Whenever this kind of thing comes up, I hear bitcoin enthusiasts use strange logic to claim that it's good because most of this power is coming from renewables, or that if it's not then it's incentivizing the switch to renewables by increasing demand, and so on.
Bollocks!
Unlike other technologies that are incentivized to become more efficient over time, because of how competition over mining rewards works, this technology has the characteristic of consuming more and more energy the more it succeeds.
It's designed to waste energy. Even if that was "green" energy, it's still just making heat out of electricity for pretend internet money. Energy that other things could be using.
A crypto enthusiast friend once made that argument to me and it was so baffling.
By this logic, we should all leave our lights and air conditioners on while we're at work or on vacation because it will increase demand and hasten the transition to renewables.
I'm no crypto enthusiast, but that's not the same argument. You are not moving demand to physical proximity of the renewables in that case, whereas miners claim they can.
Leaving stuff on when you are away is completely different than how bitcoin mining demand response works.
Firstly, at regular electricity prices, bitcoin mining is profitable and it is profitable for the utility to run renewables (which in turn means it is/was profitable to build renewables). When there is substantial demand or low supply, then it is profitable for the utility to pay the bitcoin miners to turn off, because the alternative to import power is more expensive. This in turn makes your electricity cheaper. In addition, the additional steady state demand for power allows for more renewables to be built, which further increases the supply during low supply periods. Your AC does not automatically turn off when this happens.
I am one of those enthusiasts making "strange logic" claims. I've been making this claim well before others but I feel that I keep getting downvoted on them off of people's emotion rather than rational logic.
The transition from fossil fuels to renewable energy sources has altered the environmental impact of additional electricity consumption. Where once any increase in consumption was considered harmful due to its reliance on fossil fuels, the rise of renewables introduces scenarios where the marginal environmental cost of electricity can be beneficial if the demand is flexible.
Bitcoin mining has the potential to act as a load balancer for the electricity grid. By increasing its energy consumption during periods when renewable energy production exceeds demand, and reducing consumption during peak demand periods, Bitcoin mining could help stabilize the grid and make renewable energy generation more economically viable.
Bitcoin mining's demand for electricity is unique in that it is primarily cost-driven. Renewable energy generation capacity is particularly volatile. Bitcoin mining power usage can be flexible and responsive to the availability and cost of electricity.
The ability of Bitcoin mining to consume excess renewable energy when it's available (and potentially at low or negative prices) could improve the financial viability of renewable energy projects by increasing the floor price these new projects can sell electricity at. This can encourage the development of additional renewable energy capacity by providing a reliable demand for their output during otherwise unprofitable periods.
I also don’t think most people realize just how much energy it uses. It is mind blowing. I remember doing some calculations a couple years ago and discovering that if you took the total energy spent on mining bitcoin per year, and divided it by the number of transactions per year, each individual transaction would use more energy than driving across the entire country from New York City to San Francisco in a Tesla Model 3.
The entire system is just so incredibly stupid and inelegant. If you really wanted to build something like this, you could at least have designed it in a way were the work done serves an actual purpose.
i don't understand what the actual consumption has to do with anything. That power that is used in not free - consumers actually pay for it. Unless you are suggesting that we should have regulations around what we can use power on the whole point is moot.
> because of how competition over mining rewards works, [bitcoin] has the characteristic of consuming more and more energy the more it succeeds.
New bitcoin from mining is halved every ~4 years, so every four years miners can afford to spend only half as much electricity to mine from that revenue.
As revenue from new bitcoins tapers off the work expended will self limit to the value of transactions. If you're charged 1% to include your transaction the value of energy used to mine a block will eventually not exceed the fee for including those transactions.
So it doesn't have the characteristic of consuming more and more energy and is self-limiting in how much energy is used. The bitcoin energy problem will take care of itself in time.
> New bitcoin from mining is halved every ~4 years, so every four years miners can afford to spend only half as much electricity to mine from that revenue.
Not exactly. Miners are paid out of the sum of block reward and fees multiplied by the market price of BTC. Every ~4 years the contribution of block reward goes down, but that doesn't mean that the price goes down, or that the contribution of fees stays the same.
If it was block reward alone and the "energy problem solved itself" then the blockchain would be completely vulnerable to a 51% attack and it would instantly become worthless.
The expectation is that the contribution of fees will go up as the block reward goes down, although it remains to be seen how much direct fee the market will bear. Currently the actual cost of a BTC transaction is hundreds of dollars - but most of it is socialized via inflation. It is unclear if the market will bear paying hundreds of dollars in transaction costs instead -- and if not, there's no reason the 21M coin limit can't be raised to continue doing exactly what has been happening so far.
I don't buy this argument (just like the point you are responding to is mostly wrong too). Yes it won't consume more and more but it won't consume less and less either. Miners are n't going to mine a loss it will always be SUM(rewards + fees). The network has to be secured or bitcoin loses all perceived value. Difficulty will have to creep upwards as technology improves. The question is will there be a way to mine more difficult problems using less power. That is the only way bitcoin power usages stops growing (slowly).
Probably sheer magnitude, no? The Google results for "how much power data centers use" show numbers between 1% and 3% (it's similar numbers whether I specify global or just the US). Let's assume that's at least somewhat accurate.
If we believe both statistics, then crypto mining uses roughly as much electricity as all data centers. But data centers drive so many different industries and benefit people in countless ways- entertainment (as you mentioned), financial, education, communication, etc, etc.
Crypto is like. Neat? There's some people who benefit greatly from it, sure. But broadly compare how different society would look if crypto didn't exist (not different at all, I'd think?) to how different it would look if data centers didn't exist. Looking at it that way, it's crazy that they at all use similar amounts of electricity.
Because of the demand curve. I can only read so much Reddit, and watch so many TikTok s. devoting all my waking hours to those, I'm still only going to be taking our watching one person's worth. Meanwhile, Bitcoin mining will scale to the amount of money I am willing to throw at it.
(Why) do you consider Bitcoin to not be a waste of energy, independent of TikTok or Reddit? What problems has it solved in the last decade that would make it sensible to shut down Reddit before you shut down Bitcoin?
(I'm not even climbing up the tree of Bitcoin's energy consumption being many multiples greater than Reddit's.)
everyone like to scream free market until they run into something they don't like.
If I am paying for the electricity do I have the right to use that electricity however I like? Next time you don't like how much electricity "bitcoin" uses ask yourself: am I okay with the government dictating how I am supposed to use electricity? in fact, am I okay with the government dictating anything that can and should be adjustable through the free market?
Energy is fungible anyway, so if it comes from renewables that means that renewable energy can no longer go towards other applications. The pollution is simply outsourced to other non-renewable applications
IF there were people running bitcoin rigs only 4-5 hours per day when the duck curve peaks, it would be plausible for it to incentivize building more solar because the profit is more consistent. Which could be a net positive even though that power gets wasted, since a lot of it would get wasted anyway.
That's me. I am mining only when my Tesla Battery is above 80%.
I have a node-red automation that keeps all of this in check. Mining stops when battery reaches 60%.
It basically runs all day from April to Oktober.
My solar system now has a roi of 6-7 years if everything works out. 2 years in the experiment. I am planning to invest mining profits in other environment friendly projects.
Here in Germany you only get 8 cents/kW from the state. Mining doubles that. Sometimes even triple. During the ETH run it was even 5 times more.
Fun thing 90% of my overproduction still reaches the grid. My mining rig only uses 300 to 600 watts.
Next I am planning to integrate awattar (dynamic price provider) to mine when the price of electricity is negative or close to zero. This happens sometimes during the night because of low demand and wind turbines going strong.
That doesn't change the extreme: "Taken to the extreme it is an accelerated track to causing a black hole given the incentives of the network and the requirement of computational space having a physical necessity to provide the substrate for it to continue."
Whether or not it’s a worthwhile use of energy is certainly debatable, but it’s not exactly “pretend internet money” when you can trade it for billions worth of USD in a single day with minimal slippage
It also doesn't really fit the definition of money, certainly not good money, it's a speculative asset or at best a transaction intermediate. Almost nothing is priced in Bitcoin, it's priced in dollars and converted to a Bitcoin quantity at the time a transaction is to proceed due to extreme volatility. There's no closed-loop economy where pricing is so specified - even in El Salvador - because you then have to sell it to pay your suppliers and your taxes. You don't sell money, if that makes sense.
Using the fact you can sell it for minimal slippage, you could call Apple shares money, but they're not. They're shares. Nothing is priced in Apple shares.
The attributes of money are: durability, portability, divisibility, uniformity, limited supply, and acceptability.
Bitcoin is not accepted basically anywhere (the overwhelming majority of places that claim to, use a service like BitPay that immediately sells it and gives the merchant actual money). It's also not uniform, because each sat carries with it the entire transaction history. It's also not particularly portable because its global transaction count is limited to 7tps and it costs an unbelievable quantity to do so from time to time. It's also not durable because everyone keeps losing their wallets and the lost bitcoin is effectively destroyed. All it has is limited supply and divisibility -- and portability, depending how compelling you find my argument against -- but you really do have to get all 6 to win.
Coinbase attorneys regularly compare crypto to Beanie Babies.
> "It is akin to the sale of a parcel of land, the value of which may fluctuate after the sale. Or a condo in anew development. Or an American Girl Doll, or a Beanie Baby, or a baseball card," Coinbase attorneys stated in a motion it filed in August 2023. [1]
That’s the thing though: you can’t trade a billion dollars if Bitcoin for USD in a day! Tether, sure, but not actual money.
The original USD sunk into the system is mostly gone, spent on electricity, mining rigs, hookers, and blow.
If you attempted to withdraw that much money, you’d be stonewalled.
The only way to do it would be to hire some coders, set up your own “trading” web site, and convince a million rubes to part with a thousand each on average. You’d have to do this for years while loudly saying “Bitcoin is not fake money” in every Internet forum you can spam, because otherwise the music might stop before you can cash out.
But it is pretend internet money! These people are trading "a proof of work backed cryptocurrency", pretend internet money. It is indeed, by convention, worth real dollars, but there's no underlying thing except bullshit.
It could have been a sqlite db file on a raspberry pi somewhere, keeping track of digital jars of goat semen that people then pay real dollars for. But no, instead we're wasting one Australia worth of electricity on Bitcoin.
Like what? You really believe people are mining BTC in Manhattan?
For mining to be profitable, cost of energy you put in must be lower than the value of a Bitcoin. Where is energy cheap? Not where there is a need for it, like you claim, but where it is wasted. You don't mine BTC in Manhattan, you put a Bitcoin farm mining off peak on a hydroelectric power plant in the middle of nowhere, China.
Please let's stop this nonsense of Bitcoin stealing energy from who needs it the most, as it is utter baseless nonsense that just betrays total ignorance on the simple concept of supply and demand, and why things are priced a certain way.
Bitcoin is actually useful for the people, so spending energy on it is not a waste. The waste is something not useful, like 877 billion U.S. dollars dedicated each year to the military of the United States. Or would you say it is an efficient spend and it is incentivised for even MORE efficiency?
Not everyone around is supporting the idea that the government scam and it's "real" money is the best option for us all. Electricity is burned in exchange for the utility of the bitcoin, avoiding operations with traditional state-issued money, having a currency which nobody truly governs or controls but the people, and it is definitely here to stay since it is a revolutionary financial instrument. If it wasn't, it would simply be gone, and no-one in his sane mind would be "turning electricity into heat" for nothing.
It is a natural economical progression for the humanity, to have the money nobody owns, and the maths behind it make it happen having it's natural energy toll, which is way more efficient that of any government. Commies go downvote, it is your bread
Interestingly whenever this kind of thing comes up, I also hear cryptocurrency critics use the energy argument to deride blockchains in general.
They don't seem to understand that Bitcoin alone accounts for 98% of all cryptocurrency energy usage due to its uniquely energy-intensive algorithm. Hypothetically if Bitcoin were shut down, crypto would be as energy-efficient as any other distributed/federated technology.
it takes a lot of computational power to secure something so important like protecting a whole digital currency. you can only make profit by creating renewable resources in bitcoin ecosystem.
If it was really a digital currency sure, maybe we could debate on that. But there's no way now the current real usage of Bitcoin is worth that much electricity though.
Bitcoin is the only solution to really "owning" your money.
Everything in your bank account can be stolen / frozen / or made "inaccessible" at a moments notice because of some vague bullshit reason like supporting right extremists or terrorists - even if you donate a single dollar - like it happened in in 2023 Canada / freedom convoy.
Everything a bank claims to be secure/safe goes away like a poof of smoke if it really comes down to it. The can't be any safety in our increasingly multi-polar world the political boundaries are redefined daily. Today Russia/China is the enemy, tomorrow it's some other country that will suffer economical sanctions. Or your own country decides to apply punitive measures against some minority group because of political opinion - all the control mechanisms are there and politicians are itching to use them.
2. It's less than our current banking sector
Yeah, consuming this much natural resources / electricity sucks.
That's the alternative?
Do you count how much money is spend on the banking spector as a whole? I assure you it consumes much more then the 2% in capital expenditure - so indirectly it's more (you could have build renewables with the same money) .
3. Scalability
About the famous argument that bitcoin does not scale: the 7 transaction per second argument -> this problem is completely solved by the lightning network. Lightning protocol does the same with much lower transaction cost and much less energy usage - something like 100x less. Yes support at major vendors is still a bit lagging behind but that's only temporary.
Need a 100% confirmation? Do full transaction (for example for accounting purposes). Small sums and personal funds -> can be completely handled by a lightweight lightning network transaction. Bitcoin is a highly technical solution and there are myriad ways things can be improved upon if scalability really becomes an issue - even if the lightning network would become saturated.
There are upsides though. It does add to grid resiliency, as the loads can be easily shed. It does make more funds available for investment in the industry. It's not clear that reducing loads would lead to quicker investment in renewables.
Entertainment increases happiness and is a positive for humanity, even if I personally don't enjoy the entertainment. There is no comparison to wasting energy doing worthless make-work.
You did not address the parent's point at all and instead made a pathetic attempt at deflection with a strawman. Both Netflix and Netflix customers benefit, in the form of lower electricity bills, if either find a way to use energy more efficiently. And since you can only spend 24 hours a day watching TV, the increased efficiency can only be offset by increased consumption to a minimal extent.
Bitcoin has no incentive to do this, and no ceiling on consumption, since any efficiency gains just get plowed straight into increased mining, and so energy consumption can only ratchet up, forever. Address that claim, please.
I'm not a bitcoin enthusiast by any means, but this isn't necessarily as bad as it would seem if the miners have wholesale pricing with the power plants.
Depending on the time of day and the type of electric source, power plants have excess power to shed. Miners are better situated than other industries to ramp up and down consumption.
Some of the largest bitcoin operators in the US are located near hydroelectric power plants - for parts of the year dams literally have to dump water because the river has to flow but there is not enough power demand - and wholesale rates sometimes even go negative.
This effectively disincentives expanding storage which would benefit everyone. Mining is getting rid of the issue of temporary excess power, so now the power plant needs to do more work overall to keep up with demand during other times.
Let's get rid of bitcoin. Then we can use "green" dollars. They don't need servers to run. Well, except for all the banks, federal reserves, and credit card processors. I wonder how much electricity they take to run. Well, probably not 2% of all US electricity.
But why are banks so secure? I guess because of police partially. I guess those police need electricity too. But we need them anyways, so I guess that only partially counts.
But why dollars? Why not pesos, or euros? The dollar is backed by the US military, of course. I wonder how much electricity the military uses.
Anyways. Let's get rid of bitcoin. That will solve the climate crisis! We can sell anti-bitcoin stickers made in China on Amazon to show our support!
Police, banks, the military, the Fed all provide many more services than bitcoin does and do more than just protect the dollar. What an incredibly dumb comparison.
Your assertion is that it's dumb to compare two competing financial systems?
The dumb analysis is to talk about Bitcoin energy usage in isolation, without comparing it to the present system. The present system would not work without police officers and military. Bitcoin replaces these things with servers and decentralization.
There is no military protecting the internet. You would need to bomb every country in the world to destroy the internet. The same is true for Bitcoin.
US military is 100% necessary for the dollar-based world order. The fact they do other things is not important. You still need the full US military to protect the dollar, even if they didn't do other things.
I do some work with financial tech and let me tell you, working with integration partners for payment processing who are fully into crypto made me realize, we shouldn't trust these people with our financial system. I had to explain to a senior engineer with 20+ years of experience why he shouldn't rely on floating point to calculate service fees (their calculations were always wrong and over charged our customer's customers because they used floating point). Can't calculate a 3.5% service fee properly, but will tell you why he so so much smarter than the everyone in traditional finance (who don't fuck up this calculation). And this has been an ongoing problem for a year, to the point that we built around their system because we can't trust their system does what they say.
The difference is that the existing financial system is used by about 3/4 of the world population (closer to 94% in developed nations) for the exchange of actual goods and services.
Bitcoin has significantly fewer users, but more importantly it is almost never used for the actual exchange of goods or services.
With my bank (and the accompanying infrastructure that goes along with it), my employer can deposit directly into my account, which I can then use to pay rent online (as opposed to physically traveling to their office), buy groceries at the store, and purchase nearly every legal good or service that is for sale, all while reducing the odds of me being robbed or losing money (e.g. losing my wallet.) If someone or some business scams me, I'm given methods of retrieving my money without confronting them in person. It also allows me to autopay all my bills so I'm never charged for forgetting to pay (and frankly I have very little desire to write and mail several checks each month or travel to various places to pay in cash.)
Credit cards, debit cards, direct deposit and money transfers are far more convenient than using cash, and aside from convenience, I imagine they decrease a nation's carbon footprint over using exclusively cash (due to less need to mint, print and transport physical currency, as well as travel in person to pay or receive payment.)
They do come at a cost of privacy, but if I wanted privacy for a specific purchase, I can still use cash for those specific transactions. While it may have a higher carbon footprint than digital payments, overall ink and paper tend to have low carbon footprints (though it's probably a bit higher for currency than it is for standard A4 paper.) Still, it's near certainly less carbon intensive than Bitcoin (per purchase, maybe not in total since billions of people actually use paper currency to buy things at least sometimes.)
Cryptocurrencies and their accompanying anonymity can bring about good things, so I'm open to at least considering their value — there are countries with authoritarian and oppressive governments, and there have been several democracies that have fallen to dictatorship before and that very well could happen again in the future. As such, being able to anonymously transfer money does have its value, especially in a world with CCTVs and facial recognition.
Cryptocurrencies, of course, also can be used for illegal services that are near universally considered immoral and evil. Currently, in most countries (even ones that aren't exactly liberal democracies), this is likely a much larger harm.
Balancing freedom from and freedom to is always tricky: neither authoritarianism nor anarchy are appealing — allowing personal freedom while preventing people from encroaching on other people's personal freedoms is difficult to achieve.
However, even if I were fully convinced that cryptocurrencies currencies were a net positive on society (open to considering the idea but definitely not convinced yet), I struggle to see how one with such a large carbon footprint is what should be used.
you really think that every credit card reader in the country, every ATM, every computer and piece of electronics at every branch of every bank, and all of Wall Street and everything, adds up to less than the sum total of Bitcoin mining in the country, in terms of energy usage? how could this possibly be the case? I'm not even a Bitcoin guy and this is absurd on its face.
This article gives an estimate of about 2% of all electricity usage going to bitcoin mining. All data centers in the country combine to a similar ballpark in energy usage (another comment states 1-3%). Finance accounts for 20% of US GDP, so we'll be charitable, round up its usage of datacenters to 50%, to get about 1% of electricity from financial data centers.
There are about 6.7 million employees in the financial sector [1]. Assume everyone has a computer with a 600W power supply at full bore for 12 hours a day [2]. That comes out to about 18 billion kWh of electricity a year, which is (checks math) 0.425% of US electricity consumption [3]. Sure, I'm not accounting for all the PoS systems at every retail location in the country, but they're going to use far less energy than even the overspecced numbers I'm using.
So overall, this comes out to about 1.5-2% of US electricity usage going to the financial sector, less than Bitcoin mining. Also remember that magically switching everything over to Bitcoin would still require all those PoS systems, not to mention large fractions of Wall Street and bank branches and whatnot, so this isn't really a fair comparison overall. And some amount of the financial sector includes cryptocurrency companies already.
[2] This basically comes out to a decently powerful computer being used at max spec for an 84 hour work week. A generous overestimate, I'd hope you agree.
Right, but the financial system is actually used by most people in the US. Bitcoin, a small fraction of that...and this figure does not include all of the energy expended to process bitcoin transactions.
You are comparing the transaction cost of credit cards/banking/trade to the transaction cost + infrastructure cost of bitcoin. Credit card companies, banks, financial institutes have millions of employees that drive to work, HVAC in their offices, etc. that is not required with bitcoin. This is ignoring all of the rest of OPs point that preserving the dollar system has countless other external costs.
I don’t know how you can have this conversation without talking what the marginal utilization of that energy is - do I care if crypto miners want to mine at night in west Texas when wind is generating energy and the wholesale cost is negative (I.e. there is really no marginal productive use for that generation)? Absolutely not.
It’s a trickier question when that mining activity is competing with generation assets that could be charging a car or powering a manufacturing facility…
> do I care if crypto miners want to mine at night in west Texas when wind is generating energy and the wholesale cost is negative (I.e. there is really no marginal productive use for that generation)? Absolutely not.
This is complicated though because power grids can resell that slack capacity further away if there’s a persistent surplus and other users will notice (e.g. cheap power really incentivizes overnight EV charging or even industrial users expanding). If all of the slack is being used for unproductive purposes, those positive feedback cycles will be delayed – unlike useful work, there’s no end of cycles which bitcoin mining can use so the potential power consumption is effectively infinite.
That’s like saying meat is not bad per se, because there are happy cows raised on green pastures getting petted by children all day. Yea, those cows do exist - the three of them are just outnumbered by the billions of animals kept in killing factories.
The amount of bitcoin mined exclusively in west Texas when the energy is at a net negative is negligible compared to the rest of the mining activity, by people who couldn’t care less about anything other than their profits. There is NOTHING charming about that technology.
The fact that they care about nothing other than profit is exactly why they're attracted to places where energy costs are a net negative. Lower energy cost = more profit. Higher energy cost = less profit.
It sure would be nice if more people noticed proof of stake cryptocurrencies (which cut electricity usage by something like 99.99%) like Ethereum instead of the prevailing Bitcoin myopia.
Proof of work is converted into proof of stake trivially all the time. You stake by buying lots of mining hardware and power. The more you spend (the richer you are) the more you gain. The work part is just a wasteful, unnecessary step.
It's even worse, because with $1k I can barely afford one miner locally. With $1M, I can afford to buy many (and better ones) and put them in an efficient location with a custom energy plan, etc. This means the actual PoS has linear gain, but PoW is closer to exponential. (The more you have the better the RoI % you can afford for yourself)
This centralizing effect is actually much more powerful in proof-of-work than proof-of-stake.
Anyone can stake and earn the same % rewards, regardless of how much they have. But if you're bankrolled with hundreds of millions of dollars, you get a much higher mining % return than the little guys because you can design and manufacture your own silicon (or get bulk discounts), colocate next to power generation, and buy electricity in bulk.
The minimum staking amount is very close to zero. Of course, directly participating in consensus by having the opportunity of building blocks requires 32 ETH (≈$75k), or 16/8 ETH ($37k/$18k) if you run a pool for other people through e.g. the trustless Rocket Pool system.
The minimum cost to acquire an ASIC so that you can even _contribute_ to the consensus is very high (thousands), and to be profitable you have to have close to free electricity. The ironic thing is, that in PoW the "rich get richer" is abstracted away into a combination of economies of scale, and access to free/very cheap power. Plus all the e-waste and wasted power, whereas PoS runs on e-waste people run in their closet, pulling as little as sub-10 watts.
If I was rich I could hire a security contractor to steal Bitcoin keys. Or hire a mobster to hit someone with a $8 wrench until they give me the keys. Or hire underlings to create a scam investment vehicle to steal Bitcoin. The opportunities around!
In fact, I'd wager that the majority of opportunities for the rich to enrich themselves exist outside of the pure economic simulation world that bitcoiners use to motivate the existence of Bitcoin.
Bitcoin incentivizes efficient generation and use of energy.
Until people can find economic uses for, say, the immense solar energy produced in a desert, bitcoin will use it all up because it can be deployed practically anywhere. Likewise anywhere there's excess wasted energy, it will use it. So in that respect, bitcoin finances the construction of energy generation where it is generated the cheapest but may have no other market otherwise due to geographic isolation and transportation. Unfortunately people are biased for one reason or another against accepting this reality, seemingly due to a lack of imagination and prejudice.
> Until people can find economic uses for, say, the immense solar energy produced in a desert, bitcoin will use it all up because it can be deployed practically anywhere.
Okay, how many Bitcoin miners are using immense solar energy produced in a desert?
Do note that the article mentions that the largest clusters are in, um, Texas and the Appalachians, and their providers of electricity seem to largely be, uh, natural gas and coal power, respectively.
For one, miners are already deployed to use up flared oil wells and landfills which mitigates methane emissions which is very important in terms of reducing total impact of GHG emissions.
Otherwise miners are buying cheap energy anywhere they can find it, and using waste energy on the grid, of which there's tons. The idea that they're going to spike demand isn't even correct because mining can scale to any level of power generation. Also mining does not cause emissions, mining simply purchases generated power, and emissions are caused by power generation from non-renewables.
If mining is emitting GHGs you could say the same thing about EV cars or any other power consumer. But like I said at least bitcoin as a consumer can be ideally placed ANYWHERE especially where energy is plentiful but not easily used otherwise.
> Do note that the article mentions that the largest clusters are in, um, Texas and the Appalachians, and their providers of electricity seem to largely be, uh, natural gas and coal power, respectively.
So does driving an EV car in those areas amount to being a horrible person too under that logic?
Efficient use means ability to be deployed to consume. The point being that energy is over-produced as a matter of fact in order to be a reliable utility and bitcoin can be throttled on a dime to profitably match supply to demand unlike much else. But it sounds like you're purposely misunderstanding.
Allright. I bite. Why is the energy cheap enough, to make big mining operations profitable? Why isn't it taxed if it is needed elsewhere. What happens, if there is to much energy being produced by plants? Why is it, that sometimes electricity gets sold for negative rates.
I am not a hardcore bitcoin fan, but I giggle a little when those transactions versus energy consumption arguments come up.
Maybe my views are wrong, I would love to check if somebody can change my opinion on this topic.
Energy could be taxed higher, but it would make other users (like regular people) of energy unhappy. So far energy is "cheap", but it does not cover the total eco damage it makes.
You could tax mining. Sure, this won't stop private miners, but it is impossible to hide a big mining operation, if you are using the public grid. Most of them are using their own solar anyway, so I am not sure what all this fuss is about.
Try this: go to any OTC crypto market in any African country, or any country with high inflation and poor economic outcomes, like Philippines or Turkey.
Ask around for the going rate for USDT/USDC
Then check the official USD vs local currency exchange rate
Compare the two and ask yourself: why are ordinary people on OTC platforms willing to pay a substantial premium for USDT/USDC?
If you’re on HN, you’re likely smart enough to figure out why. And no, its not just plain “money laundering”.
Because only Crypto is used for money laundering, right?
You would never guess what other businesses that your reddit mind thinks are legitimate are also used for money laundering...
Readit News
Bollocks!
Unlike other technologies that are incentivized to become more efficient over time, because of how competition over mining rewards works, this technology has the characteristic of consuming more and more energy the more it succeeds.
It's designed to waste energy. Even if that was "green" energy, it's still just making heat out of electricity for pretend internet money. Energy that other things could be using.
By this logic, we should all leave our lights and air conditioners on while we're at work or on vacation because it will increase demand and hasten the transition to renewables.
Firstly, at regular electricity prices, bitcoin mining is profitable and it is profitable for the utility to run renewables (which in turn means it is/was profitable to build renewables). When there is substantial demand or low supply, then it is profitable for the utility to pay the bitcoin miners to turn off, because the alternative to import power is more expensive. This in turn makes your electricity cheaper. In addition, the additional steady state demand for power allows for more renewables to be built, which further increases the supply during low supply periods. Your AC does not automatically turn off when this happens.
I am one of those enthusiasts making "strange logic" claims. I've been making this claim well before others but I feel that I keep getting downvoted on them off of people's emotion rather than rational logic.
The transition from fossil fuels to renewable energy sources has altered the environmental impact of additional electricity consumption. Where once any increase in consumption was considered harmful due to its reliance on fossil fuels, the rise of renewables introduces scenarios where the marginal environmental cost of electricity can be beneficial if the demand is flexible.
Bitcoin mining has the potential to act as a load balancer for the electricity grid. By increasing its energy consumption during periods when renewable energy production exceeds demand, and reducing consumption during peak demand periods, Bitcoin mining could help stabilize the grid and make renewable energy generation more economically viable.
Bitcoin mining's demand for electricity is unique in that it is primarily cost-driven. Renewable energy generation capacity is particularly volatile. Bitcoin mining power usage can be flexible and responsive to the availability and cost of electricity.
The ability of Bitcoin mining to consume excess renewable energy when it's available (and potentially at low or negative prices) could improve the financial viability of renewable energy projects by increasing the floor price these new projects can sell electricity at. This can encourage the development of additional renewable energy capacity by providing a reliable demand for their output during otherwise unprofitable periods.
Here's some examples:
https://news.ycombinator.com/item?id=25444985
https://news.ycombinator.com/item?id=26094279
https://news.ycombinator.com/item?id=26811819
https://news.ycombinator.com/item?id=29367174
https://news.ycombinator.com/item?id=30310572
[1] https://teslamotorsclub.com/tmc/threads/power-inverters-for-...
See:
> It's like if idling your car 24/7 occasionally produced solved Sudoku puzzles that you could then exchange for heroin.
* https://twitter.com/VessOnSecurity/status/113524359527398604...
New bitcoin from mining is halved every ~4 years, so every four years miners can afford to spend only half as much electricity to mine from that revenue.
As revenue from new bitcoins tapers off the work expended will self limit to the value of transactions. If you're charged 1% to include your transaction the value of energy used to mine a block will eventually not exceed the fee for including those transactions.
So it doesn't have the characteristic of consuming more and more energy and is self-limiting in how much energy is used. The bitcoin energy problem will take care of itself in time.
Not exactly. Miners are paid out of the sum of block reward and fees multiplied by the market price of BTC. Every ~4 years the contribution of block reward goes down, but that doesn't mean that the price goes down, or that the contribution of fees stays the same.
If it was block reward alone and the "energy problem solved itself" then the blockchain would be completely vulnerable to a 51% attack and it would instantly become worthless.
The expectation is that the contribution of fees will go up as the block reward goes down, although it remains to be seen how much direct fee the market will bear. Currently the actual cost of a BTC transaction is hundreds of dollars - but most of it is socialized via inflation. It is unclear if the market will bear paying hundreds of dollars in transaction costs instead -- and if not, there's no reason the 21M coin limit can't be raised to continue doing exactly what has been happening so far.
If we believe both statistics, then crypto mining uses roughly as much electricity as all data centers. But data centers drive so many different industries and benefit people in countless ways- entertainment (as you mentioned), financial, education, communication, etc, etc.
Crypto is like. Neat? There's some people who benefit greatly from it, sure. But broadly compare how different society would look if crypto didn't exist (not different at all, I'd think?) to how different it would look if data centers didn't exist. Looking at it that way, it's crazy that they at all use similar amounts of electricity.
(I'm not even climbing up the tree of Bitcoin's energy consumption being many multiples greater than Reddit's.)
What do people get from Bitcoin? Monopoly money with no purpose or intrinsic value.
If I am paying for the electricity do I have the right to use that electricity however I like? Next time you don't like how much electricity "bitcoin" uses ask yourself: am I okay with the government dictating how I am supposed to use electricity? in fact, am I okay with the government dictating anything that can and should be adjustable through the free market?
Maybe it was that weird guy on a pole out in the field
As far as financial instruments go, Bitcoin is fantastically, comically inefficient, and by design.
I don't think basically anyone is doing that.
If you're opening to understanding why it may not be bollocks, read this
https://www.lynalden.com/bitcoin-energy/
Deleted Comment
https://en.wikipedia.org/wiki/Jevons_paradox
Using the fact you can sell it for minimal slippage, you could call Apple shares money, but they're not. They're shares. Nothing is priced in Apple shares.
The attributes of money are: durability, portability, divisibility, uniformity, limited supply, and acceptability.
Bitcoin is not accepted basically anywhere (the overwhelming majority of places that claim to, use a service like BitPay that immediately sells it and gives the merchant actual money). It's also not uniform, because each sat carries with it the entire transaction history. It's also not particularly portable because its global transaction count is limited to 7tps and it costs an unbelievable quantity to do so from time to time. It's also not durable because everyone keeps losing their wallets and the lost bitcoin is effectively destroyed. All it has is limited supply and divisibility -- and portability, depending how compelling you find my argument against -- but you really do have to get all 6 to win.
Coinbase attorneys regularly compare crypto to Beanie Babies.
> "It is akin to the sale of a parcel of land, the value of which may fluctuate after the sale. Or a condo in anew development. Or an American Girl Doll, or a Beanie Baby, or a baseball card," Coinbase attorneys stated in a motion it filed in August 2023. [1]
[1] https://www.usatoday.com/story/money/2024/01/19/crypto-beani...
The original USD sunk into the system is mostly gone, spent on electricity, mining rigs, hookers, and blow.
If you attempted to withdraw that much money, you’d be stonewalled.
The only way to do it would be to hire some coders, set up your own “trading” web site, and convince a million rubes to part with a thousand each on average. You’d have to do this for years while loudly saying “Bitcoin is not fake money” in every Internet forum you can spam, because otherwise the music might stop before you can cash out.
It could have been a sqlite db file on a raspberry pi somewhere, keeping track of digital jars of goat semen that people then pay real dollars for. But no, instead we're wasting one Australia worth of electricity on Bitcoin.
Like what? You really believe people are mining BTC in Manhattan?
For mining to be profitable, cost of energy you put in must be lower than the value of a Bitcoin. Where is energy cheap? Not where there is a need for it, like you claim, but where it is wasted. You don't mine BTC in Manhattan, you put a Bitcoin farm mining off peak on a hydroelectric power plant in the middle of nowhere, China.
Please let's stop this nonsense of Bitcoin stealing energy from who needs it the most, as it is utter baseless nonsense that just betrays total ignorance on the simple concept of supply and demand, and why things are priced a certain way.
Not everyone around is supporting the idea that the government scam and it's "real" money is the best option for us all. Electricity is burned in exchange for the utility of the bitcoin, avoiding operations with traditional state-issued money, having a currency which nobody truly governs or controls but the people, and it is definitely here to stay since it is a revolutionary financial instrument. If it wasn't, it would simply be gone, and no-one in his sane mind would be "turning electricity into heat" for nothing.
It is a natural economical progression for the humanity, to have the money nobody owns, and the maths behind it make it happen having it's natural energy toll, which is way more efficient that of any government. Commies go downvote, it is your bread
They don't seem to understand that Bitcoin alone accounts for 98% of all cryptocurrency energy usage due to its uniquely energy-intensive algorithm. Hypothetically if Bitcoin were shut down, crypto would be as energy-efficient as any other distributed/federated technology.
The reason most money goes into bitcoin is probably, that people consider it safer than proof of stake.
1. Ownership and Security
Bitcoin is the only solution to really "owning" your money. Everything in your bank account can be stolen / frozen / or made "inaccessible" at a moments notice because of some vague bullshit reason like supporting right extremists or terrorists - even if you donate a single dollar - like it happened in in 2023 Canada / freedom convoy. Everything a bank claims to be secure/safe goes away like a poof of smoke if it really comes down to it. The can't be any safety in our increasingly multi-polar world the political boundaries are redefined daily. Today Russia/China is the enemy, tomorrow it's some other country that will suffer economical sanctions. Or your own country decides to apply punitive measures against some minority group because of political opinion - all the control mechanisms are there and politicians are itching to use them.
2. It's less than our current banking sector
Yeah, consuming this much natural resources / electricity sucks. That's the alternative? Do you count how much money is spend on the banking spector as a whole? I assure you it consumes much more then the 2% in capital expenditure - so indirectly it's more (you could have build renewables with the same money) .
3. Scalability
About the famous argument that bitcoin does not scale: the 7 transaction per second argument -> this problem is completely solved by the lightning network. Lightning protocol does the same with much lower transaction cost and much less energy usage - something like 100x less. Yes support at major vendors is still a bit lagging behind but that's only temporary. Need a 100% confirmation? Do full transaction (for example for accounting purposes). Small sums and personal funds -> can be completely handled by a lightweight lightning network transaction. Bitcoin is a highly technical solution and there are myriad ways things can be improved upon if scalability really becomes an issue - even if the lightning network would become saturated.
Bitcoin has no incentive to do this, and no ceiling on consumption, since any efficiency gains just get plowed straight into increased mining, and so energy consumption can only ratchet up, forever. Address that claim, please.
Depending on the time of day and the type of electric source, power plants have excess power to shed. Miners are better situated than other industries to ramp up and down consumption.
Some of the largest bitcoin operators in the US are located near hydroelectric power plants - for parts of the year dams literally have to dump water because the river has to flow but there is not enough power demand - and wholesale rates sometimes even go negative.
But why are banks so secure? I guess because of police partially. I guess those police need electricity too. But we need them anyways, so I guess that only partially counts.
But why dollars? Why not pesos, or euros? The dollar is backed by the US military, of course. I wonder how much electricity the military uses.
Anyways. Let's get rid of bitcoin. That will solve the climate crisis! We can sell anti-bitcoin stickers made in China on Amazon to show our support!
The dumb analysis is to talk about Bitcoin energy usage in isolation, without comparing it to the present system. The present system would not work without police officers and military. Bitcoin replaces these things with servers and decentralization.
There is no military protecting the internet. You would need to bomb every country in the world to destroy the internet. The same is true for Bitcoin.
US military is 100% necessary for the dollar-based world order. The fact they do other things is not important. You still need the full US military to protect the dollar, even if they didn't do other things.
Extremely cringe to see the HN bubble struggle to grasp how the world economy works. Not all government currencies are properly maintained.
The fact that 0.025% of transactions use 33% of the power is not exactly a win for Bitcoin.
Visa alone can process 24,000 transactions per second. Bitcoin can handle 7
Bitcoin has significantly fewer users, but more importantly it is almost never used for the actual exchange of goods or services.
With my bank (and the accompanying infrastructure that goes along with it), my employer can deposit directly into my account, which I can then use to pay rent online (as opposed to physically traveling to their office), buy groceries at the store, and purchase nearly every legal good or service that is for sale, all while reducing the odds of me being robbed or losing money (e.g. losing my wallet.) If someone or some business scams me, I'm given methods of retrieving my money without confronting them in person. It also allows me to autopay all my bills so I'm never charged for forgetting to pay (and frankly I have very little desire to write and mail several checks each month or travel to various places to pay in cash.)
Credit cards, debit cards, direct deposit and money transfers are far more convenient than using cash, and aside from convenience, I imagine they decrease a nation's carbon footprint over using exclusively cash (due to less need to mint, print and transport physical currency, as well as travel in person to pay or receive payment.)
They do come at a cost of privacy, but if I wanted privacy for a specific purchase, I can still use cash for those specific transactions. While it may have a higher carbon footprint than digital payments, overall ink and paper tend to have low carbon footprints (though it's probably a bit higher for currency than it is for standard A4 paper.) Still, it's near certainly less carbon intensive than Bitcoin (per purchase, maybe not in total since billions of people actually use paper currency to buy things at least sometimes.)
Cryptocurrencies and their accompanying anonymity can bring about good things, so I'm open to at least considering their value — there are countries with authoritarian and oppressive governments, and there have been several democracies that have fallen to dictatorship before and that very well could happen again in the future. As such, being able to anonymously transfer money does have its value, especially in a world with CCTVs and facial recognition.
Cryptocurrencies, of course, also can be used for illegal services that are near universally considered immoral and evil. Currently, in most countries (even ones that aren't exactly liberal democracies), this is likely a much larger harm.
Balancing freedom from and freedom to is always tricky: neither authoritarianism nor anarchy are appealing — allowing personal freedom while preventing people from encroaching on other people's personal freedoms is difficult to achieve.
However, even if I were fully convinced that cryptocurrencies currencies were a net positive on society (open to considering the idea but definitely not convinced yet), I struggle to see how one with such a large carbon footprint is what should be used.
This article gives an estimate of about 2% of all electricity usage going to bitcoin mining. All data centers in the country combine to a similar ballpark in energy usage (another comment states 1-3%). Finance accounts for 20% of US GDP, so we'll be charitable, round up its usage of datacenters to 50%, to get about 1% of electricity from financial data centers.
There are about 6.7 million employees in the financial sector [1]. Assume everyone has a computer with a 600W power supply at full bore for 12 hours a day [2]. That comes out to about 18 billion kWh of electricity a year, which is (checks math) 0.425% of US electricity consumption [3]. Sure, I'm not accounting for all the PoS systems at every retail location in the country, but they're going to use far less energy than even the overspecced numbers I'm using.
So overall, this comes out to about 1.5-2% of US electricity usage going to the financial sector, less than Bitcoin mining. Also remember that magically switching everything over to Bitcoin would still require all those PoS systems, not to mention large fractions of Wall Street and bank branches and whatnot, so this isn't really a fair comparison overall. And some amount of the financial sector includes cryptocurrency companies already.
[1] https://www.bls.gov/iag/tgs/iag52.htm
[2] This basically comes out to a decently powerful computer being used at max spec for an 84 hour work week. A generous overestimate, I'd hope you agree.
[3] https://www.eia.gov/energyexplained/electricity/use-of-elect...
It’s a trickier question when that mining activity is competing with generation assets that could be charging a car or powering a manufacturing facility…
This is complicated though because power grids can resell that slack capacity further away if there’s a persistent surplus and other users will notice (e.g. cheap power really incentivizes overnight EV charging or even industrial users expanding). If all of the slack is being used for unproductive purposes, those positive feedback cycles will be delayed – unlike useful work, there’s no end of cycles which bitcoin mining can use so the potential power consumption is effectively infinite.
It's even worse, because with $1k I can barely afford one miner locally. With $1M, I can afford to buy many (and better ones) and put them in an efficient location with a custom energy plan, etc. This means the actual PoS has linear gain, but PoW is closer to exponential. (The more you have the better the RoI % you can afford for yourself)
Anyone can stake and earn the same % rewards, regardless of how much they have. But if you're bankrolled with hundreds of millions of dollars, you get a much higher mining % return than the little guys because you can design and manufacture your own silicon (or get bulk discounts), colocate next to power generation, and buy electricity in bulk.
The minimum cost to acquire an ASIC so that you can even _contribute_ to the consensus is very high (thousands), and to be profitable you have to have close to free electricity. The ironic thing is, that in PoW the "rich get richer" is abstracted away into a combination of economies of scale, and access to free/very cheap power. Plus all the e-waste and wasted power, whereas PoS runs on e-waste people run in their closet, pulling as little as sub-10 watts.
Also true for proof of work. And basically any economic system that exists in the wild AFAIK.
In fact, I'd wager that the majority of opportunities for the rich to enrich themselves exist outside of the pure economic simulation world that bitcoiners use to motivate the existence of Bitcoin.
Until people can find economic uses for, say, the immense solar energy produced in a desert, bitcoin will use it all up because it can be deployed practically anywhere. Likewise anywhere there's excess wasted energy, it will use it. So in that respect, bitcoin finances the construction of energy generation where it is generated the cheapest but may have no other market otherwise due to geographic isolation and transportation. Unfortunately people are biased for one reason or another against accepting this reality, seemingly due to a lack of imagination and prejudice.
Okay, how many Bitcoin miners are using immense solar energy produced in a desert?
Do note that the article mentions that the largest clusters are in, um, Texas and the Appalachians, and their providers of electricity seem to largely be, uh, natural gas and coal power, respectively.
Otherwise miners are buying cheap energy anywhere they can find it, and using waste energy on the grid, of which there's tons. The idea that they're going to spike demand isn't even correct because mining can scale to any level of power generation. Also mining does not cause emissions, mining simply purchases generated power, and emissions are caused by power generation from non-renewables.
If mining is emitting GHGs you could say the same thing about EV cars or any other power consumer. But like I said at least bitcoin as a consumer can be ideally placed ANYWHERE especially where energy is plentiful but not easily used otherwise.
> Do note that the article mentions that the largest clusters are in, um, Texas and the Appalachians, and their providers of electricity seem to largely be, uh, natural gas and coal power, respectively.
So does driving an EV car in those areas amount to being a horrible person too under that logic?
I am not a hardcore bitcoin fan, but I giggle a little when those transactions versus energy consumption arguments come up. Maybe my views are wrong, I would love to check if somebody can change my opinion on this topic.
Ask around for the going rate for USDT/USDC
Then check the official USD vs local currency exchange rate
Compare the two and ask yourself: why are ordinary people on OTC platforms willing to pay a substantial premium for USDT/USDC?
If you’re on HN, you’re likely smart enough to figure out why. And no, its not just plain “money laundering”.
Deleted Comment
I totally get why the official exchange rate is probably bogus, but I would expect the black market rate to be the same for USD/USDT/USDC
Shit take