Comment
I think at some point, government is going to ban PoW mining in the same way they ban gasoline based cars or plastic bags.
> The thing is... Bitcoin solves a problem for almost nobody. It's almost entirely a speculative bubble. Citizens of stable countries are almost entirely better off with traditional currencies
That's the key: citizens of stable countries are just speculating, but for people of not so stable countries (Mexico, Argentina, China, among several others) where people just do not trust their government & their banking system, Cryptocurrencies deffinitely have value.
In my case, I have part of my portfolio on Bitcoins, because there is no easy way to open a USD account in Mexico, and storing USD or gold is just not practial. And with our stupid president having 4 more years to go, the country is quickly going to a deep recesion. I don't doubt that when a recession come, the government will "lock" the banks to prevent a "cash run" as they did before (and as it has happened in other countries like Venezuela and Greece)
Fair point, but curious in how many shops in those countries you can buys groceries or how many landlords take their rent in Crypto? Because if you can't use it to feed or house yourself then what's the point of owning it other than going back to BTC's only real use cases so far: storing it for speculation, drug trafficking and ransomeware payments.
Plus, can you imagine paying a $26 transaction fee every time you buy a $0.30 loaf of bread with bitcoin?
So if a bunch of miners drop off due to electricity prices or such concerns, the network will simply readjust and keep on going.
BTC has a lot of issues, but nothing forces it to be ever power hungrier. It can scale down the energy consumption and keep on existing just fine.
Bitcoin and other proof-of-work (no actual useful work being done here either, opportunity wasted!) based crypto-currencies increase the proof-of-work algorithms complexity factor as a means of controlling the rate. Bitcoin cannot scale up without using an ever increasing literal waste of electricity. Want a better system? make a new crypto-currency trust basis... (proof of stake, etc.)
https://en.bitcoin.it/wiki/Proof_of_work
https://changelly.com/blog/proof-of-work/#Proof-of-Work-Draw...
Today i believe, most usage of Bitcoin is for legitimate purposes. There is always lots of illegal use cases for anything with value, if it has value, people will do illegal s** to get it and will use as payment. Human nature.
The energy used since the inception of the network is what makes the network valuable. Think of it this way: to create a cryptocurrency you need some "value" attached to it, Bitcoin does this by converting energy->work->bitcoin, you add "value" to the network in the form of energy and get bitcoin back (you get your "value" back in the form of money when you sell the mined BTC). Ethereum took a different approach (token sale + PoW) and now are moving to PoS.
Pure PoW seems the only way to launch a completely anonymous and decentralized crypto
Transaction wallet ids are public and Chinese miners control the currency.
Like what? Aside from "speculating that it will increase in value", what are these legitimate purposes?
Same as Facebook or Twitter or Instagram. They may use less power but their negative influence is far greater.
[1]https://youtu.be/emc83bQYiF8?t=1358
Also, consider the massive dis-incentivization of consumption that BTC will encourage. The environmental effects are ambiguous, and probably not nearly as bad as mainstream media suggests. It could even be net positive.
I wonder how afraid one actually needs to be of 51% attacks. How would the attacker profit from a 51% attack? They might double-spend, or rewrite known history somehow, or decide to only include certain transactions in their blocks and leave other transactions stranded. In each of these cases, it would be clear to everyone that Bitcoin has been broken, and that it has lost its usefulness and the properties it became famous for. The attacker might then control a large amount of Bitcoin, but having lost everyone's trust in it, that large amount of Bitcoin would be worthless. It's not in any attacker's interest to actually break the system, since they would need a gigantic initial investment and get no return on it. (Except if it were very cheap and the attacker's motivation would really be to destroy Bitcoin.)
I don't think we need to fool ourselves that miners are in it to "protect" the network. They're in it to make money.
It’s a clean energy subsidy. Be it hydroelectric, wind, nuclear, or cold fusion - create it and the returns are yours indefinitely.
Indeed, much of mining is already hydroelectric, and much is overage that can’t be stored. This is not just sugarcoating or PR. Miners are highly incentivized to find these situations and exploit them. The more that happens, the less “bad” miners can even compete.
I lived in a period without debit and credit cards. You dropped your cash it was gone. I'm not sure not having a reversal transaction is the killer missing feature.
I know what life is like with the existing feature of getting thousands of stolen dollars back by relying on the banking (and/or legal) system. I won't willingly adopt a system without it.
Most Android phones stop receiving security updates after two years or less.
With bitcoin it's medieval ages at best.
Since we need huge investments into renewables production, every mechanism for such capital reallocation should be welcomed. Our future is electticity. Currently we are producing a fraction of what we'll need.
Lots of banking problems in your so called "stable" countries like your account getting blocked (try running a business on transferwise or paypal) because of some shit algortihm.
How much energy do all atm machines (on idle) waste compared to miners? At least miners have incentive (dependent on local regulation/costs) to find cheaper sources of energy because it directly affects their bottom line.
[1] https://en.m.wikipedia.org/wiki/List_of_countries_by_electri...
Bitcoin grows by a factor of 100x, Satoshi is now a Trillionaire. He has vast reserves of money he can move around anonymously. Does he still exist? Well his coins haven't moved. Will the world be okay with the mystery?
So the likely reasons someone sitting in a notional value of $50B+ who hasn't cashed in any of it include:
1. He (or she) is dead (I believe the last confirmed post was 2012?);
2. He (or she) has lost access to these coins;
3. He (or she) has cashed in some wealth from wallets not linked to Satoshi; or
3. He (or she) is sitting on this mountain of wealth and not cashing any of it in.
There's the possibility of course that Satoshi isn't one person but several.
Let's consider (4). You would need to be an incredibly committed ideologue. We have ways now of essentially laundering crypto (ie by converting it to other crypto through a pooling mechanism that makes it difficult to identify the source wallet for what comes out).
It's stated that perhaps Satoshi fears government persecution (eg the tenuous connection to Wikileaks). To me that seems... unlikely. It's not like Satoshi controls the network. Lots of people hold crypto now.
Maybe Satoshi just really likes his, her or their privacy. But given that wealth... (1) or (2) become increasingly likely as time goes on.
It's fun to speculate.
Didn't read the rest, btw forks of a chain like bcash doesn't have much to do with immutability.
Dead Comment
I realized something very sad this year.
I used to think that Bitcoin was a poor currency, and if someone just made one that was actually scalable and better, then this whole first-gen system would fizzle out, like Friendster or AskJeeves in the presence of better technology.
But no. You see, Satoshi had us all fooled with the title of his paper: “A peer to peer cash system.” FORGET about Bitcoin being a currency. It is a store of value. And it has all the features you’d ever need to store value and not have it be diluted. There is nothing that needs to be improved over and above those features, and that is its killer app: being a black hole of value. Constantly growing versus fiat.
You see, just like gold, Bitcoin is a store of value becaus others say it is. It has reached critical mass and mindshare for “storing value” even from companies now. From here on out, even if a better system arises, if it becomes a sidechain of bitcoin that locks up the coins, then there will be less and less “unlocked” coins, and therefore each coin will be more valuable. Also, bitcoins are constantly lost as dust or misplaced private keys or other things. And so the supply shrinks.
But bitcoin is divisible into extremely tiny pieces (satoshis) so this merely helps one bitcoin get more and more valuable. You can’t kill bitcoin by making something better because even if 1/1000th of it remains, it will actually just be more valuable. The scarcer bitcoin gets, the pricier bitcoin gets, like the Hulk.
Ok so what does it mean for electricity consumption? Here is where the sad part comes in! You see, bitcoin miners are rewarded in bitcoin, and as long as the price of bitcoin outpaces the halvings, mining rewards will grow.
Read the story again, and extrapolate. The year is 2035, and households are fighting for electricity against bitcoin miners, who are easily winning. Governments trying to ban bitcoin mining meet similar fate to Mexican governments trying to ban the drug cartels’ activity, that is to say their families are threatened and they do not have power anymore to stop it, etc. Their feeble attempts to print money fall short of the ever growing rewards.
Everything in the article about bitcoin using “only” 6% is misunderstanding the expontnential function. In 2021 those stats are outdated and the Bitcoin network consumes more electricity than half the world’s countries. We are five minutes to midnight. By the time we realize it’s consuming more than half the world combined, it will be too late to stop this activity. It will be “too sweet” and too financial lucrative.
If you think we can stop it as a society, then let’s see how we have done with killing off insects, reducing biodiversity and species, polluting the world with plastic and pumping greenhouse gases into the air. Take that last one for example — have we been able to make a reduction in the greenhouse gas emissions, or merely their rate of growth?
What exactly will change between now and 2035, or 2135 that will make bitcoing mining NOT be more economical valuable than, say, airconditioning homes?
Change my mind. Prove me wrong.
How Argentina justifies using so much energy?
Bitcoin supports the degenerate gambling habits of some nerds.
This is a very Western centric view. Also, I live in the west and see Bitcoin as a good alternative store of wealth.
Also, have fun staying po...
With a twitter thread?
I mean, what is the application of Bitcoin, except crime?
Bo one believes in BitCoin except a few people who don't understand how the word works.
Do educate yourself: https://medium.com/@kaistinchcombe/ten-years-in-nobody-has-c... and followup: https://medium.com/@kaistinchcombe/decentralized-and-trustle...
As to your tweet, it is as ignorant and uneducated as anything coming from bitcoin apologists.
The problem with bitcoin, or the issue to be more honest because it is not really a problem, is that right now there is no "better" use for that electricity than bitcoin. That is the truth you must grapple with. Or as Google would say, the best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads. That that is true, that is your problem and everything else is noise. If you really want an environmental problem to tackle go fight the oil industry killing thousands of animals every day, destroying communities every day, destroying them literally.
But, if you insist you must "fix" something about the current crypto boom because somehow they do not adhere to your morality then you should look at everything else but bitcoin and ask yourself, why is the thing I consider moral not attractive to the market?, what can we do differently to make doing something else at least as profitable as mining bitcoin? If you just tax it or try to ban it they'll just move and you'll be a)poorer and b)left without a say.
Which is exactly what the locals would want, is it not? I mean, if I live in a place with cheap power, I don't want some outsider to come, take advantantage of that fact, and use so much power until the prices approach average power prices.
Hydroelectric plants usually require flooding huge areas of beautiful nature. People accept that because it's better than burning coal. But if people are just going to use it for something that doesn't help the local community at all, why bother destroying the local scenery?
There's more to the economy than just money; local governments often subsidize local companies if they think it's good for the locals even if it would be more profitable to move production overseas.
We don't need to find a way to make the "moral" thing more profitable. We can just make laws that prohibit the "amoral" thing. If we would let the market decide everything, why bother electing a government in the first place?
Because markets are notoriously unable to price in externalities on their own.
I realize there is a temptation here to throw up your hands and say "well, all human activity emits carbon", especially if you are long bitcoin, but it's a false equivalency. Bitcoin is an energy consumption monster by design, and its difficulty adjustment mechanism neutralizes any attempt at making mining more efficient.
You can't abstract away the fuel for energy production. I'm sure bitcoin miners would be fine with mining every last bit of coal on the planet and using it to run their rigs if they can do it cheaply (which they probably can as coal prices drop and renewables ramp up)
Majority of bitcoin mining is run on fossil fuel power.[0]
A better 'use' is keeping it in the ground.
Here's a byproduct of bitcoin mining, basically throwing a lifeline to dying coal plant: "Bitcoin miner Marathon signs for coal-fired electricity in Montana"[1]
[0]https://decrypt.co/43848/why-bitcoin-miners-dont-use-more-re...
[1]https://www.datacenterdynamics.com/en/news/bitcoin-miner-mar...
It’s not one or the other. I’m critical of Bitcoin just like I’m critical of other things affecting the environment.
“If you just tax it or try to ban it they’ll just move”
Good. Let them move. Not everything is about acquiring as much money as physically possible. Getting more money out of people is not a tenable argument for whether something is appropriate or not.
Markets are wildly inefficient and do not account for everything. The areas that had low electricity prices were doing just fine for themselves before Bitcoin miners moved in, and will do just fine afterwards. Saying we should allow things because “money” is just sickening. At least come up with a better argument.
Ridiculous.
A counterargument from Warren Buffett:
> If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing.
The market isn't a God - it selects silly, suboptimal things all the time, especially in the short run. It often selects things which are very bad for the many and good for the few, it has no regard for negative externalities, it's often subject to irrational speculative bubbles.
I'm not sure regulation is the answer, but bitcoin absolutely can and should be criticised as a poor use of energy.
That's just not true. The higher the price of Bitcoin, the more incentive there is for miners to outbid other energy consumers.
That's more about the fact that it's not measured in terms of dollars and shareholder return.
Would it be beneficial to have this electricity being used for other things or have those engineers do other things than optimize an ad click factory? Probably, we could use this electricity to have cheaper power for lower income households, or those engineers could work on improving other things.
But the market doesn't necessarily pay for those things, and if the system is geared towards optimizing for more dollars, then the only one gets is more dollars with all the non-priced externalities dumped onto the society at large.
I've never heard of a clearer statement that our society is broken. We are literally destroying our own biosphere by generating energy, nearly all from fossil fuels, and yet we can't find anything "better" to do with that power.
It's madness.
> what can we do differently to make doing something else at least as profitable as mining bitcoin?
Not destroying our ecosystem will _never_ be profitable. We should do it because we want our grandchildren to live, not to make a buck.
A society that values immediate gain over its grandchildren's safety is, as I said, profoundly broken.
This should be the top comment of this post.
Dead Comment
People making noise about Bitcoin energy consumption seem to have little idea how much energy anything else uses kinda like how Americans only compare everything to Hitler because WW2 is all we’re really taught in school.
People suddenly act like they care about how others choose to spend their energy when it comes to Bitcoin but not anything else, like the incredible amount of land and energy it took to bring that pound of meat to your table that you only eat because it pleases your tastebuds. Or the tech gadgets you own.
Seems convenient to only turn on the ol careface when it’s something you don’t happen to indulge in, yet it makes you blind to the inconsistency of your position. There are a lot of necks on the chopping block long before you get to Bitcoin mining when you start bringing up the metrics that you think damn Bitcoin mining, probably your entire way of life.
Otherwise we'll be gridlocked by trying to be foolishly self consistent, and we won't be able to rein back developments that make things worse in new ways.
That this craze receives so much attention and funding while we face very real existential challenges is maddening.
yes please, that would be the holistic approach. externalities like carbon need to be priced in. if it's in the price, then the market will adjust accordingly. a $4 [thing] will jump to $12, people will buy fewer until producers figure out ways to reduce externalities in order to bring the price down.
what's free will be overused. price it in to force efficiency and alternative seeking.
* Tax Bitcoin transactions - decreasing Bitcoin transactions wouldn't decrease energy usage
* Tax Bitcoin holdings - this is already accomplished via capital gains taxes, and again, it isn't the holding or usage of Bitcoin that causes the energy usage. It's the fact that Bitcoin has value that causes usage.
Now all your products are produced in country B, you've changed nothing and country B is probably using coal so you're worse off from your initial goal.
You loose double!
There are tons of things the society could do without and be better off. Or maybe not, who decides? Surely it shouldn't be majority as then we will approach Idiocracy level of civilization in no time with Kayne designer flip-flops getting a yay and NASA or a new semi-conductor start-up getting a may.
I think there are two problems with crypto currencies:
1) Pollution and carbon emission is not taxed but should be.
2) Regulators allowing the situation where magic token is the only way to do certain kind of trades while competition faces insurmountable mountain of regulation and requirements. If it was possible to make fast money transfer system without hiring the army of lawyers in every country you want to operate then BTC would never gain any traction.
Considering the array of competing cryptocurrencies that consume far less energy while providing more transactions per second and additional features like smart contracts, yes it is. For example. Ethereum has twice as many transactions per second while consuming a third of the energy.
As an example Cardano and Tezos are two blockchain based on Proof of Stake, they both require a very low amount of energy compared to bitcoin or ethereum (no mining rigs, a node can run on a raspberry pi 4).
I don't know where you get the idea that BTC is being used primarily to transfer money fast between countries without lawyers being involved, because as far as I can tell that's mainly a hypothetical use case rather than one that happens often in reality.
Even looking at the usage of graphics cards specifically, is Bitcoin an objectively worse usage of those chips than playing video games? Than running ML models at Facebook?
Or the entertainment industry as a whole, it's pointless.
We’re creating a wonderful scenario where miners would be investing in as much cheap energy as possible. If their cost gets to close to average, then they can just leave it to the market.
> Everything we do as a society I think should be from time to time evaluated
Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
> the incentives should be updated to support things that are consider useful, and to penalize things that we do not.
Please define useful. Humans have different needs and value things differently. What is useful to one may not be useful to the other. Any system that picks winners will also pick losers.
Just because there is a market for something doesn't mean that "society" as a whole has decided that it is useful. There's an underground market on taking out hits on someone else, that doesn't mean that "society" has decided that murder is good.
> Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
A public body that is democratically constrained.
> Please define useful.
Welfare enhancing for humanity. Sometimes, a welfare enhancing step will involve losers and winners, you're right. For instance, if one person held $200 billion and the rest of humanity held $1, redistributing that money would almost certainly be a welfare enhancing step given diminishing marginal utility of the $.
Not when that mining doesn't account for externalities
I suspect such dismissive types lack the combination of deep technical ability and profound economic intuition that made the Collison brothers wealthy. Or maybe it’s just that they don’t care to think these things through. Like PG says in his exploration of the aphorism “a word to the wise is sufficient:” “Understanding all the implications — even the inconvenient implications — of what someone tells you is a subset of resourcefulness. It's conversational resourcefulness.”
http://www.paulgraham.com/word.html
Who is “we” and why to “we” get to decide instead of “they”? This approach to governing only sounds good when you’re not in the sights of those with the legislative pen.
In Iran, “we” (the government) have decided that “they” (gay people) should not be able to live openly gay.
You actually haven't changed anything it has just moved to another country that is probably using coal. You loose!
Bitcoin seems to be just the latest in a long string of events suggesting that humans are irrational, not necessarily that capitalism or markets are bad.
If Bitcoin were processing a zillion transactions at a very very low fee per transaction, I believe few people would be saying it was a waste of resources.
This is vague to the point of meaninglessness. On one level, it describes democracy and lawmaking. On another level, it describes communist-style state control of economic factors.
The real only effect it had on most citizens were the fires that got started at a few mines, from electrical overloads. Now it’s a big pain if you want a large load of power, which makes starting a high power demand business a lot harder around here.
We also have a ton of indoor pot farms, this is the best place in the country to grow indoors because power is so cheap.
Since article was written a Diamond foundry opened up, pretty cool use of tons of power, and just about as useless as Bitcoin.
Edit:spelling
One could argue that diamonds are considerably more useful than bitcoin, most of the world's diamond consumption is for industrial use rather than jewelry.
Do you mean that the journalist over-exaggerated the story in a very heated topic to get eyeballs. I'm, for one, very surprised. /s
Another one that they learned some very expensive lessons about heating and cooling is inside this big tower [1] that used to be where they made apple juice by the millions of gallons.
[0] https://goo.gl/maps/PEbm8qqVKDL5fnRf8 [1] https://goo.gl/maps/6HfgNELGKxwRJiJE6
On the other hand we have bitcoin.
On the other hand I ate a delicious burger.
What's your point?
I have Bitcoin.
Yeah, I'm not particularly helping with your problem but you never really helped with mine so it's all good.
I can think of any number of energy uses that could be classified as wasteful, are you ready to part with them?
Turning your heat above 60 degrees in the winter
Driving more than 10 miles a day
Driving at all
Owning a videogame console
Spinning up too many cloud resources for an experimental startup
Having a house larger than you need
Having multiple cars per family
Flying internationally
Flying anywhere
Buying a new TV, phone, laptop, or other gadget
I can imagine a really horrific dystopia where an AI is given control of the Bureau of Moral Energy Use. It starts out nice enough finding low hanging fruit to reduce energy usage with minimal impact to peoples lives. And then it's a slippery slope, all the way to the final conclusion by the computer brain that the lowest energy users are DEAD HUMANS.
The only holistic solution is to tax carbon at the time of production. Really, all economic externalities (pollution, garbage, aquifer use, etc.) should priced in at the point of production. It's too easy to never price it in if you punt to deal with it further downstream.
I love reading HN, but every time Bitcoin comes up I feel like I'm hanging out with a bunch of virtue signaling luddites. You all need to stop being butt hurt that you missed the boat and look up at the revolution that's happening.
Specific laws targeting individual causes are always a useless whack a mole exercise when you can simply decentivise problems and the causes will rearrange themselves to not be problems.
i think its really interesting that elon musk has changed his public stance on bitcoin. originally, and for a long time, he described bitcoin as an alternative to cash but not an alternative to centralized banking because the primary purpose of money is to act as a database or tool for resource allocation. i had never thought of it that way and it intrigued me. overall he was basically dismissive of crypto. but then recently he has endorsed bitcoin, offered to buy out dogecoin investors and other things. and he hasnt elaborated on why he turned around, and joe rogan was too stupid to ask him when he came on the podcast recently.
The North American crypto mining landscape and trade has evolved alot since this article, it is the most robust in the world as the hardware shifts from location to location to prevent becoming waste
Employing PoW to protect against Sybil attack in anonymous network is the very invention that made Bitcoin possible.
Without PoW you must ID participants, which makes system trivial to regulate or shutdown (see Facebook Libra, or security fraud case against Ripple). And no, PoS isn't the answer, because PoS implies a handful of biggest exchanges control the coin, because they genuinly stake the most.
If Bitcoin was PoS, Mt Gox would run Bitcoin to this day!
- Signed transactions being broadcast onto a p2p network
- This network being visible to anyone who is interested
The much less important part of crypto is exactly how the shared ledger is assembled. So long as these transactions are put together in a relatively timely manner, and no transactions are being willfully excluded, whatever mechanism used for assembling the ledger doesn't really matter that much. Proof of work is literally just a time-gated lottery for some entity to be the one that gets to say "I am submitting the next update to the ledger." They're not providing any service to the network that a single shitty chromebook couldn't provide on its own, the time-gated proof of work is literally just to arrive at a consensus. There are so many alternatives that make more sense than this.
No! It is of *critical* importance how the shared ledger is assembled, because Bitcoin's threat model assumes the World's governments descending upon the shit, eventually!