The energy consumption of Bitcoin isn't new news. What continues to disappoint me, however, is how many people immediately jump to its defense with arguments based on the value it provides, as if that offset its cost.
What gets neglected is that the Bitcoin algorithm is inherently wasteful. By its very design, it results in an insane amount of duplicated, pointless computation.
The question isn't whether something like Bitcoin can provide any value. The question is whether we have better options. And the answer is: we do, by far. From proof-of-stake (like Ethereum is moving towards) or trust-based models (like Stellar), technologies exist that grant almost all the benefits of Bitcoin at tiny fraction of the environmental (and monetary!) cost.
I give Bitcoin credit for being an interesting "first answer" to an extremely hard problem. But it is in no way something that we should be doubling down on.
What you're describing is basically Libra with slightly better entities backing it. Transactions can be reversed by those "trusted entities" with no recourse by you and at no cost to them. At least with PoW and PoS (to an extent), attempting to reverse transactions has a cost.
Speaking of PoS, were the issues with PoS ever solved? Specifically the "nothing at stake" problem. The Wikipedia page[1]'s list of implementations makes it sound like it's not at parity with PoW in terms of security.
I'm pretty sure stellar uses more or less the same consensus mechanism as the XRPL and there is absolutely no way to reverse transactions. Every few seconds a ledger is closed and it can not be changed anymore. If all validators would agree on one Tx being "bad" they would need to exclude it from the very first moment and from that point on to eternity. There would be a valid signed public Tx that isn't processes. So it would be public know that the system is corrupt. People who disagree with that could fork include the Tx and move on. This is a totally different kind of risk than if Tx can actually be reversed.
There's also a significant niche of people who want assurance that a transaction can never be reversed. For example online entertainers who get donations for thousands of dollars only to have them charged back months later.
it is possible if you choose to use a third party.
The good thing is that you don't have too! You are not forced. If I send money to a friend or familiy, I don't need a third party.
A third party could be either a bigger financial company or just a trusted third party in a specific domain both people trust (and make a 2 out of 3 multi-sig with it, and if I get delivered what I want and the other side receives the payment, the payment processor has nothing to do, but could in case there is a dispute)
You can take a look at the eth2.0 specification here https://github.com/ethereum/eth2.0-specs. They have solved the nothing at stake problem, and they currently have 8 independent client implementations written in different languages that can 'talk' to each other on a multi-client testnet. They are much further along then people may realize.
I think we aren’t quite there yet with Ethereum and Stellar.
Proof of stake is promising, but it hasn’t rolled out yet. It’s possible that the migration leads to unforeseen problems, or fails entirely.
The trusted models like Stellar aren’t operating at the same financial scale as Bitcoin. The question there isn’t technically whether they can handle the transactions per second, but socially whether they are as resistant to censorship as Bitcoin is.
In the end, more people want Bitcoin than want Ethereum or Stellar. And people are willing to pay a lot of money to get it, money which in large part goes indirectly to miners’ energy expenditure. Perhaps, in the long run, the more efficient consensus mechanisms will prove superior to proof-of-work. But it hasn’t happened yet.
I think the only reason to hold out for Bitcoin over something like Stellar is an extreme libertarian ideology.
Stellar is attractive to me precisely because it works with society, rather than against it. It uses the trust relationships already built into our social systems and institutions. It's true, I don't trust Chase individually not to screw me over. But I do trust 50 independent organizations (including government, private individuals and corporations) all checking each other's work. You get 98% of the benefit of Bitcoin with thousands of times greater efficiency.
The only scenario where this stops working is in a complete societal breakdown, and frankly that is not a contingency most reasonable people plan for.
Is hypothetical resilience in the face of an anarchist fantasy really worth millions of tonnes of real carbon being pumped into the atmosphere?
Look, if you bring an anology into an argument then it’s in you to explain why it holds, it’s not on others to refute it.
Ever heard of the bullshit asymmetry principle?
Anyways, to answer your question: High cost of mining in gold is what limits the supply. High cost of mining in a cryptocurrency is not needed to limit supply.
> High cost of mining in a cryptocurrency is not needed to limit supply.
this is a bit backwards, high cost of mining is not needed, it's a consequence of demand in higher supply
analogy does hold: there is demand for gold which causes certain amount of mining which has environmental impact. there is demand for bitcoin which causes certain amount of mining which has environmental impact.
of course no analogy is perfect, bitcoin has another aspect with feedback loops to mining and demand - security. the more mining happens, the higher ledger security and the more valuable it is.
it's still completely misguided to think that bitcoin mining is some process done for no reason - it's integral part of what makes bitcoin valuable. and the more mining - the more valuable bitcoin is.
lastly, blaming energy consumers in environmental impact is wrong too, it's producers that use environmentally damaging means for energy production who should bear the blame.
We were an early adopter of Stripe’s Bitcoin integration. I even was sent a Stripe t-shirt for finding bugs in their docs. In the entire time until Stripe ended the integration, we never received a single payment using Bitcoin.
Tbh I'm pretty sure that people who ask for BTC never intend to pay. It's just another deflection in a long list from people who won't pay. I now see it as all kinda wasted effort. Probably should just focus on making things better for the guys with the dollars rather than the guys who promise the money if you'll only do X.
Bitcoin's main function is store of value, with the additional benefit of being relatively easy to transfer. It is basically a more convenient form a gold.
After all these years of growth, Bitcoin's market cap becomes its own unique edge. One simply cannot transfer significant amount, say tens of millions of dollars, easily in any other crypto currency.
The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
> The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
Is it though? Gold in vaults easily outstrips the value assigned to all bitcoins and I doubt these vaults use even 1 Twh/year. Vaults are only environmentally expensive in construction. And since we have a surplus of vaults and bunkers (from digitization of stock trading and the end of the cold war, respectively), the only cost is protection. A few guards and some cameras and high security doors can protect >$10mio worth of gold, probably not using more energy than a few households. Managing a farm of ASICs for Bitcoin generating that amount is probably more labor intensive.
> The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
That's only because Bitcoin is still relatively insignificant blip in the world of trade, mostly a pastime for gamblers and scammers. It's footprint is actually absurdly huge compared to value it provides.
The real problem is scaling. Vaults, guards, banks, lawyers scale somewhere around O(n) to O(n logn) with the size of the market. Bitcoin's proof of work - the means of securing it - scales, to the best of my understanding, as O(n!) with the number of miners. That's not something you can run a global economy on.
So the purpose of Bitcoin is to give billionaires better tools to move their wealth around while externalising the energy consumption and CO2 omissions to all of us. Thanks a lot!
That is a side effect, not the purpose. Millionaires can use Bitcoins to move their wealth too. I'd say even for a transaction of $1,000, it is often cheaper to move in Bitcoins.
On the contrary: the purpose of private banks is almost exclusively for billionaires to move their wealth around, while externalising costs to all of us. Many financial market interventions in the past are the society bailing out billionaires who bet irresponsibly and cannot bear reducing themselves to millionaires.
> That is a side effect, not the purpose. Millionaires can use Bitcoins to move their wealth too. I'd say even for a transaction of $1,000, it is often cheaper to move in Bitcoins.
Compared to a free domestic ACH or wire?
Internationally you have to pay exchanges on the receiving end >1% fees to convert it to something you can actually spend.
Buy $10M worth of bitcoin, and then sell it again the next day, and we'll see how much you lost (on average).
I'd guess you'll lose far more than doing the same with gold, because the market slippage due to lack of liquidity far exceeds the cost of those vaults, banks, and guards.
This is not true. I used to be a professional market maker in Bitcoin. This year, Bitcoin market is relatively calm in at least half of the time, meaning 12 hours out of a 24-hour day, longer than most established equity market. Under these normal conditions, trading $1m worth of Bitcoin moves the market by less than 0.01%.
I regularly use it to pay for gift cards on cardcash for an additional 2% discount. It makes a lot of sense for sites selling items highly prone to fraud or with thin margins.
It's solving a much much bigger problem than electronic payments (which was never really a problem in the first place unless you're overly concerned about privacy). We have a major problem with inflation in this world, you can't just put your money somewhere and have it retain its value anymore and it hasn't been like that for years, we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind - bitcoin actually solves that problem, and just to drive that point home, if you'd invested in bitcoin and held during just about any given 365 day period throughout its ten year lifespan you'd have likely beaten the stock market in gains by a lot, that helps a ton of people, especially young people who are saddled by debt. We have countries that have no reliable form of currency at all, again bitcoin solves that problem.
I agree with some of the sentiment of the article, bitcoin's energy consumption is something to keep an eye on and if we can seamlessly move to an algorithm that's greener then so be it but you have to realize the tremendous amount of good that bitcoin is doing for the world and will likely continue to do as it becomes scarcer and scarcer, don't knock a technology that can single handedly lift a continent like Africa out of poverty.
*edit: Nothing like defending bitcoin on Hacker News and getting downvoted to oblivion, hey rather than downvote why don't you point out exactly what you disagree with so we can have a discussion
> We have a major problem with inflation in this world, you can't just put your money somewhere and have it retain its value anymore and it hasn't been like that for years, we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind...
The Bank of Canada found that a Bitcoin based economy would have the same amount of drag as a 48% rate of inflation [1].
A 2% rate of inflation is trivial in the near term, and in the long term encourages productive allocation of capital. Inflation literally only matters to people sitting on cash -- and that's the point! If you invest it in anything inflation stops mattering and the constant-dollar return starts to matter.
> we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind
We at least know the names of big corporations. Otherwise "we're forced to play the BitCoin game which just consolidates power to big anonymous holders and leaves a lot of people all over the world left behind".
85% of the BitCoins have already been mined. It's beyond the reach of people to participate in mining. What's left is pure speculation, based on the available supply. There's also a "culture" of HODL which means the actual exchange rate is determined by very few (big) sellers.
This gets repeated over and over again, but the causality of this has never been proven, as incredible as that may sound.
Yes, the causality of "create too much money -> inflation" is plausible (but note the emphasis on "too much").
However, we live in a world of endogenous money, where money is largely created by commercial banks in the form of loans to private entities. When prices increase, those loans get bigger. So there is also the causality "inflation -> create more money".
At the same time, there are other factors that can drive inflation, such as workers and companies exercising price setting power (which Econ 101 likes to pretend doesn't exist, but plays an important role in the real world).
So yeah, the causality that you're casually throwing out there hasn't actually been proven as the driving factor here.
At the same time, the widespread belief in it and similar misunderstandings causes us as a society to make extremely damaging macroeconomic policy decisions, in particular the decision to attempt to fight recessions using monetary policy instead of fiscal policy.
bingo, money is enormously more complicated than microecon suggests. Micro-econ thinks Keynesian economics are full of shit, yet they stimulated us right out of a micro-economic hole during the 30s.
We had 4 years with 4x the reward, 4 years with 2x the reward, and about 3 years with the current reward, which makes for 1/(4x4+4x2+3) = 1/27 inflation.
I agree the infrastructure isn't there yet but problems with national currency is a government issue, infrastructure issues can usually be solved but governmental issues tend to be a lot harder and all countries that rely on fiat currency are subject to inflation
Countries that don't have reliable currencies are countries like South Sudan and Somalia. Do you really expect illiterate people (3 in 4 women in Somalia are illiterate, 1 in 2 men) to use Blockstream?
You can tell that Bitcoin, and its advocates, are from developed countries. No one who has lived in a developing country and seen crushing poverty would make such arguments.
I'd suggest keeping it in USD or other hard currency. Bitcoin provides no advantages in obtaining/transacting hard currency relative to other currencies, nor any stability while holding it. Either way you are going to a black market, and you are paying real, unaffordable conversion rates compared to transacting in (worthless) hyperinflationary currency.
The bitcoin guy is not going to accept 1 Zimbabwe dollar to 1 USD any more than your black market dealer who has USD. The real currency conversion rate is the problem, not the act of obtaining actual hard currency.
yes, there are a lot of fungible ways to transfer hard currency over the internet... once you acquire it.
again: acquiring it is the hard part, because nobody wants to trade a zimbabwe dollar for a USD.
Bitcoin does nothing to help your zimbabwe dollars be less worthless than they are in USD, therefore they don't help the currency conversion process at all.
you missed the news of the last couple of years with all these names dropping btc because if the high fees, a problem that could be solved but wasn't due to politics
Also transaction times + volatility. Because it takes so long to confirm, the underlying exchange rates were shifting out from under customers, so even though you'd paid the right amount, by the time the transaction cleared, they either needed to refund you or you needed to pay extra. The whole system was so asinine nobody wanted to use it, and it created tons of customer service headaches.
the problem is largely allowing chinese nationals to extract hard currency past PRC capital controls (any electricity you burn is converted to BTC, and it's easy to bribe a local official to ignore it) and a side of russian mafia transactions (cryptolocker/etc)
there really aren't any significant (legal) north american/european transactions that occur in BTC
Think about it from the opposite direction: trust is a ridiculously effective optimization of group dynamics, and humans come equipped with it by default. It allows us to engage in trade and cooperation without paying the cost of perfectly, mathematically, enforcing the rules. It takes a problem that would be O(n!) and reduces it to something on the order of O(nlogn), at very little loss in the optimality of the result. Taking this shortcut is a no-brainer, it would be immensely stupid not to do it.
It so happen that historically, we took that trade-off and built a civilization on it. It worked well. It works well*. And what bitcoin does is trying to make our economy run on O(n!) overhead, because some individuals think that a political ideology based on not trusting other people is somehow a good idea.
> protecting the most sound monetary policy in human history
That's a political opinion. But regardless of its validity, I'm not convinced that this justifies a single Bitcoin transaction producing as much CO2 as 700,000 Visa transactions.
Comparing Visa transactions to Bitcoin transactions is definitely comparing apples to oranges.
A Bitcoin transaction on the blockchain is layer 1. A visa transaction is layer 3 or 4?
Lightning network is layer 2 and you could have >700,000 transactions in a lightning channel before settling on chain, so there you go Bitcoin layer 2 is more energy efficient than the common financial system layer 4.
> it’s users have to pay for the tremendous energy expense.
They are. How else do you think miners pay for their electricity? And so far it seems like the users are happy to pay what it costs. The fact that you don't see the benefit doesn't mean there isn't any for them.
Miners more or less entirely pay the cost with the blockreward which means the users pay way way less fees for their Tx than it would actually cost in energy.
If we assume max 7Tx/s 1 block can hold 4200 Tx
One block gets the miner 12.5 BTCs that's a 0.003 BTC "subvention" per Tx that would otherwise have to be pais as fee.
In other words the cost is paid by inflation which hurts most who holds and not who uses it.
People don't care about a little inflation because the price gains where way way over that. But in the long run this system can not work. Every halving requires the BTC price to at least double (assuming the same mining cost). Problem is mining cost goes only up the halving is finite it goes to zero blockreward. Since the price can't go to infinite it's obvious that this system has to crash at some point we just don't know when.
Miners are not paying their electricity bills with bitcoin (most of them). It's the other buyers, that buy the bitcoins from the miner in exchange for dollars, that in fact pay the bills. And those are willing to pay the current price of electricity required to create the block.
And mining costs have gone down before. It's when bitcoin's price falls making mining unprofitable, so some miners stop, which lowers the difficulty, which makes mining profitable again at lower level - mining costs decreased to match the price.
That's word juggling whether the miners pay with bitcoins or sell bitcoins and pay with fiat is totally irrelevant. Fact is, mining is paid with the block reward. Bitcoin pays itself by "printing" itself. The value that goes to whom sells the energy/hardware is extracted from every bitcoin in existence via inflation. Unlike with Fiat the inflation rate is hard-coded and declines so hyperinflation isn't a problem but then gain inflation will stop and then user will have to pay for the bitcoin network. Which currently would costs several thousandth USD per minute in energy alone.
That true, mining cost can go down and it did but in the long run it can (must) only go up.
If we assume after block reward is gone or very low, fees pay miners less so most miners stop and difficulty is adjusted then we have a imminent 51% attack risk. Low difficultly, bankrupt miners, mark flooded with cheap mining hardware and suddenly drooping energy prices are the perfect conditions for such an attack. Once attacked the price drops pushes more miners out of business and attacks are even cheaper. A crash is inevitable.
If you are so sure, you are welcome to make some money on it by shorting bitcoin before the halving which is in May.
And no, it's not word juggling, the value of money comes from the people who exchange things for money. Here they exchange either electricity, or USD for it. Miners are paying their bills by selling virtual tokens, if those tokens didn't have any value for anybody, they wouldn't be able to sell them. Whether the token comes from block reward or transaction fees doesn't change anything on the fact that somebody gave up USD to get the token.
> Bitcoin pays itself by "printing itself"
Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Maybe I do that already? Or maybe not because I stated above that the crash could very well come after the next halving but it could also take another few more halving each coupled with price waves as we have seen in the past. I have no clue how long this self fueling will work. Anyway the whole "if you sure about xxx why you don't yyy" isn't an argument.
You don't seem to understand where the value from new minted BTCs comes from.
How they are exchanged is completely irrelevant. Mined BTCs change the supply and that changes the price of all other BTCs. Any additional BTC makes all other BTCs a little bit cheaper/less worth. And that is where the value form the new BTCs come from.
Printing controlled by math avoids hyperinflation like I said above. Printing isn't the problem, that the printing stops is the problem. Or that the whole system was self fueling in the first place.
> If you are so sure, you are welcome to make some money on it by shorting bitcoin before the halving which is in May.
Only suckers take positions in a rigged game, short or long.
> Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Obviously that math is defined by people, so you're just pointing at it and pretending otherwise. The Bitcoin Core team can just change the printing rate any time; their lack of action is defacto action. Rather than an elected group of economists you've got a bunch of un-accountable, un-elected people with zero experience in the economics space shooting from the hip.
I'm really surprised to see so huge amount of misunderstanding of basic Bitcoin principles here on HN. These things were discussed 10 years ago. The Bitcoin Core team cannot change rules just like that, they are not the central bank of Bitcoin, while the elected group of economists have done that a couple of times before just to save their own asses. Talk about accountability...
Why are you replying to that post then? While ignoring all my arguments.
I know very well that the devs can't change the rules.
And you probably know very well that my arguments are very valid and there is not even a plan to fix this.
There's some question of what a crash looks like. If the block reward goes away but there are enough fees to cover a reasonable difficulty, the crash will just be the end of the enormous investment in chasing the block reward, the network might still be secure enough to be usable.
I haven't checked the math, but this article says the block reward is ~$45 per transaction, vs ~$0.70 in fees:
BTC can survive if the price at lest doubles before or after the halving. This is what happened in the past. It can happen again maybe even multiple times but certainly not forever.
A doubling leads to the rewards staying about the same. Whether that needs to happen for bitcoin to survive is not at all obvious. It would likely be sufficient for bitcoin to survive, it just isn't clear that it is necessary, maybe ⅓ of the reward would keep folks interested.
It probably needs more than doubling in the long run. For the following reasons.
Price is measured in USD and USD is inflationary so its purchasing power drops and BTC needs double the purchasing power not double the USD "value number"
The reward being constant would in the long run reduce the margins used as profit but also stop the re-investing of said profit to creating new hardware (ASICs) etc. That would stop or slow down the growth of hash/energy ratio which would make 51% attacks cheaper over time if we assume all other hardware on this planet keeps getting better and more.
Also keep in mind that BTC "only" doubling ever 4 year would significantly under perform most peoples expectation so if it's even lower, interest probably goes down rapidly as well which could trigger the collapse.
> How else do you think miners pay for their electricity?
With speculation on currency (it's the primary use of Bitcoin) and theft - the latter less so, given the very high centralization of hashing power, but it was and still is common for a wannabe Bitcoin millionaires to run mining software on computers and electricity they do not own or pay for.
They're an easy way to donate to people in places where it is hard to transfer money. What exactly is the argument you are making here? Presumably the people running those things are definitely paying for their power one way or the other.
The days when this was either widespread or not blocked by mainstream browsers are behind us. At this point it is mostly scaremongering for no good reason.
And USD is guarded by guns, bombs, wars, lies, and so on. None of these currencies have free protection. That said, I do like Prime Coin's use of their energy going to finding prime numbers which (I assume) is useful to mathematicians.
Hashing solved a problem of limiting supply and spreading the work in a dynamic way to prevent takeovers.
Energy consumption would be dramatically less if ASICs weren't a thing. In hindsight it is obvious they would be built but give me a break.
What they accomplished was a decentralized balancing of power based on economics, crypto, and distributed computing. It is beyond remarkable.
So tell me, what is the carbon footprint of FedNet and all of the banks clearing the 3,000 tx/s demands and their collective datacenters...
What, you thought what we had today was free?
Are you aware that these numbers shared are not even 1% of the worlds consumption of energy or a quarter of what the us alone uses in merely datacenter costs!
I hate these fud charged articles with no balance, basis, or actual science.
> So tell me, what is the carbon footprint of FedNet and all of the banks clearing the 3,000 tx/s demands and their collective datacenters...
(a) whataboutism is a logical fallacy.
(b) If every Visa transaction took 625kWh, it would use 38X the entire world's power generation capacity and 3X the worlds entire rate of e-waste generation. Just Visa, not MC, UnionPay or Amex. Visa is literally 700,000X more efficient, and getting more efficient as technology does. Bitcoin becomes more wasteful as technology improves.
> I hate these fud charged articles with no balance, basis, or actual science.
A study from Cambridge University backs it up and is linked. Just because it doesn't agree with your preconceived notions doesn't make it "not science" all of a sudden. You could just be wrong.
Koomey says that de Vries’ work is “fundamentally flawed” because it backs into bitcoin’s power consumption by estimating miners’ revenues and expenses. “Any time you do that, you introduce multiple layers of error and uncertainty. It’s a completely unreliable way to do the analysis, and no credible energy analyst would ever do that.”
But of course you prefer this digiconomist spewing FUD as a hobby and winding folks up:
"Digiconomist's index has emerged as something of an authority recently. The index was developed by Alex de Vries, a 28-year-old consultant for PwC with a background in data and risk analysis who now specializes in blockchain, the technology that underpins bitcoin. He founded Digiconomist as a hobby in 2014 and acknowledges he has no previous experience in energy economics"
The other side is that people who mine bitcoin have to have basically “free” energy - margins are too tight. So while it’s wasteful, people aren’t burning coal or gas to produce bitcoin in the big bitcoin farms. Hydro and geothermal rule.
Should Christmas lights be illegal too because they are "wasting energy"? Shouldn't consumers be allowed to choose what they will do with the energy that they pay for? Or is this soviet Russia?
Should it be illegal to dump toxic chemicals into streams because they're "killing us all?" Shouldn't consumers be allowed to choose where they dump the cleaning products they paid for? Or is this soviet Russia?
Ok bad example because the soviets weren't known for their environmentalism, but you get my point. Once a problem becomes big enough scale that it affects us all regulation is justified.
vlad whatever was full of shit 4 years ago when he said that he thought proof of work would be eliminated within 6 months. I bought hardware on the basis that he was wrong and it paid out.
I dunno why anyone still has faith in eth as a concept, it's a garbage programming model, it's a garbage developer, who has failed for an inordinate period of time as measured by the crypto community. he's just trying to pump up his holdings.
(many of these deficiencies would have resulted in monetary losses for the developer himself, had he not used his central authority to roll back the blockchain. Literally anti-"crypto as a philosophy". So much for "code is law" and all that.)
He's 2 years beyond his 2 year worst case scenario and he has zero progress. And in the crypto community 4 years is a ridiculous period of time to be behind schedule. It's time to state the obvious: he fixed the broken script model that Bitcoin refused to fix, but he is incapable of adding anything significantly novel.
4 years of failed promises? With at least one rollback from a central authority? time to look elsewhere.
Otherwise, the obvious question: where is the Proof of Stake that he promised literally 4 years ago? How many more years out is it right now?
(nor is the "never increase past X amount of currency" even a good model. real currencies need to match issuance the amount of demand for currency... potentially even negative at times. And someone needs to do that. Otherwise, the currency will be subject to a wild amount of inflation/deflation... just like all previous hard currencies.)
Gosh, we could call that a "central bank". And electing an unresponsive 17-year-old as central banker is just about as dumb as it gets.
He is already making central banking decisions... just ones that the majority of the community (ridiculously) agrees with (throttling the amount of currency issued) because the community is centered around deflationary gold-bugs rather than actual maximalists.
Don't forget the blatant price manipulation from exchanges and scammers! Search numbers show fewer people care now than ever and yet the price is pretty high. You should be surprised by that because the block reward requires $5.25B in new money to enter the market to maintain the price, and yet...
Proof of work is the only objective datapoint that can’t be faked. It has value in itself proportional to how much energy went into the proof, so it’s wrong to say something was wasted - all the energy went into producing something of value.
With proof of stake if you get out of the bunker and are presented with multiple competing chains - you can’t decide which one is genuine and which is a malicious fork. With proof of work it’s trivial and that’s where value comes from.
Why compare PoW with PoS if there is consensus https://xrpl.org/intro-to-consensus.html which already solved the problems of both before PoS even existed.
Consensus will never have 2 chains unless someone creates one on purpose. For all others it's always clear witch chain is the correct because everyone can check for correctness.
in case the consensus fails (for example serious global network problems) the consensus would halt which is not ideal but better than uncertain chains.
> Each participant in the network chooses a set of validators, servers specifically configured to participate actively in consensus, run by different parties who are expected to behave honestly most of the time.
maybe you're fine with that, i'm not and everybody who values bitcoin aren't either. it's the kind of thing that PoW solves and PoS doesn't. every PoS system i've seen just obfuscates this glaring hole instead of admitting that there's no way around it - you can't know which chain is genuine without trusting third party. in Bitcoin you can, or at least it is trivial to detect when something malicious is happening. and i'm not talking about correctness here, correctness is trivial, you don't even need to bring it up.
Why exactly aren't you fine with that? You run a node and you decide which nodes you want to connect your node to. If such a node gets a Tx it will be relayed to your node and the other way around.
It's not like your node would copy their validation and just agree with what they agree. Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx. But it should make you overthink whether that node is trustable.
Trusting nodes is a "reliability rating thing" it doesn't really affect the consensus decisions because Tx are either valid or aren't.
The consensus that must be found is only about the order of Tx. If the majority of the validators say Tx X was first and therefore Tx Y is invalid (attempt to double spend) but your node got Tx Y first then its totally fine to flip the order of these two since both are valid just not at the same time.
"Voting" which nodes you trust means you trust them to be reliable/fast and not controlled by a single entity or controllable by a single entity (gov.) So with a clever trust list you help decentralize the network and help that the network runs on the most reliable nodes. You don't change the rules or allow other to change the rules. You can even make mistakes. You can choose some nodes that turn out to be not reliable/fast or even actively malicious. It has no fatal effect and can be corrected as soon as it is detected. Only if everyone would select over 20% "bad" nodes it could halt the consensus. Still would not allow a single false Tx or a single Tx reverse. It would just stop until some nodes remove the bad actors form their trust list.
As your quotes says "...run by different parties who are expected to behave honestly most of the time." The "trust" you give them is very very very limited.
because i don't want to trust anyone. XRP is not trustless or decentralized enough.
> Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx.
as i said - validity is trivial. i asked you to not bring it up but you did anyway.
> majority of the validators say Tx X was first
"majority of validators" is not something you can reliably even define for yourself because you don't know which parties have colluded with each other. this consensus model fails on every layer.
> Only if everyone would select over 20% "bad" nodes it could halt the consensus.
i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
i want universally objective measure by which i can compare competing chains. if your protocol doesn't provide it without having to trust third parties - it's a failure.
> because i don't want to trust anyone. XRP is not trustless or decentralized enough.
And yet you trust the Internet to get packets to HN. You trust the government to administer the roads, the schools, the army, the police, the firefighters, and so on for days. The FDA to verify your drugs, Agriculture to verify your food.
You trust so many people every single day to make it through from breakfast to dinner, and yet this is where you draw the line for some reason you can't really quantify.
What you’re saying is basically “things are horrible so why don’t you just bend over and let somebody fuck you in this other aspect as well”.
Yes, that’s where I draw the line today. Governments used to challenge our right to free speech and even right to live free - we don’t accept that anymore. In my opinion it’s time to untangle governments and money. You’re free to disagree of course and you’re free to entrust all sorts of strangers to make all sorts of decisions in your life, just don’t expect others to do the same.
> You’re free to disagree of course and you’re free to entrust all sorts of strangers to make all sorts of decisions in your life, just don’t expect others to do the same.
You already do though. You're just entrusting a different set of un-elected un-accountable strangers with no economics degrees with your monetary policy -- the Bitcoin Core team. And the PRC where over 50% of the hash power is located. They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part. Your government is accountable to you, the core team, to themselves.
If you tell me they wont then you're trusting them not to unless you can point to a math equation preventing them, I guess.
You're describing a libertarian pipedream that can't exist.
> You're just entrusting a different set of un-elected un-accountable strangers with no economics degrees with your monetary policy -- the Bitcoin Core team
no i don't. they just happen to maintain the reference implementation.
> And the PRC where over 50% of the hash power is located
no trust involved here either.
> They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part.
no they can't and the fact that you think this means you have zero understanding of how bitcoin works.
> If you tell me they wont
i'm telling you they can't. bitcoin is defined by consensus rules and releasing a binary that breaks those rules or mining blocks that break those rules doesn't change bitcoin.
It’s the politics. If the core team decided to change the parameters of bitcoin at worst everyone would fall in line and at best it’d fork and you’d lose a whole lot of value.
Then "faith" that people are going to continue to believe in the Bitcoin that you believe in. I mean it’s not scarce anyone can clone and fire up their own bitcoin.
Trust can not be removed it can only be spread. If you use BTC you also have to trust that most miners/pools act honest. You can't even choose which miners you think are trust able. You have to just hope (trust) that at least 50% are honest an cant be compromised at the same time.
How is that any better than (optional, yes completely optional) choosing trusted Nodes?
You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded. If Tx X was actually first but Tx Y reaches majority this simply means that either Tx X was not relayed fast enough to all the nodes OR it could mean that a lot colluded nodes voted for Tx Y.
Either way the consensus can "fail" because of technical reasons (slow relaying) or "fail" trough colluded nodes both "fails" do not lead to changed rules. No invalid Tx can happen this way. No Tx can be reversed this way. The whole situation can only ever happen if 2 Tx are valid signed but try to send the same funds (double spend attempt) and are inserted into the network nearly at the same time. Only one Tx will be processed. Enough colluded validators could effect which one but its completely irrelevant. Who cares which Tx of a double spend attempt is processed?
If you try to pay 2 persons with 100 bucks each by placing just one 100 dollar bill on the table in front of them, you don't know which one is gonna pick it up but clearly you have not fooled anyone into thinking you payed both.
>i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
You completely misunderstood, you don't have to choose "correct" validators to make it work correctly it can only work correctly! Bad validators don't "hurt" they just don't contribute.
Assuming 50% of all validators are bad and suddenly start censoring Txs or reordering non final Txs that would have the same effect as if these validators would just shut down. It does NOT produce a wrong output. Worst case is that the network halts and that is wanted because if 50% go offline at the same time there is probably something seriously wrong like a global internet collapse. Something humans have to fix first before resuming.
>i want universally objective measure by which i can compare competing chains.
By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point? Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
> You have to just hope (trust) that at least 50% are honest an cant be compromised at the same time. How is that any better than (optional, yes completely optional) choosing trusted Nodes?
51% attack exists for all cryptocurrencies. don't try to substitute "colluding 51% of selected validators" with "colluding 51% of global hashrate", you're being disingenious.
i don't have any trust in miners, all they do is send me block signatures and if the signature satisfies proof of work requirements i can be reasonably certain one would have to burn some amount of energy to override that.
you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
> You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded.
80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
> By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point?
universally objective measure is proof of work. you can't fake it without burning similar amount of energy.
> Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
You means all PoW/PoS cryptocurrencies?
Because consensus does NOT have something like an 51% attack especially not at 51%. Majority is defined as 80% for a reason. Colluding 51% of selected validators NEVER result in anything comparable to a 51% attack on a PoW network.
Neither double spend nor reversing is possible with 51%. I already described the "harm" someone could do with 51%. Temporary Halt progress. Temporary censor/exclude some Tx.
That would be bad but it would be detected and could be fixed.
Well I call that trust. You trust miners/mining pool operators to act by the rules.
And even if they do you still could be on the wrong chain because of network problems etc.
If you only see one chain you don't even know if there is another chain. Hence the waiting for several block for confirmation.
>you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
Consensus isn't PoS there are no chains
You don't have to trust any third party you can run your own node and validate the Tx in real time and confirm everything yourself. If the network and your node node would "fork" you would instantly know something is wrong (most likely something with your node).
>80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
Well how about you read the documentation? Why arguing with me if literally all you arguments just show that you have never read how consensus works but you still wanna tell me why it does not work.
BTW Validators use public-key cryptography to communicate with each other and they know exactly which validators is online. That of course doesn't help at all against colluded validators. But then again like mentioned many times now, colluded validators can not trick any node into doing something wrong. No matter how many. Literally all validators could not trick your own node into accepting a Tx that isn't valid or to revers anything. It's like if suddenly all calculators except yours would calculate some things wrong. As long as you use your own to verify results you can't be tricked.
>who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
The answer to all these question is literally the consensus algorithm. Please just go an read how it finds consensus. I can only give some short answers but to fully understand you must read the documentation.
>who decides what's final?
In short very simplified: Everyone who wants tells everyone who wants to hear, which valid Tx they would include in the next ledger.
Everyone listens to who they want to listen to and skip the Tx that aren't suggested by at least 80%
Everyone now has a bunch of Tx that they validated and they know most others agree on.
That's it. That's final. Skipped Tx will be proposed for the next ledger.
Since everyone can say whatever they want but also everyone can just ignore what you say, colluded validators can tell sh*t all day long. You could even spin up 1000 Validators (way more thane 80%) and let them all propose wrong Tx. No one would care because no one has a reasons to include invalid Txs ever. An attacker would need to collude existing validators that others already listen to. But as soon as they propose Tx that are not valid everyone would stop listen to them.
So you would need to collude over 80% of the existing validators then you could propose a wrong Tx AND reach 80% agreement.
Problem is all other not-colluded validators would simply stop and all nodes that validate Txs them-self like the node of an exchange or a node run by a bank etc. they would all stop as well because even majority can not overwrite their code.
You end up with a network of colluded validator that make forward progress but no one listens to them anymore. All the honest player have detected that something is wrong and halted after the last correct ledger.
Technically there is now a fork. One chain is halted and one is obviously wrong. Not exactly hard to pick the right one in this case.
>how much does it cost to bribe them?
Who knows? But how much is halting the network worth? It sure could cause damage (trades stop etc.) But it will not case wrong behavior so you can't exactly make money with this like with double spending. You could short and hope the price would drop because of the halt. On the other hand surviving such a large scale attack could also push the price way up.
The XRPL never halted but the XLM ledger did (not because of an attack) a few month back for like 2h. It has no visible effect on the price.
>how do they know they have quorum to make such decision?
They don't. Consensus is reached not decided see above and documentation. They only decide if a Tx is valid and they use math to do so.
>what if there's a network partition and two quorums have finalized two chains?
That can not happen because nether partition could reach 80% agreement.
The network halts in such situation for as long as needed rather than splitting.
>that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
It's still not PoS why are PoW supported always coming up with flaws in PoS lol I already know PoS is flawed but so Is PoW.
> And even if they do you still could be on the wrong chain because of network problems etc. If you only see one chain you don't even know if there is another chain.
this is the key thing you don't understand, i don't even need to respond to the rest of your message because of it.
with PoW even if i see only one chain i can absolutely objectively detect if something cheesy is going on by observing the difficulty of that chain. no network connectivity required. no comparison with other potential chains required. until you understand how is that different from PoS there's no point in discussing benefits and tradeoffs between these systems.
Detecting if something is cheesy in the chain is not enough. The chain you see can be totally fine nothing cheesy you could "objectively detect" yet the chain you don't see is longer and everyone will switch there. Your "objectively detected" nothing is totally pointless in this case.
Or what about Tx censorship. A valid Tx with reasonable fee isn't included because miners/mining pools colluded to not process that Tx. You objectively detected nothing because everything on the chain is completely correct. You can't detect what isn't there.
You still come around with PoS lol dude I never in the whole thread compared PoW to PoS. PoS is totally irrelevant. If it would not exist PoW would still have the same flaws.
> yet the chain you don't see is longer and everyone will switch there
No. No it can’t. No it can’t without somebody spinning up 100%+ more hashrate. And in PoS it totally can because there is no objective truth measure attached to it.
And again, 51% attacks are not solvable in principle and all your criticisms are basically “but what if your chain gets 51% attacked?”. Well duh, 51% attacked system gets destroyed, no matter if it’s PoS or PoW, the issue is that PoS gets destroyed in many more scenarios, not just the equivalent of apocalypse.
And you did bring up PoS multiple times. If you didn’t - we would t be having this conversation at all.
It does, because it competes with decarbonizations of things our civilization actually needs. Once that's done, it'll still be ridiculous to try and base the economy on bitcoins, because proof of work scales so badly it'll happily eat any and all energy that's made available.
Thousands of years from now, when humanity builds its first Dyson sphere, I would like to believe the collected energy will be used for purposes like making everyone's life long and prosperous, or propelling great starships across the void - and not just to secure the Bitcoin network.
Explain to me how they prevent the energy requirements of proof of work securing the entire cryptocoin infrastructure from growing significantly faster than the market using that infrastructure, and without compromising the whole reason behind cryptocurrencies in the first place, which is decentralization and lack of trust?
Hm I'm not sure I understand, because the answer seems very simple: because they dramatically increase ratio of the number of meaningful transactions describing real economic activity to a MB of valueable block space (and therefore per watt of total global PoW calculation).
If all they do is increase the ratio, that's only constant scaling. So in no way does it compensate for the scaling of PoW energy use with respect to market size.
Why would you assume it would be constant? What equations you are using? How exactly are you projecting the market size to POW increase, and how do you calculate L2 changes? "Increase" the ratio does not mean it will increase by *2, it can be ^2 or whatever other formula might end up being real.
But renewable is all wasted if there is no demand. Hydro power used for bitcoin mining doesn't find a new user immediately if bitcoin stops and the power can't be stored long term so it can be wasted.
I think you misunderstand. Once the power is generated it can't be stored for long. And I understand your point but you can't hold water in a reservoir/dam indefinitely, at some point you either use it to generate power or you let it flow through without generating power because otherwise the dam overflows.
Ok, I should be more clear. Until we have enough energy that we're all running on renewables and adding more bitcoin-related load uses up spare capacity rather than increase overall usage - it matters.
I mean, unless it's a dedicated power generating station, you're still using renewable power which is not used by someone else and overall we're supplementing that with coal and others.
You’re wrong. If you think Bitcoin’s mining is wasteful you don’t understand what is valuable in Bitcoin. If you think there is duplication - you don’t understand how modern bitcoin mining even works.
Proof of stake doesn’t work and trust based models are the very thing bitcoin is designed to save us from.
If you have ideological bias here I won’t try to convince you, only time will.
Why not tax or make all energy more expensive? That way all wasteful usage will be curtailed and only the valuable use cases will be left after a while. If we do what you proposed it sounds like we should start taxing other behavior on the internet based on its usefulness to society and electricity usage.
We definitely should tax all dirty energy, and the shifting price landscape will do a lot to fix the environmental issues we're facing.
That said, it's not enough - because the market isn't some NP-complete-problem-solving magic oracle. It's just a greedy optimization algorithm. It's very prone to falling into bad local optima. We know that for a fact, that's the basis of most regulations around markets. Left unattended, the market would happily prioritize mining Bitcoin over producing food, as running Bitcoins in circles is more profitable than selling grain - up until there's an actual shortage of food and the market self-destructs.
Energy on it's own is not dirty or clean. You cannot test the wires in the wall to say yep, this energy is clean.
You can of course tax the energy producers, but that does not prevent fraud on it's own - see oil tankers converting gas pollutants to water and causing even more harm.
You purchase electricity with clean production guarantees.
That doesn't necessarily mean the electricity you use comes from that, or any, clean source, but that clean sources are used to contribute to grid supply equally.
If that's not actually happening then we can call that fraud, but that's a separate issue.
See the way bitcoin works is anyone who wants to run a node on the network can just start without asking anyone for anything, or even letting anyone know they are starting.
There is no door you can bang on to stop new users from joining. There is no server you can bring down to prevent people from joining.
> It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
This kind of comparison is flawed: Tesla was made for efficient mileage from electricity, but Bitcoin never aimed at transactions that require little electricity. You could compare an electric kettle to a smartphone and say that electric kettles are really bad because you could talk on the phone for 50 years instead of boiling water for some tea. ( If you don't believe me or don't get it, I don't have time to try to convince you, sorry. )
> Edit: You would end up burning even more if you tried to stop it.
Based on the above and other properties of bitcoin, it would not be cost free at all to try and stop it. I am convinced that the costs related to attempts to stop bitcoin would be much higher than the costs required to leave it be.
> We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Yeah I'd too appreciate if the debate here was more than yeah just tax it bro, they gotta cash out bro
Also the critical thinkers seem to never have even checked the source of this 600KWh / transaction claim.
If you actually cared to check [0] you would see that this claim is coming from estimating mining revenue and then sending 60% of that revenue to mining costs.
That calculation is actually:
Mining revenue(in USD) * 0.6 / 0.05 / amount of transactions = KWh per transaction
The most powerful supercomputer in the world reaches 143 petaflops, bitcoin network in comparison reaches 80704290.84 Petaflops. Granted that a majority of this computing power is in the form of custom ASIC's, but the figure is really staggering.
And all of the 80704290.84 Petaflops, consume 73.12 TWh to repeatedly calculate SHA256 ! What could be the world's most powerful network does absolutely nothing but crunch hashes billions of times to discard almost all of the results anyway. Sheer waste of computing power.
It's incredible that people on HN, a technical readership, still don't understand why the energetic or computational "waste" of proof-of-work is needed.
There is simply no other known way of implementing a decentralized, censorship-resistant, robust digital currency. Without PoW you lose one of these properties.
Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. There are many other unsolved problems. That's why Ethereum is years behind schedule in designing and deploying PoS.
Replacing PoW with a useful algorithm (eg. protein folding) loses decentralization (a central trusted authority must verify/sample who performs the work correctly).
Trust-based systems (Stellar, Libra) lose censorship-resistance.
A "dumb" PoW is literally the only practical solution.
If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.
If the only way to have a decentralized, trustless, robust digital currency is to waste an inordinate amount of energy and increase our global warming and pollution problems, then we'll have to do without that kind of digital currency. It's a matter of priorities.
From a position of power it is easy to do without, because you derive no security or finances from this solution. After all, the status quo is paying you just fine. Why is what you say relevant for most people, who to varying degrees definitely don't have all the things that you apparently take for granted?
Is having food on the table and a roof on their head relevant to "most people"? Because, when we're talking about climate change, that's what is at risk for hundreds of millions of people.
Said the man living one of the most privileged lives possible on this planet. Bitcoin has a very clear use to the oppressed people of the world, and for that exact reason it’s popular among criminals.
It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Don't fall prey to the scary comparisons BECI employs to mislead its readers.
Global warming is critical, but there are other energy wasters much, much bigger than Bitcoin miners.
Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. A recent paper by Stoll et al. estimated CO2 emissions as being comparable to what a single city like Las Vegas emits: https://mobile.twitter.com/zorinaq/status/113943906857019392...
Right now the share of the world economy running on Bitcoin is negligible, yet its energy consumption is relevant. If that share became consistent, the price of Bitcoin would increase by many orders of magnitude, and mining bitcoin would become more and more competitive in relation to other uses of energy, and would increase in tune - that's why I say inordinate. PoW is just unsustainable by design.
Bitcoin's energy consumption is also by design self balancing - increase the price of electricity, less electricity will be used. With the same benefits for the network.
It's not a "waste" if the result is a decentralized, trustless, robust digital currency.
And the global warming argument is a many times debunked hoax - if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable. Except in the other cases, the benefits go to the single entity that owns the business, whereas with cryptocurrency every participant benefits from the stronger network. Global warming is caused by using fossil fuels to make electricity, mining crypto doesn't require fossil fuels. There are other ways to make electricity, let's focus on them.
> if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable
I'm sorry, but you got this backwards. If bitcoin becomes a relevant part of the world economy, then it HAS to use a relevant part of the world energy, because consuming energy for PoW is the only limiting factor against a 51% attack. So, either Bitcoin is irrelevant - and thus its power usage is a literal waste - or it's relevant, and then its power usage has to become relevant in terms of global warming.
From the point of view of the miner, they have a supply of electricity at a certain price and can decide what to do with it. They might run their TV, computer, heating, industrial machinery, datacenter, or a bitcoin miner. They have to compute what profits can each of the options give them. If running bitcoin miners at that electricity cost and at that profit they can get from selling the bitcoins is more profitable than the others, then it's logical to do that. If on the other hand the price of bitcoin goes down, or the price of electricity goes up, or people start paying more for server hosting, then the decision changes. The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
If bitcoin is the dominant currency, another option exists:
51% attack, double-spend to get free electricity.
This is useful even when it makes an apparent loss by damaging trust in the currency: If you are, say, the USA president and you’re at war with Iraq, and Iraq uses bitcoin, you can outspend on energy until they surrender.
Unless the whole world uses bitcoin, but then the first few nations individually face the same problem, regardless of who else actually uses bitcoin — gotta keep the USA and China happy at the same time! (The EU isn’t integrated enough to do that sort of thing yet, but is a similar sized group).
Right now, 51% needs the cost of one very large power station from when you start until when you win — large nations, the sort with global ambitions, can spare a lot more. In the previous example, that’s close to all the power Iraq produces, but 5.4% of the USA’s output.
Then there’s the fact that most countries like being in charge of their own currencies as the ability to create or destroy units is a useful economic lever.
> The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
Or it’s speculation, like so many other things before and probably yet to come.
There is no such thing as speculation by mining - if they wanted to speculate but didn't profit from the mining itself, it would be better for them to speculate by buying - instead of giving dollars to the power company, they'd just give them to other people on the exchange. Basically the only reasons for miners to "speculate" are long term contracts like lease contracts for warehouses. And those may or may not be long term.
And 51% attack has the designed side effect that all other people stop using the currency - they may keep following the previous fork without the double-spend - as shown by ETH and ETC. You'd also need some way of forcing all participant to stay with the now corrupted currency. Otherwise the attacker who performs 51% attack will gain the ownership of a network that immediately becomes completely worthless.
> And 51% attack has the designed side effect that all other people stop using the currency
That’s my point. That is literally the point. That is why it is a bad thing and why no sane nation would ever allow it to become their main currency. It is an attack surface. It is a vulnerability to your economy.
I see no benefit in a trustless currency: If I have no trust in a currency, why should I trust the goods/services?
I see no benefit in a decentralised currency: gold is one (anyone can mine it) and there’s a reason we moved away from it.
I don’t buy that bitcoin is either decentralised (they who control the algorithm steering committee control the currency); trustless (why should I trust irreversible transactions? Why should I trust those who wrote my wallet? Why should I trust those that wrote my mining app?); nor robust (the domain of money is law, not logic, so always subject to government interference; the price is currently highly volatile; and apps always have bugs yet to be discovered).
Trustless currency means exactly the opposite of what you think. It means you don't need to trust anyone, because everything can be proven and verified mathematically without any authoritative figure that you'd have to trust. That's why you can trust the system itself.
I think you have fundamentally misunderstood my point.
Let’s say I buy a widget. How can I trust that the widget will arrive? That it will do what widgets do? That it will not break? None of these are payment issues, but they might call for a refund. How can I get a refund? How can the refund system be resistant to abuse?
The answers we currently have are “the law”. If the law functions, I don’t need a trustless currency.
Once we have enough green energy I'd totally agree with you. But currently, I don't think we can afford adding that much CO² for a currency that isn't widely used anywhere in the world.
Which is negligible compared to the number of credit card transactions in the US (> 300 times as many per month) or bank transfers in Germany alone (50 times as many per month). And that's not even counting other ways or countries.
Disregarding the energy cost, couldn't a "dumb" PoW be more computationally complex than Sha256, such that a relatively larger number of computers could compete in the consensus algorithm, thereby increasing decentralization? To me, Bitcoin doesn't seem that decentralized, considering the ASIC chip manufacturers control the majority mining stake. Intel has even gotten into the game.
More complex PoW, such as a memory hard one requiring several GB of memory to solve efficiently, can lower the efficiency gap between GPUs and ASICs to about one order of magnitude, but not much less. That means that ultimately, only ASICs can mine profitably (and only if they have access to very cheap power).
I am not that old and still I remember Ring networks (before ethernet), they were highly impractical and rudimentary, but they filled a purpose at their time.
Then Ethernet came. Anyone remembers the dumb hubs? when a computer wanted to send a message, the hub actually broadcasted it to all computers in the network... so inefficient, and yet, it served its purpose.
Later, came the network protocols. There was this protocol used for discussion groups/news, remember NNTP? wasteful, because nodes had to download / replicate the full history of posts. But still... served its purpose for its time.
Then came a messaging protocol, SMTP, very useful for sending "electronic mail", very convenient. But people started sending binary data files on it... by converting it to text (UUEncoding anyone?) so wasteful and inefficient. But it is still being used.
So, bitcoin for me is just that early system, that early test that shows a way to do decentralized, censorship-resistant, digital currency. Humanity will find more efficient ways to do it (and maybe they won't be used, as with Email) or at some point in the distant future, the power side of the equation won't be relevant (renewable energy? nuclear? who knows). But for me, that does not change the fact that bitcoin proposition is a stepping stone for society that sooner or later will change the way people transfer value.
I invoke Zawinski's Law of Software Envelopment, and predict that Bitcoin will be replaced by artificially intelligent spam filtering software that can read mail.
> If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.
But they aren't, and the whole exercise is comparable to trying to repeatedly solve ever-larger NP-complete problems by brute force. Something no technical person in their sane mind would consider a correct course of action.
And just like we use good enough polynomial approximations to get near-best solutions to NP-complete problems, we can do the same for running economy. Trust is not a liability. Trust is what makes economy efficient.
The bitcoin network asics reach exactly 0 petaflops. Why? Because they cannot do any floating point operations. They can literally do just SHA256 hashes, nothing else.
The "worlds most powerful network" simply cannot do anything else than this. It's effectively just an expensive set of electrical heaters.
That's like saying a water bottle factory has only an output of N water bottles per day while the Three Gorges Dam can output N million liters of water a day with the difference that the Three Gorges Dam actually produces something useful, electricity, while doing so.
Just because it's a higher number, it doesn't mean it's equally useful.
It's more like instead of using the Three Gorges Dam to generate power you use the giant flow of water to fill 7 water bottles per second and divert the rest to dry up in a nearby salt flat, citing the renewability of the solution.
So supercomputers produce nothing useful but the bitcoin network does? In the long term I'm not sure we gained anything so far by all the energy spent on bitcoins. Some people got richer, some got poorer but I've yet to see any benefits for society from bitcoin.
So many times this argument comes up and every time I am amazed at how ignorant it seems to me. But it is very hard to discuss...
Can't we all just agree that what is a valuable use of someones watts or petahashes per second is a subjective choice? That people are free to value their resources as they see fit? You personally might not value securing Bitcoin network, but many other people find it valueable and it is perfectly fine in a free country to allow them do what they please if you are similarly allowed to do what you please (no one forces you to buy Bitcoin miners)?
The problem is the impact these things have on the rest of us when we ourselves have no interest in bitcoin.
If bitcoin existed purely inside a virtual world — say, if coin miners were a virtual good that WoW players could buy which made WoW money appear in their inventory according to similar rules but without the actual hard work of computing anything beyond a lightweight O(num_players) random number generator on the server, then it stops being anyone else’s problem.
Are my christmas lights that I put on during winter also everyone else's problem because they waste energy (that I bought with my own money)? Are you going to get into my business there as well and tell me what I can and cannot spend my resources on, because you claim that they have an "impact on you and you have no interest in them"?
I am pretty sure that the best consensus the western world has come up with is that if there are any externalities, they can simply be taxed in like for example a carbon tax. But telling other people what they should and should not find valueable as if you have some sort of ultimate authority on knowing what is valueable, well, I hope you can already see what is wrong with that. Value is subjective. As in, other people have a right to decide for themselves.
> Are my christmas lights that I put on during winter also everyone else's problem because they waste energy (that I bought with my own money)?
Yes but too little to bother about. Transportation and inefficient heat management are the only common ones that matter.
> they can simply be taxed in like for example a carbon tax
On that we agree. I believe car fuel is taxed appropriately in the UK, but in general these externalities are not properly accounted for. If they were, it would be a different matter, but they’re not.
Yes but the bitcoin network computers don't _really_ coorperate (well they do, with a bandwidth of the order of 2MB/15mins), unlike supercomputers, so hard to compare. But yes, lots of waste.
Maybe there are more values in investing into SHA256 hardware other than Bitcoin. That's 80704290.84 petaflops dedicated to break the SHA256 algorithm (finding a duplicate). Finding such duplicate could advance knowledge, mathematics, cyber security, society, etc
Clarifications (this website perpetuates some common misconceptions):
- A single bitcoin "transaction" can actually have thousands of inputs and thousands of outputs. So energy "per transaction" or "transactions per second" is not analogous to a typical monetary transaction.
- Bitcoin does not compete with literal credit card transactions (although some use it like that today). I'd compare Bitcoin on-chain transactions with how nation-states settle their central-bank ledgers with gold. Gold is the best comparison to Bitcoin because trading in hard gold is "final". Credit card transactions happen on a higher level in the financial stack. As does cash. As do bank transfers. All of these bubble down into interbank transfers that eventually settle on the base layer of central banks. So compared to shipping and securing gold, Bitcoin is quite cheap!
- Adding to the above point; if Bitcoin succeeds in beind "adopted", it would not mean we no longer use credit cards. Credit cards would just port their underlying mechanism on top of Bitcoin instead of fiat moneys.
The linked website attempts to quantify the impact with some stated assumptions. You’ve stated some alternative assumptions, but haven’t quantified the conclusions to determine if they hold.
I’ve been long on Bitcoin, but I am exiting my position over concerns about the environment impact. I don’t think it’s plausible that a proof-of-work based blockchain can be anywhere near as efficient as centralized ledgers are. If any of the proof-of-stake based solutions ever gain traction, maybe I’ll participate in those.
> can be anywhere near as efficient as centralized ledgers are
Yeah, no one ever claimed that they would be more efficient. If you have invested assuming the efficiency is the main goal, you have been misled. What they do provide is efficient decentralized ledgers, which is a whole other game completely.
> Bitcoin does not compete with literal credit card transactions (although some use it like that today). ... So compared to shipping and securing gold, Bitcoin is quite cheap!
I haven't heard the tagline "Bitcoin - it's cheaper than moving around gold on warships" yet. So far, Bitcoin has always been advertised as a new form of internet payment and a new decentralised currently for everyday use.
It's also the very point of cryptocurrencies that there are no intermediate agents, like central banks that could make up the lower levels of your stack.
So the usage patterns that Bitcoin was marketed with absolutely put it in competition with visa transactions.
I think it's fair to blame the marketing mistake. Bitcoin was built for the purpose of making convenient payments. However, it turned out to be an ingenious alternative to gold.
I wish it were labelled cryptoasset instead of cryptocurrency.
In the long-term, the objective nature of Bitcoin should prevail and we'll assess its benefit by whether it is a successful store of value.
Are you comparing Bitcoin to settlement with gold to make Bitcoin seem less inefficient? This seems like a misleading comparison, because which significant central banks still physically move gold around for settlement? Either they don't move gold or it is only moved virtually, and in either case Bitcoin is vastly less efficient.
I am comparing it to settling gold in that a settlement is "final". You can reverse a credit card transaction, a bank wire, etc. You cannot reverse a Bitcoin transaction or Gold shipment without significant risk and cost.
Off-chain transactions effectively don't exist at all in terms of transaction volume, and the players who staked money on Lightning lost approximately 99.97% of that money.
I think you haven't read how Lightning Network works.
People don't need to stake money, just create a multisig transaction with a peer and having a transaction signed by the other peer to get their money back when they want to close the lightning channel. They can get extra fees for enabling transactions, though not that big amount.
Perhaps the Satoshi group should have called their invention BitGold instead of BitCoin? Although it's normal to see tech guys bad at marketing/branding.
Per transaction is intentionally a bit misleading, as the amount of power usage is proportional to how-much-power the block-reward can buy regardless of there being 1 or 1 million transactions.
Not to mention, a single transaction can power an infinite amount of (wash) transactions thanks to 2nd layer stuff like the lightning network. So it'd be similarly misleading to try quote in terms of that.
So the correct unit would be power usage, per block or time unit.
The bitcoin network has a limited number of transactions per second that it can process (Limited by block size). Last time I checked the network was basically at the limit so per transaction is not an insane way of looking at it.
I get what you mean, if you decide not to make a transaction, the energy still gets spent but the more you use bitcoin the more valuable it becomes which incentivizes miners to keep mining. Also someone elses transaction will just slot in to fill the gap left since there is a very limited amount of space for transactions which is always fully utilized.
Not exactly. Second layer transactions sit on top, so the hard max of 4200 "settlements"[1] in a block does not necessarily mean 4200 transactions.
With enough people using the second layer network, each "settlement" could mean finalising hundreds of transactions for thousands of people. This second layer network acts like a caching layer, and consolidates many transactions into a single transaction (put into very simple terms).
The contrarian take on Bitcoin and carbon is that Bitcoin chases the cheapest energy, and solar is quickly becoming the cheapest source. In some areas of the world it already is (various subsidized infra in China).
That's correct. Bitcoin actually accelerates the adoption of renewables because it provides an instant economic incentive to build e.g. solar in places where electricity demand doesn't provide high return on the investment.
The problem is bitcoin needs baseload power, not variable because the mining equipment is expensive. This is why bigger mining farms are located near large hydropower areas. BTC miners run their equipment 24/7/365.
1. Calculate total mining revenues, across all miners in the Bitcoin network.
2. Estimate that, on average, miners spend 60% of their revenues on electricity. (I believe the origin of this number are the calculations in this paper [0]).
3. Find out how much miners pay per kWh on average.
4. Convert the costs into a consumption.
There is some discussion of the origin of the assumptions, and some criticism and validation here [1] and here [2] respectively.
The Bitcoin network has a fixed transaction capacity that has no relation to the amount of power expended to mine bitcoin.
The amount of power used is proportional to the value of the reward for successfully mining a new block, which happens about every 10 minutes (12.5 BTC or about $100k).
If the value of BTC goes up miners will increase their spend and more power will be consumed per block mined, and if the value goes down so to will the power used.
Regardless of the power used for mining, there is a fixed transaction capacity in the network.
Power used can also be a function of energy costs. It costs go down by half, miners will be incentivized to increase mining capacity (else their competition will) and as a result presumably energy consumption will double.
We're talking about just keeping track of who owns what amounts of a commodity. That part is using terawatt hours per year! I am very doubtful that the "keeping track of who owns what amounts" part of the stock market is anywhere near that.
Determining who has the rights to make changes to what data, auditing changes, auditing ever-changing access control rights, systematically changing these rules to adapt to technological advancements, etc. is the function which Bitcoin accomplishes that you are discounting from your perceived cost of the traditional stock market.
The financial sector is 20% of global GDP. Bitcoin is much less than 20% of world carbon emissions.
Further, fiduciary duty of corporations to maximize shareholder profit has led to almost every environmentally harmful exploit of externalities. I'd argue that the stock market is fundamentally responsible for 99% of all pollution.
Financial sector does not produce 20% of carbon emissions. They are maybe 0.1%. The act of trading on exchanges is significantly more efficient than the act of trading on blockchain. Because there really is no need for an untrusted ledger when there is the USG certifying that the NYSE and NASDAQ will not execute erroneous trades.
Bitcoin does not eliminate the idea of fiduciary duty. Bitcoin holders still expect bitcoin loanees to trade and operate in their financial interest.
for processing/validating transactions? couple hundred MWH. How much do you think the Nasdaq/NYSE mainframes really eat?
bitcoin numbers don't include the off-chain stuff either, lol.
Bitcoin energy is literally expended on a massive, inefficient mainframe that processes a couple hundred transactions a second. That's all - everything else is additional to that.
No, what is the cost of the system which enables the USG to reliably prevent the execution of erroneous trades?
Tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges, etc.
Obviously the purely digital systems consumes more compute, but I think you're discounting many of the true costs of the existing system.
The system doesn't just enable the USG to reliably prevent the execution of erroneous trades.
If you think that tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges are there just to prevent erroneous trades...
It seems that you are discounting a vast amount of things that the system does besides preventing the execution of erroneous trade.
Yes, I am being superlative. However the traditional system would not function without all those parts - bitcoin effectively accomplishes many of these functions with compute alone, while traditional stock market uses compute for a much more limited scope. I simply want to point out this vast discrepancy in scope of comparison.
I have similar feelings, but if you apply this attitude uniformly it's nearly impossible to participate in the economy at all, since it's mostly riding on fossil fuels in one way or another.
At least with bitcoin you could theoretically throw up a pile of solar panels and directly convert that clean electricity into money.
Same here but I left because of the high transaction costs and low anonymity. I prefer privacy coins. Only problem is not many people use the smaller market cap coins for buying/selling stuff.
Depends on the hardware, mining difficulty, block reward. Right now? Something like 0.15 per kw/h is the break-even point, and if you're not getting below 0.10 you won't get the cost of your hardware back fast enough
In other words, you should mine if you're in China where you can get those rates
Pays zero what? They have to buy the hardware so I assume you mean electricity, pretty sure bribing allows them to operate, it doesn't cover electricity costs.
pays zero electricity costs, yes. A couple grand a year can buy you all the electricity you want. tens or hundreds or of grand per year, or millions. A couple grand is a lot in terms of China salaries.
you'll never find a systematic article on it, but these aren't the first or the last incidents.
they also pay much lower hardware costs than the US does, because it all happens off the books. Chinese mining farms with internal hardware/super cheap power are nothing new.
china doesn't and never has played fairly in terms of hardware or power costs. crypto as a whole has been embraced because it's a good system to move value past chinese capital controls, you just are getting your beak wet as that money moves.
just like those 2 million dollar houses in vancouver or whatever. Sure, it's great to be trading in that current, or providing property management services, or to be holding the asset as it's pumped up by that money moving under the chinese capital controls!
I'm not "smart enough" to calculate that acurately, but if the "cost per transaction" is high enough to get a couple of articles written about it, I won't participate into that.
Wow that's really noble of you, have you considered logging off permanently and living in a tent in the woods? You realize none of the world's problems ever get solved if you bury your head in the sand and ignore things right? I mean we could all go back and start living in caves again, that would certainly solve the climate crisis wouldn't it?
To put this in perspective, Bitcoin's 73.12 TWh annual energy consumption is enough to power over 10 million electric cars each driving 100 km (61 miles) daily, every day of the year.
This seems completely outrageous to me. I had seen similar numbers thrown around casually in the past but still found it hard to believe to be true, (despite being pretty bearish on Bitcoin myself). This seems to provide some pretty detailed evidence, analysis and validation directly addressing criticisms. It seems pretty thorough.
Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Is Bitcoin figuratively, and almost literally, a tire fire?
(Edit2: I interpreted your use of "outrageous" to mean surprising or unbelievable. If instead you meant inciting to outrage, then I agree, it is.)
My opinion is that if you find this outrageous then you don't understand the core principles of Bitcoin. The difficulty of mining a block on the network goes up with the amount of mining being done to maintain a constant block mining rate.
There are massive bitcoin mining warehouses in China, and for each one that opens all of them are less effective at mining, but still consume the same amount of energy.
So, yeah, it's pretty much a tire fire.
Edit: to add to this, many industries can use technology to produce more value with less energy. Bitcoin is fundamentally unable to do this for the same reasons I mentioned above. When bitcoin specific mining hardware first came out, it briefly gave an advantage to the first people to have it, but then the advances were completely neglected when they became widespread.
Proof of stake sort of solves this. In theory those with the most money can spend the most on mining equipment and get the biggest payout. Proof of stake short circuits this and just gives the biggest payout to the ones with the most money.
I'm afraid that the moment you chose to use the word "wasteful" it became a philosophical discussion and they don't typically have final words at all.
The stripped down reason you see it as wasteful is that you have some set of beliefs about what is "right" and "meaningful" (many of which, I'll take liberty to say, most likely likely NOT consciously thought out) and since the core technical principle behind Bitcoin is simple enough, it's easy for you to see it does something that seemingly does not contribute to the fulfillment of what you consider "meaningful" (i.e. performing tons of computation that essentially compute nothing "meaningful").
Technical principles behind markets, industries or your own existence are not simple enough, so you cannot see through them and decide at a glance that they are "wasteful". And since you generally avoid falling into philosophical discussions (rightfully so), this is good enough for you. This doesn't mean that they achieve something that will turn out "obviously meaningful" to you (I'm cynical enough to assume they actually not), it's all just too complicated to tell at a glance.
If this is all too abstract, I'm saying that Bitcoin is actually doing something, and this something is much more complicated than the technical principle you can easily see behind it. You should take this into consideration when thinking about what this giant CO₂ emitting machine actually is. It is not a machine for computing hashes, as it might seem from a purely technical perspective.
Bitcoin is absolutely wasteful to the vast majority of the population on earth. It provides no benefit to them, and makes their energy bill (and video card bill) go up.
But the same could be applied to almost any consumer product. My kids want to buy these crappy plastic toys at the supermarket, wastefully packaged and shipped from China, of no-use to anyone yet energy is expended to design, make and ship them internationally. And this is just one consumer product from China. Have you seen Alibaba offerings of late?
Tons are mining alt coins with them. These stories never include the rather sizable market for alt-coins, almost all of which use the same energy-sucking design that bitcoin does.
I’ve never seen an article like this for the entire crypto space as a whole but I imagine it is much, much worse.
No, energy expenditure for bitcoin mining is larger than that of all altcoins combined. Despite the considerable technical innovations of some altcoins, bitcoin remains king in this world for now.
The energy consumption of the next closest altcoin is almost an order of magnitude less even with ASICs. After that, you'll find the security model of almost every altcoin to be total garbage (low energy consumption).
LOL. Sure, but that is only being done because bitcoin gobbled up all the electricity that could have been used doing useful things like running data centers, smelting aluminum, air conditioning homes, etc.
Bitcoin is a drain on the electrical system. You are basically arguing that it is okay to litter because it will create jobs and spawn new anti-litter technology.
I'll shutdown my bitcoin mining operation if you shutdown your AC. I find 21c living to be incredibly wasteful and a luxury only offered to those blessed to be born in the first world.
Please turn off your computer. You're wasting watts shaming first world folk. Go convince the 3rd world to stop burning trash and making babies. Oh, right - they'll stop by themselves when they reach your level of wealth.
That electricity could not always have been used to smelt aluminium or whatever else you suggest. Some of that power is hydro based and cannot travel a significant distance. You can move bitcoin mining equipment closer to power sources much more easily than you can move an aluminium furnace and supporting infrastructure.
Oh, does it? Does it accomplish all the speculation, all the drama going on? All the drug deals made with Bitcoin, all the kids that became rich out of nothing because they played with some obscure technology 10 years ago? I'm pretty sure you don't know everything Bitcoin accomplished (or maybe still does). Neither do I, nor anyone.
To be clear: if you ask my opinion on technical side of Bitcoin, I wouldn't be really praising it. But, as I said already, Bitcoin is not a technical thing. It is a very complicated sociocultural phenomena that definitely did achieve something. And you need to consider everything X is, to apply words such as "wasteful" to X.
Again, if this seems too abstract: if you are living in the USA, you are consuming twice more energy (per capita) than Japanese people, having lower life expectancy (both are far from the ends of the spectrum, BTW). So, the existence of USA citizens is wasteful.
Now, doesn't stripping down all the nuance of living different lives in different countries seem a bit outrageous to you? It surely does seem so to me.
I don't know. My bank "double spent" a hundred bucks the other day, that took them half a month to return.
There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks.
I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
Yes they absolutely do. Someone buys something from you and then they reverse the payment. They go on and buy something else with the same money. Reversible payments are a huge issue for online merchants.
The world is. There is no engineering reason why it’s so expensive to move numbers around in a bank.
In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
Dude. That $2 trillion is all of finance. Finance is a hell of a lot more than preventing double spends (which don’t exist outside of bitcoin). On a per transaction and even global domestic product basis, the cost of our financial system is tiny. By comparison the cost of bitcoins financial system by any metric is astronomical.
Read the report, it's 2 trillion of revenue for payments only, not all of finance. That report doesn't cover trading, derivatives, mortgages, etc... 1 trillion of payments revenue comes from credit lines, about 1 trillion is fees moving money around.
Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions.
There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either.
So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
Thankfully many types of fraud can be reversed in our modern financial system. With bitcoin, virtually any form of fraud leaves you completely fucked with absolutely no recourse.
Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
You're discounting the costs of maintaining system which allows fiat to keep it's value: 20% of the value of human productivity is spent maintaining the financial system.
Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful?
The carbon estimate seems very poor.
> Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining.
The reason many miners are in China is that they can access cheap off-grid renewable sources of energy there, such as excess hydroelectric, so using an on-grid CO2 estimate doesn't work.
I love when bitcoin promoters claim that bitcoins massive waste of energy is okay cause “it’s totally renewable”.
Setting aside the non-trivial ecological damage caused by dams.... all that renewable energy could have been used to power something that actually adds value to society. Instead it is getting flushed down the toilet solving useless math problems so that a relative handful of people can milk a larger set of rubes for all their money. Oh, and enable criminals to continue their criminal behavior....
I don't own any Bitcoin and never have, and am not especially fond of it.
> Setting aside the non-trivial ecological damage caused by dams..
I don't think anyone is claiming that the dams were built to mine Bitcoins. The power generation was provisioned to power towns, but it is generating more electricity than the towns can use or profitably transport away.
> all that renewable energy could have been used to power something that actually adds value to society.
There is a market to buy the energy. If anyone wanted it for basically any other purpose, the price would increase and the miners would presumably go anywhere else in the world with overprovisioned renewable energy, so that their profit can be preserved. Mining doesn't have many requirements: it doesn't even need to be on-grid. It's created an arbitrage market for cheap electricity, and people will search out the cheapest electricity in the world to use for it. By definition, the cheapest electricity will be the least wanted.
> all that renewable energy could have been used to power something that actually adds value to society.
If the miners are using excess production, then by definition, that power could not have been used for anything else; otherwise, some consumer in the grid would have used it!
It's written in the page that they're Carbon Emission Footprint are totally biased and flawed:
> The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid
I've thought of a good way to put this perspective.
The block reward is 12.5 BTC (and fees are neglible), which is $100000. There's a new block every ~15 minutes, which means 35000 blocks per year. ($100000 * 35000 / 73 TWH) = $0.048/KWH. So miners spend at most $0.05 per KWH on electricity. Assuming they spend 60% on electricity, they spend ~$0.03 per KWH, so not an outrageous price.
The problem is BTC grew too big too fast. The block reward is very large, but once it drops to the magnitude of fees ($2000 / block), we'll probably see a decrease in the energy usage to the (perceived?) value of decentralized payment system.
Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Its not the final word, but it is something to vigilantly monitor in case the following changes:
Most bitcoin energy use is from mining, and that mining uses renewable energy or energy waste byproducts. Source: my experience with mining companies that don't publicly disclose how they do this profitably.
So for now, try to corroborate it yourself. I would say that 70-80% of bitcoin mining is not a wasteful use of energy and that merely estimating the energy numbers doesn't tell you anything about the source. What I mean by "not wasteful" means that it isn't pulling away from another use of energy that was ever going to happen.
This wasted energy is usually in the form of byproducts around other power facilities that cannot be economically converted and transported to residential and commercial areas. This is where bitcoin mining shines: Bitcoin mining does not need a robust internet connection and does not need to occur in residential or commercial areas. A computer with a satellite connection can submit hashes to the bitcoin network, and pools further make it practical to have lower latency, because they merely pay out based on your contribution to the pool.
So miners that use energy waste byproducts (converting those byproducts to electricity at the source and taking transformers there) often times are doing a favor to the power company or whoever is there.
What to monitor: if nation states start competing over power of this network, they may disregard the economic feasibility of doing so, and then it will be incredibly wasteful uses of electricity.
That's not an accurate statement, since the pollution costs of Bitcoin are an externality not being paid by the people using it. It's more like Bitcoin users are dumping costs on the unconsenting public to avoid the "tyranny" of AML/KYC banking regulations.
That's great, but you could argue that AML/KYC has pollution costs of a different nature in regards to personal liberty. Whether or not they do me suggesting that is about as baseless as suggesting bitcoin has huge negative externalities.
Without explicit evidence of a market failure it's probably fine to assume that negative externalities are factored into sticker price of goods as the opportunity cost of product X eventually must take into account those externalities as applied to everyone.
Those don't sound like theft. KYC is supposed to make it easier to trace money, ostensibly if used in crime. But doing this before any crime has occurred seems like a violation of the 4th amendment, and probably only passed constitutional muster at the time because the laws force a nongovernmental entity to infringe on your rights.
The problem with KYC and banking laws are that you can prevent anyone from conducting business for any reason. They've not seen abuse per se but people have been caught up in them with no recourse. Their application in reality may see them ruled unconstitutional.
Bitcoin, then, is just a correction in the other direction. Because face it: large financial institutions still facilitate money laundering, just not for small people.
Alright, that vein of arguments are the biggest cop-out ever. It's like trying to say the 4th amendment doesn't apply to houses because no one forces me to have a house.
The constitution recognizes the inherent right to be secure in your personage and effects. This should include your financial information.
I think it odd that people accept the abrogation of their rights w.r.t. driving. Yes, the government can definitely tax you for road use, but imagine having to carry an ID around that proved you paid your income tax, and that you were required to be IDable at almost all times to be sure you were not committing tax evasion.
Cost of running this public tamper-proof database is $4B + Personnel + Amortizing cost of ASIC Forms, Say $6B
Where does the money come from? This Database isn't selling any service to Enterprise or Government or Public to get revenue. So, the $6B money has to come from Bitcoin holders or new suckers.
Every year it has to get $6B new money just to maintain the current value of Bitcoin.
A bitcoin miner is in essence a kind of inside-out electrical meter: It measures, with remarkable precision, how many electrons (bundled as SHA256 operations) you burn to support the network finding a block, rather than how many you bought, assuming you even bought them at all.
The question is not how many you burned, which is what the mining algo answers with such precision, but how much you paid for them in the first place, which it can offer no insight into.
Some possible shortcuts to paying retail prices for electron mining fuel:
1. You're a large business power customer and pay vastly discounted rates on a contract basis.
2. You're stealing some or all of your power, either by pirate wiring or by paying some official to look the other way, or a little of both.
3. Your mining operation is a pork barrel project with funding secured from your local government's (either clueless or remarkably pragmatic) business development office. Sometimes there may be a legitimate exit plan for this, like repurposing the new datacenter facility you built, after wringing every mining penny from it possible, to host cloud services or as the core of some government-sponsored technology park.
4. You may have been mining quite along time and now have enough early coin held back from the $100 days to slowly sell off into the retail market at 80x profit, or borrow against. It may even be that this reserve of held back coin is partly responsible for the thin liquidity in the market, and consequent bubbled-up price.
5. You publicly, or covertly own or have an interest in one or more of the mining pools and public exchanges, and retain a share some of the Tx and conversion fees which helps subsidize the mining costs.
6. Same as above but for mining rig manufacturers and fabs. Mine on newly manufactured chips for a few days or a week before shipping (for 'testing' purposes ofc) and you get to stay ahead of the difficulty curve as well as get free subsidy from your own customers.
Darkweb, murderers, VCs and drugpeddlers can help run this network of "decentralized futuristic currency" or whatever buzzcrapwords people use for Bitcoin ...
Wasteful compared to what though? How much energy, human capital, and resources are consumed by the banking industry?
If (and big if) bitcoin is able to replace a significant fraction of the banking industry it will be extremely efficient in comparison. Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
> Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
This idea has been around the corner for a while now. How likely is it really, how long will it take, and what will adoption look like? Until it happens and is popular, it seems fair to discuss how much a Bitcoin transaction actually costs...
Too bad lightning network requires bitcoin at the on and off ramps to function. Those transactions alone would kill bitcoins pathetic transaction rate if the ecosystem ever took off.
I mean, the article lays out the energy costs of competing transaction processors. But if Bitcoin is just a clearinghouse for large-scale reconciliation, then... who is the audience exactly? Large banks that have to operate using real money under actual governmental regulation have no use for Bitcoin's naive guarantees, which pretend that the court system and human ambiguity don't exist.
As others have commented, per-transaction is a very misleading metric. Hashing difficulty is based on the number of other miners and time between blocks, not based on the number of transactions.
With something like lightning network, a single Bitcoin transaction can facilitate millions of 'lightning' transactions.
I like cost of electricity. While Chinese plants are subsidizing the BTC network right now, we can estimate the cost of "unsubsidized" BTC in the future based off of electricity costs today.
That supervision probably will have a cost of some kind.
> You can hire watchtowers nodes for a fee and design the revocation transaction in such a way that the watchtowers will also receive their service fee when you get funds of the other party as a penalty.
So we're adding many, many more middlemen to the picture. Not only do we have to pay for the final transaction (which requires a large amount of electricity to be "mined" into the blockchain), we have to hire watchtowers to ensure that our Lightning Network transactions remain correct even if our counterparty tries to screw with our transaction history. (Remember: the full transaction history in the Lightning network is off-chain).
It should be possible to build watchtowers into the protocol itself. A lightning node could elect some number of random nodes as watchtowers at bootup, similar to how many clients now elect random channels.
Being a watchtower is extremely low cost, it only requires a small amount of memory. Every full lightning node is watching the blockchain anyway so it is easy to watch for some extra transaction ids with a certain prefix. Transaction IDs are sufficiently long that only part of the txn ID (half) needs to be shared with the watchtower. The tower can only decrypt and send the revocation txn once the malicious txn is broadcast, and the watchtower reward can be built in to the revocation txn.
> watchtower reward can be built in to the revocation txn.
How much will watchtower rewards cost?
The economics aren't fully studied. But I'd expect a good watchtower would be proportional to the amount of the transaction. That is, if you wanted to protect a 100 BTC transaction, you'd want to spend more on the watchtower reward than if you wanted to protect a 1 BTC transaction.
Hypothetically, if you spend too little, the watchtower + your opponent can collude to effectively steal some of your money. (Ex: the Watchtower could be paid by your opponent to NOT send the revocation message).
The reward can still be low because you can choose many watchtowers. If you have a high value channel, you could choose for example hundreds of watchtowers. Only the first one to broadcast the revocation would get the reward.
The reward only has to be high enough for it to be worthwhile for other nodes to spend a small amount of memory storing your txn.
It's true, I believe the low probability of getting the reward is the greatest flaw with the watchtower reward scheme. Not just if you have many watchtowers, but the likelihood of a peer attempting a channel breach in the first place esp. when watchtowers are in place would be extremely low since that peer is almost certainly assured to lose money.
There are some services currently providing watchtower for a flat fee instead, and the going rate is low (1 satoshi / txn watched) =~ $ 0.00008
Since gold bullion isn't legal currency anywhere, I'm not sure it's the most relevant comparison.
From the US Mint's financial statement [1]:
2017 cost $13.5 million dollars in "Communications, utilities, and misc charges", which presumably is the bucket that electricity bills falls under. There's no breakdown of overhead between currency coinage production and bullion/numismatic production, but the manufacturing obligation suggests that currency is roughly ⅕ of their total costs, which suggests that we might ascribe about $3 million in utility cost to produce coinage. The coins themselves were worth about $870 million, which suggests about 250 kJ (or 0.07 kWh) per $1 of coinage if we assume the Mint pays $0.05/kWh. I'm not including the energy cost of metal production itself, because I don't want to spend the time to track down that information.
This is a good relevant question. Both are easily verified, impossible to duplicate, convenient value density, and (!) production correlates to increase of total world economic value.
As such, the question is interesting: how much energy required to produce one new ounce of gold? vs one bitcoin?
I don't think any modern currency is really using Gold these days. The cost of creating dollars is basically the cost of the Fed signing a few papers. A lot of modern currency is fully virtual.
So I don't think "mining gold" is an appropriate analogy.
EDIT: Case in point: how much did it cost for Visa + Bank to increase a credit-card from $500 credit limit to $2000 credit limit? $1500 of credit appeared out of thin air.
I think your Edit example actually points to the root of the issue with these comparisons.
The first credit limit increase "from scratch" costs hundreds of billions of dollars in creating a system of legal compliance, accounting, communication, internal and external risk management, executive compensation, regulatory oversight, credit ratings, cybersecurity, salaries of millions of workers, building public trust in the credit system, writing and passing legislation, even Fed responsibility of building and maintaining a fiat currency.
The second credit limit increase once this system exists is essentially free.
To what extent do these costs need to be accounted for in creating an accurately comparable 'per transaction' metric? By replacing much of the logic with 'just math', Bitcoin has the potential for a much higher theoretical efficiency than the current banking system. Whether market penetration will ever reach the current banking systems levels - and function without replicating these same structures - is certainly highly debatable and for many of the above items implausible.
Bitcoin transactions in isolation are also essentially free - it's the maintenance of the system which keeps it secure and trustworthy that is expensive.
Bitcoin physically cannot scale to replace any substantial portion of the financial industry. That is a primary design feature of proof of work systems.
It's this wasteful at this level of scaling. That only gets worse.
There’s no indication I’m aware of that Bitcoin is removing any labor or equipment from the banking system. So far all I’ve seen is traditional banking layering crypto on top.
There's nothing fundamental about this state of affairs. We're simply early in the adoption curve: the network of services around fiat is larger than the one around cryptocurrency, so to use cryptocurrency effectively you have to connect with fiat.
The infrastructure required for functional cryptocurrency usage in society is far smaller than for traditional money, so with enough adoption to supersede fiat, there would be efficiency gains.
Remember, we used to need the phone network to connect to the internet. 30 years later, the trend is reversed and it's telephone that we layer on top of the internet.
it's cheaper to transfer Bitcoin and immediately convert to fiat than to do a wire transfer from overseas. Then you're using the home banking system like ACH in the US and SEPA in Europe
Wires cost me $50+ because of intermediary banks, even if I don't pay anything at my own bank, someone is getting a big cut.
Don’t companies like TransferWise already do international payments electronically without the need for a blockchain? I definitely support lowering the amount of human labor required for payments, but I don’t see the need for many coal plants worth of computers randomly hashing a bunch of junk over and over again when a normal efficient server can do it.
Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human, so it seems like the human labor in the banking system is a regulatory issue, not a technical one.
Sure, but why do I need a blockchain for that? Can’t the service trusted by the government to enforce KYC regulation also run a normal commodity server to process transactions, without burning the earth?
It is only cheaper today because the price of those traditional transfers are set artificially high. Make no mistake if banks had real competition for inter-bank transfers you’d see the price drop to near zero.
It's not just the banking industry that trustless cryptocurrencies can do without, but also the whole infrastructure necessary to maintain the value and trust in fiat money.
This encompasses a very large part of the responsibilities of the political system, army, secret service, ...
Those cost centers can't be ignored if the goal is an honest comparison between the energy efficiency of bitcoin vs. fiat.
> The assumptions underlying this energy consumption estimate can be found here [1]. Criticism and potential validation of the estimate is discussed here [2].
FWIW, [2] doesn't seem to offer substantive criticism at all. It mentions a couple independent verifications of the numbers in [1], with one complaint (from a very biased party) whose claims are not sourced.
This pretty much lines up with what I've seen in all Bitcoin energy use debaters: the evangelists insist the numbers are all wrong, but never really provide any evidence to that point.
New Dark Forest theory: The universe is teeming with alien civilizations that have survived The Great Filter ...but they all built Dyson spheres around their respective stars to harness the maximum amount of energy for mining cryptocurrency.
Now they pass the time counting their money until their stars burn out.
If only governments and corporations did not insist on limiting people's freedom to trade freely and anonymously we wouldn't need that. Just make trading and privacy fundamental human rights like air breathing is and huge amount of energy will be saved.
C'mon, it's 21-st century, we need electronic cash we can send to a person we don't know instantly with a press of a button without revealing ourselves. We could use more traditional banking if only anonymous accounts were legal and banks were banking secrecy was guaranteed.
I've never bought anything illegal (but some weed perhaps) yet I feel very uncomfortable every time I have to share my personal details with any party.
I also want anonymous P/O boxes.
I just bloody don't want any party to track me nor tell me what I am and what I am not allowed to buy (unless it's a weapon of mass destruction or a human slave and there are other ways to bust people selling these).
Don’t worry it won’t be suddenly outlawed but all the governments will gradually outlaw it as it directly threatens their power. I hope somebody manages to release a conscious AI before they manage to completely outlaw it, otherwise it will be very hard to fight against tyrannical governments.
Already, businesses in the UK that accept cash payments worth over €10,000 must register with HMRC as a "high-value dealer". In France, it is illegal to perform a cash transaction over €1,000 (yes, one thousand). And the same is true in Italy.
In the US, if the cops notice you have large amounts of cash in your car during a "routine traffic stop", they will take it from you on the basis that you must be a drug dealer.
First: it absolutely is being outlawed, slowly but surely. The US is not yet fully there (although: try to buy a 1M USD house cash and see what happens), but most EU countries are fully there.
Second: Try and wire a large sum to your brother who happens to currently be stationed in disreputable country X or Y, and see what happens. Or mail him a box full of cash. See what happens.
This does not seem to include transactions on the Bitcoin Lightning network which are transaction that are handled offchain so they are not included in blocks. I don't have the exact number of lightning transaction ocurring but it is the Bitcoin Core developers' plan that the scaling to thousand of transactions per second will and should take place on the lightning network (this is where they differ from their competitor Bitcoin Cash which is aiming for bigger blocks and onchain scaling). Bitcoin is still a technology in its infancy ten years after being started.
The market cap of Bitcoin is above 120bn USD, less than Apple and Facebook but more than Netflix. But that is still only about 0.1 to 1 % of its potential. So, big but in its infancy.
Besides it being completely different in other ways, the market cap is not value. You couldn't realize a tiny fraction of that without tanking the market cap.
The opposite also applies: You couldn't buy up a large proportion of Bitcoins without the price skyrocketing. Prices are determined at the margin, what the marginal seller (probably miners) will sell for and what the marginal buyer will buy for. They are the best measure of "fair value".
Although interesting in its own right, Bitcoin's energy consumption is in no way a good basis on which to judge its social value.
Bitcoin is fundamentally an asset. A useful analogy is to think of it as gold. Gold can be used to make payments, but it is not convenient. Same goes for Bitcoin. But they are both useful as a robust way of storing value.
Maintaining the Bitcoin network costs energy, but almost nothing else. Given Bitcoin's price history, it's safe to assume that Bitcoin's total energy cost is a tiny fraction of its current market cap of around $150b. Now compare that to the social costs of protecting gold, which probably has an over $7 trillion market cap. Wars were fought and lives lost for its ownership.
In conclusion: a large and liquid crypto asset like Bitcoin provides a much more advanced solution of value storage and transfer than traditional physical assets. Its net social benefits should be orders of magnitudes higher than its energy expenditure.
Bitcoin is an ongoing environmental disaster, profiting off of subsidized coal power in China and elsewhere in the world. Millions of people die every year from air pollution.
But on the other side, hey blockchains are so cool they can do the same work as banks but six orders of magnitude less efficiently.
Doesn’t work that way. Bitcoin’s block reward system is designed so that the systems energy consumption costs are basically some percentage of the price of bitcoin. The higher the price, the more energy used. Drop the price of energy, and all rational miners will just buy more hardware. Why? If they don’t, their competitors will and the odds of them getting block rewards will go down.
Or $68/transaction supposedly if electricity cost at 11 cents per KwH is used. Actual transaction fees run around $0.20 for on-chain which implies either math is wrong or per block reward is sufficient still (total blocks I believe are fixed with increasing difficulty).
Does this analysis take into account secondary network transactions? For example wire transfers are relatively expensive to process still, but are often used to settle huge volumes of things like ACH payments, nightly sweeps etc.
Transaction costs are currently being socialized across all holders. The block reward is sold to pay the power bill creating downward pressure on price for everyone.
Quite arguable numbers that seem to be used to drive traffic to this site rather than do a proper scientific report like done by the University of Cambridge https://cbeci.org/
The CO2 emissions heavily depend on the actual use of renewable which nobody can be sure about. In some cases like bitcoin mining using fuel that would otherwise cause CO2 emissions, you actual have a net gain. (See companies like https://www.upstreamdata.ca/)
So even by those arguable arguable CO2 emissions it's actually less than 0.1% of the world's total.
I wish people that have knee-jerk reactions about this, actual think about the big picture and what actually causes high CO2 emissions and offer way fewer benefits than censorship-resistant money.
The luxury fashion industry for example for a long time has had a big negative effect, from drying up whole lakes, to child labor to effectively destroying villages for what... anyhow.
The idea that bitcoin is 'wasteful' is entirely missing the solution that bitcoin is. Byzantine Generals Problem.
This network is unmatched in it's provability and security.
There is a turing complete machine, operating that can be trusted. Seriously, the possibilities are limitless but guess what, they do have a cost. And there are too many con-artists around. But an industry that is changing the entire monetary policy around world is very impactful. It's changing it and you'll notice in the coming years how much monetary policy is going to change. The grand experiment is about to happen. Are we going back to gold? Are we going to innovate a replacement that's better than crypto? How is 'money' going to function in the 21st century?
P.S. Proof of Stake is terrible in it's economics. If you think rent-seeking is good, then PoS is for you. It's not for me and I think it's terrible based on the game theory of it. Remember the 'We are the 99%' chants? Yeah, not going to go over well.
In a PoW network (read Bitcoin), those that have the currency (satoshis/'sats') don't gain any more sats by just possessing them. The only way to gain more is from either those that have some or to mine more (until 2140).
In a PoS network, those that have the currency can "stake" their possessions to gain more. They don't need to spend in hardware/electricity to mine more. There is a built in function to extract currency.
One bitcoin transaction is not directly comparable to one transaction on other payment systems. One bitcoin transaction can represent thousands or millions of transactions.
It isn't fair to say bitcoin requires this amount of electricity. Different people all over the world choose to spend electricity to try to find new bitcoin. The amount of new bitcoin is exponentially decaying to zero. It's like telling someone their gold jewelry uses up too much electricity because someone they don't know is spending electricity to mine gold.
Some amount of mining is necessary for the security of the network. Most global endeavors use electricity, whether it is traditional finance or video games.
Bitcoin mining believed to be one of the greenest industries (a very high percent of electricity comes from solar, wind, and hydrolelectric). This is due to some of the cheapest electricity in the world being from green energy in remote places (and bitcoin mining is extremely portable)
I developed something that can help reduce some of these problems. The energy used to mine a resource trends towards the value of the resource. The resource in cryptocurrencies is the block reward + fees.
One can reduces pollution by paying miners only transaction fees and not inflation. One further increase savings by utilizing an existing network, and employing time locks. More hashrate is not what matters most. Hashrate from honest, non cooperative parties is what makes the system censorship and collusion resistant. It's interesting to note that the people you "defend" yourself against in sha256 hashing are only the very same people you're paying, as only they have equipment relevant to attacking. On GPU and CPU mined algos, hash rate matters more as a larger set of humans can become attackers.
Even if you got a maintainer to commit and release code to disable PoW, you'd still have to get enough node operators to update, which... I doubt would happen.
That would be difficult to pull off. bitcoin code merges are highly scrutinized, and disagreements in blockchain projects just result in forks and new networks.
A better way would be a global ban coordinated among every nation, and even then that would be difficult to pull off.
Bitcoin appears to be highlighting the issue of how we price dirty energy vs clean energy. There is nothing Bitcoin miners would like more than for all energy have the correlated carbon tax associated with it in the price.
I don't think this makes even sense to account. Try to look at internets energy consumption as a whole and how much of it "makes" sense and provides real value - tranferring memes, DDoSes, ADs and so. Look at all animated websites - how needed is this "feature", what value it provides (usability? haha) and how much total energy it consumes in sum across all devices. I really "love" that Belgium uses city night lights on their highways - this is total nonsense. Compared to these, Bitcoin energy consumption makes complete sense.
Bitcoin is good for the economy because it encourages spending. It's better than having a electricity as a resource and not using it. Miners buy equipment which is income to the producer. Also increases employment in the power plant and the factory producing the equipment.
Not even then, and that won't be for a while. Even though about 85% of all BTC have been mined, the process gets exponentially slower the closer you get to the final blocks.
After the last BTC is mined, miners will still presumably be able to profit from block transaction fees. That might help power a little bit since they'll worry more about being efficient with which transactions go into a block.
> Cannot the bitcoin developers put in a massive difficulty jump at this point?
No, because the miners will continue to run the useful version (for some definition of useful). Changing the algorithm would require a hard-fork and a hard-fork to turn down the network will result in the "new" branch of the fork ... turning down, while the old one continues.
Why would people no longer mining make bitcoin useless? There's a supply of existing bitcoins that can be split to ludicrous degrees. Scarcity is already enforced by the difficulty, and a huge difficulty jump won't affect that.
If bitcoin can't survive without mining (which IIRC isn't related to transactional processing or any actual use of bitcoins), then bitcoin has a guaranteed uselessness point when the difficulty jumps exceed, I dunno, the output of the sun?
As for code changes, what is the lightning network about? Isn't that a code change? And if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take, then those coins would be worth much less.
I'm not saying the code change is easily done or even technically feasible. But it should be considered.
Bitcoin is immoral in the age of human global warming.
> Why would people no longer mining make bitcoin useless?
Because mining is what secures the network.
> which IIRC isn't related to transactional processing
Transactions are confirmed by being included in mined blocks. The amount of compute power burned to mine that block, and the following blocks, is what prevents someone from pretending a different transaction (moving the money somewhere else - a double-spend) happened first.
> what is the lightning network about? Isn't that a code change?
Software running on top of the existing mining network, although downwards-compatible changes were made to enable it. The downwards-compatible is key here.
> if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take,
Then someone would make an exchange that still trades "original Bitcoin" and get rich, and the exchanges would go bankrupt.
More sensible and less controversial changes failed or resulted in splits (with the chain that remained downwards compatible being the most valuable one).
(Downwards compatible is the easiest approximation I can come up with for the much more complicated reality.)
It makes no sense to me to put Bitcoin under different scrutiny than, say, Christmas lights, Netflix or the US Military. We need to decarbonize our energy sources, but Bitcoin or not is not the answer to how.
Unrelated to the content itself, I like the inclusion and format of the Recommended Reading section, especially "If you find an article missing from this list please report it here, and it will be added as soon as possible."
For anyone that wants to promote a free-market cryptocurrency ecosystem, my suggestion is to look at the Stellar Foundation. Doesn't fill the earth with C02, and enables trades across borders
Coal is the cheapest power source but also the dirtiest. It’s well-known that China has comparatively lax environmental policies. Major cities like Beijing are notorious for their high levels of smog, produced mostly by burning coal.
Energy producers can freely burn coal and use the energy for Bitcoin mining. Instead of physically transporting the coal, it’s easier and more cost-effective to establish a Bitcoin mining operation near a source of coal and convert carbon directly to crypto.
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
— Emin Gün Sirer (@el33th4xor) July 20, 2015
FTA:
Carbon footprint
Bitcoin’s biggest problem is perhaps not even its massive energy consumption, but the fact most mining facilties in Bitcoin’s network are located in regions (primarily in China) that rely heavily on coal-based power (either directly or for the purpose of load balancing). To put it simply: “coal is fueling Bitcoin” (Stoll, 2019).
Bitcoin's Climate Impact Is Global. The Cures Are Local.
To measure bitcoin's contribution to global warming, you need to know where it is mined and where those computers get their electricity.
...
Not so fast, said county officials. They pointed to a different culprit: a giant coal plant halfway across the state. If energy from the dam went to bitcoin mining, they said, the county as a whole would wind up using more coal. In April, officials required all future mines to build their own renewable power.
Missoula County was on the right track, says Christian Stoll, an energy researcher at the Technical University of Munich. In a paper published Wednesday in the journal Joule, his team takes a closer look at the energy consumption of bitcoin mining, based on where miners are located and the types of machines they are using. “Coal is fueling Bitcoin,” he says. “The question is how to prevent it, and that’s up to local regulators.”
I read that some miners operate right next to hydro electric stations where electricity comes cheap, that would mean they are using excess energy that would have been lost in transit?
Here is the proposition: let's make an inherently deflationary currency suitable for black market transactions that will become even more polluting with every transaction.
CryptoKidz: I'm in!
But haters gonna hate, and downvoterz gonna downvote. what evs
The strongest hypothetical argument against the consumption is that Bitcoin incentivizes green energy. The mining operation is mostly interested in one thing: access to the cheapest electricity possible. Currently China is still subsidizing electricity, which has attracted a lot of Chinese miners and apparently is tolerated by the state.
But in the longer run I believe that Bitcoin will be the thing that will allow investments into green energy on a big scale. This is currently only happening by e.g. governments guaranteeing a minimum electricity price with other horrible consequences (see Germany: https://translate.google.com/translate?sl=auto&tl=en&u=https...).
Bitcoin however provides the incentive by itself to invest into green energy. This also is regardless of the fact that where there are optimal conditions for green energy often no infrastructure is available to add it to the grid. Bitcoin only needs an internet connection and consumes energy on-site.
Regarding arguments that compare transactions with energy spent (comparing apples-to-banana...), I will make a counter-comparison: "The amount of electricity consumed every year by always-on but inactive home devices in the USA alone" spends three times the energy of the Bitcoin network (see "Fun Facts" at https://www.cbeci.org/comparison).
Comparing the energy consumption of a transaction is meaningless, because this transaction may enable thousands of off-chain transactions (see Lightning network) and vary in actually block-spent-size depending on if it aggregates many actual transactions or not. It also shouldn't be a surprise that a lot of energy went into it in the first place, since otherwise the whole point of Bitcoin, namely being open, borderless, censorship-resistant and neutral, wouldn't be possible.
It's like saying that all the many maintenance checks of airplanes (https://en.wikipedia.org/wiki/Aircraft_maintenance_checks) wastes so and so many hours and energy of engineers' work-time, just because you don't see that they make air travel safer.
It's disturbing that people are still praising Bitcoin in spite of that fact that it can only handle at most 4 transactions per second and consumes as much energy as Austria.
Same goes for Ethereum at 15 TPS...
Ethereum is an over-engineered mess of technical debt. It's been stretched way past its original design goals.
All these valuable cryptocurrencies are a symptom of a failing capitalist system. The only reason that they had value in the first place was because the rest of the economy was so inefficient and speculative that they started to look like a wise investment in comparison (especially as a hedge).
The rise of useless jobs is real, this is especially true in the cryptocurrency industry. The amount of human effort and talent which has been wasted on Bitcoin, Ethereum and other overhyped, poorly engineered cryptocurrencies is staggering.
Not only is it wasteful, but this industry is producing a new wave of engineers and scientists who are gullible (hype-driven), unskilled and complacent; a dangerous combination.
Most cryptocurrency projects were created by juniors who had limited understanding of distributed systems and scalability at the time. If Vitalik Buterin had to start Ethereum from scratch today (knowing what he knows now), I think he would design it very differently. But instead, he is forced to support the existing network and protocol even though the only real way to fix the project is by starting from scratch with a new foundation.
It's like if you start building a 1-storey apartment and after you finish, you realize that you actually needed a skyscraper; but instead of starting again from scratch, you decide to re-use the existing building foundation with the same investors, same architects, same engineers, same builders. You even allow the existing tenants continue to live inside the house while you continue building on top. It's probably not going to work because you don't have the right foundation, your team doesn't have experience building tall structures and you don't have any experience leading projects of such complexity - The fact is that your odds of success are extremely low; your foundation is probably not strong enough, your team is probably not smart enough and not adaptable enough and you, the leader, are probably not humble enough to accept reality; so you will fail to take the necessary steps to fix the problems.
Bitcoin is artificially limited in capacity by people like Adam Back and his company Blockstream.
The number of transactions is a simple limit set by whoever controls the Bitcoin GitHub Repo, thats it. Bitcoin Cash is much closer to the "Bitcoin" described by the inventor Satoshi Nakamoto.
Bitcoin has grown a complex mining ecosystem that is pretty difficult to understand. Bitcoin has high level of energy consumption because of its demand. If demand goes down, energy consumption will go down. From what I've seen in the market, Bitcoin works the best.
Many coins attempt to tweak this Proof of Work model. The result is not wasted energy but wasted human effort. What we need is to go back and explore Bitcoin Proof of Work model. It's works and simplest to configure.
I create Bitflate, a Bitcoin fork with constant inflation. I get to see a small-scale, simpler version of Bitcoin energy consumption. Currently, it costs me about $3/day to mine coins and verify transactions. I get about 12-14 TH/s. That is cheap for running a digital ledger system. It's cheaper than renting any server on AWS. I imagine, in the future, businesses can run private permissioned digital ledger system to verify their own transactions. A Proof of Work system like Bitcoin is not wasteful.
It says a single transaction generates almost 300kg of CO2. Surely not. 95g of e-waste also seems incredible. And 600 kwh of energy per transaction? Really.
Edit: based on a cost of electricity at $0.1/kwh, and assuming bitcoin operators break even and are rational, one transaction costs less than 3kw of energy:
They're missing that the reward has fallen below the cost of non-renewable energy, such that the only profitable way to mine Bitcoin now is with renewables. The only way to profitably mine Bitcoin with any country's electric grid would be if someone else is paying the electric bill for you.
> Electricity is probably a lot cheaper in China.
Specifically, miners in China are famous for colocating with overprovisioned excess hydroelectric power that is not transportable elsewhere via the grid.
An average block has something like 2500 transactions in it. It means that there is about 1-2 transactions per second. Bitcoin network is running at 100 million TH/s. Modern mining hardware does 10 GH/Joule = 10^10 H/J, so 100 million TH = 10^8 * 10^12 H = 10^20 H is 10^20/10^10 = 10^10 Joules. 1 kWh is 3.6 * 10^6 joules, so 10^10 Joules is something like 3 * 10^3 kWh, so 3 MWh. One ton of coal produces something like 2 MWh. So yeah, assuming some of the electricity is not coal, the numbers do add up.
I'm not sure if the article is right or wrong, but the commenter above you was probably getting at this:
You can see how much money a block miner receives for a block of transactions, and given the money they received, and an estimate for the cost of power, you can estimate how much power they might have been willing to expend on it
Going off the guy's link, I guess it's 24 cents to get into the next block, and a block has about 500,000 transactions, so whoever mines that block gets $125,000. Assuming 4 cents per kWh, the presence of only one miner, and no other operation costs, he'd still be breaking even if he expended (1 kwH/$0.04)*$125,000 =~ 2,500 kWh per block
(and by the same napkin math, that's 6 kWh per transaction)
What's weird is TFA seems to be using a similar methodology (but looking at total bitcoin mining revenue instead of an individual block), and yet they came out with a number 100x as large. I'm not sure why there's such a big discrepancy.
If 625 kWh per transaction is accurate, then 300kg CO2 is plausible depending on the grid. Many electric grids emit 500g CO2 per kWh or more. Others are much cleaner depending on the production mix.
The energy consumption of Bitcoin isn't new news. What continues to disappoint me, however, is how many people immediately jump to its defense with arguments based on the value it provides, as if that offset its cost.
What gets neglected is that the Bitcoin algorithm is inherently wasteful. By its very design, it results in an insane amount of duplicated, pointless computation.
The question isn't whether something like Bitcoin can provide any value. The question is whether we have better options. And the answer is: we do, by far. From proof-of-stake (like Ethereum is moving towards) or trust-based models (like Stellar), technologies exist that grant almost all the benefits of Bitcoin at tiny fraction of the environmental (and monetary!) cost.
I give Bitcoin credit for being an interesting "first answer" to an extremely hard problem. But it is in no way something that we should be doubling down on.
>trust-based models (like Stellar)
What you're describing is basically Libra with slightly better entities backing it. Transactions can be reversed by those "trusted entities" with no recourse by you and at no cost to them. At least with PoW and PoS (to an extent), attempting to reverse transactions has a cost.
Speaking of PoS, were the issues with PoS ever solved? Specifically the "nothing at stake" problem. The Wikipedia page[1]'s list of implementations makes it sound like it's not at parity with PoW in terms of security.
[1] https://en.wikipedia.org/wiki/Proof_of_stake
I'm pretty sure stellar uses more or less the same consensus mechanism as the XRPL and there is absolutely no way to reverse transactions. Every few seconds a ledger is closed and it can not be changed anymore. If all validators would agree on one Tx being "bad" they would need to exclude it from the very first moment and from that point on to eternity. There would be a valid signed public Tx that isn't processes. So it would be public know that the system is corrupt. People who disagree with that could fork include the Tx and move on. This is a totally different kind of risk than if Tx can actually be reversed.
I'd argue that people generally want systems where you can revert transactions that you made by mistake at almost no additional cost.
There's also a significant niche of people who want assurance that a transaction can never be reversed. For example online entertainers who get donations for thousands of dollars only to have them charged back months later.
it is possible if you choose to use a third party.
The good thing is that you don't have too! You are not forced. If I send money to a friend or familiy, I don't need a third party.
A third party could be either a bigger financial company or just a trusted third party in a specific domain both people trust (and make a 2 out of 3 multi-sig with it, and if I get delivered what I want and the other side receives the payment, the payment processor has nothing to do, but could in case there is a dispute)
You can take a look at the eth2.0 specification here https://github.com/ethereum/eth2.0-specs. They have solved the nothing at stake problem, and they currently have 8 independent client implementations written in different languages that can 'talk' to each other on a multi-client testnet. They are much further along then people may realize.
That’s not true. YOU can create your own node and decide who YOU trust.
In exactly the same way I can print Schrute bucks and distribute it to people I trust.
In Casper proof-of-stake (Ethereum 2.0), staking on the "wrong chain" will result in part of your staking deposit being slashed on the winning chain.
I think we aren’t quite there yet with Ethereum and Stellar.
Proof of stake is promising, but it hasn’t rolled out yet. It’s possible that the migration leads to unforeseen problems, or fails entirely.
The trusted models like Stellar aren’t operating at the same financial scale as Bitcoin. The question there isn’t technically whether they can handle the transactions per second, but socially whether they are as resistant to censorship as Bitcoin is.
In the end, more people want Bitcoin than want Ethereum or Stellar. And people are willing to pay a lot of money to get it, money which in large part goes indirectly to miners’ energy expenditure. Perhaps, in the long run, the more efficient consensus mechanisms will prove superior to proof-of-work. But it hasn’t happened yet.
I think the only reason to hold out for Bitcoin over something like Stellar is an extreme libertarian ideology.
Stellar is attractive to me precisely because it works with society, rather than against it. It uses the trust relationships already built into our social systems and institutions. It's true, I don't trust Chase individually not to screw me over. But I do trust 50 independent organizations (including government, private individuals and corporations) all checking each other's work. You get 98% of the benefit of Bitcoin with thousands of times greater efficiency.
The only scenario where this stops working is in a complete societal breakdown, and frankly that is not a contingency most reasonable people plan for.
Is hypothetical resilience in the face of an anarchist fantasy really worth millions of tonnes of real carbon being pumped into the atmosphere?
> In the end, more people want Bitcoin than want Ethereum or Stellar.
This is an accident of history more than anything.
I think the distribution will look different once the monetary cost of Proof of Work starts to impact the Bitcoin ecosystem.
When will the monetary cost of gold mining start impacting gold ecosystem?
That analogy does not hold if you think about it
why?
Look, if you bring an anology into an argument then it’s in you to explain why it holds, it’s not on others to refute it.
Ever heard of the bullshit asymmetry principle?
Anyways, to answer your question: High cost of mining in gold is what limits the supply. High cost of mining in a cryptocurrency is not needed to limit supply.
> High cost of mining in a cryptocurrency is not needed to limit supply.
this is a bit backwards, high cost of mining is not needed, it's a consequence of demand in higher supply
analogy does hold: there is demand for gold which causes certain amount of mining which has environmental impact. there is demand for bitcoin which causes certain amount of mining which has environmental impact.
of course no analogy is perfect, bitcoin has another aspect with feedback loops to mining and demand - security. the more mining happens, the higher ledger security and the more valuable it is.
it's still completely misguided to think that bitcoin mining is some process done for no reason - it's integral part of what makes bitcoin valuable. and the more mining - the more valuable bitcoin is.
lastly, blaming energy consumers in environmental impact is wrong too, it's producers that use environmentally damaging means for energy production who should bear the blame.
I don't even know what problem Bitcoin is solving anymore. I haven't seen a single website accepting Bitcoin as a payment in the last whole year.
We were an early adopter of Stripe’s Bitcoin integration. I even was sent a Stripe t-shirt for finding bugs in their docs. In the entire time until Stripe ended the integration, we never received a single payment using Bitcoin.
Tbh I'm pretty sure that people who ask for BTC never intend to pay. It's just another deflection in a long list from people who won't pay. I now see it as all kinda wasted effort. Probably should just focus on making things better for the guys with the dollars rather than the guys who promise the money if you'll only do X.
Bitcoin's main function is store of value, with the additional benefit of being relatively easy to transfer. It is basically a more convenient form a gold.
After all these years of growth, Bitcoin's market cap becomes its own unique edge. One simply cannot transfer significant amount, say tens of millions of dollars, easily in any other crypto currency.
The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
> The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
Is it though? Gold in vaults easily outstrips the value assigned to all bitcoins and I doubt these vaults use even 1 Twh/year. Vaults are only environmentally expensive in construction. And since we have a surplus of vaults and bunkers (from digitization of stock trading and the end of the cold war, respectively), the only cost is protection. A few guards and some cameras and high security doors can protect >$10mio worth of gold, probably not using more energy than a few households. Managing a farm of ASICs for Bitcoin generating that amount is probably more labor intensive.
> The cost of energy is minuscule compared to alternative means of achieving the same: vaults, guards, banks, lawyers, etc.
That's only because Bitcoin is still relatively insignificant blip in the world of trade, mostly a pastime for gamblers and scammers. It's footprint is actually absurdly huge compared to value it provides.
The real problem is scaling. Vaults, guards, banks, lawyers scale somewhere around O(n) to O(n logn) with the size of the market. Bitcoin's proof of work - the means of securing it - scales, to the best of my understanding, as O(n!) with the number of miners. That's not something you can run a global economy on.
So the purpose of Bitcoin is to give billionaires better tools to move their wealth around while externalising the energy consumption and CO2 omissions to all of us. Thanks a lot!
That is a side effect, not the purpose. Millionaires can use Bitcoins to move their wealth too. I'd say even for a transaction of $1,000, it is often cheaper to move in Bitcoins.
On the contrary: the purpose of private banks is almost exclusively for billionaires to move their wealth around, while externalising costs to all of us. Many financial market interventions in the past are the society bailing out billionaires who bet irresponsibly and cannot bear reducing themselves to millionaires.
> That is a side effect, not the purpose. Millionaires can use Bitcoins to move their wealth too. I'd say even for a transaction of $1,000, it is often cheaper to move in Bitcoins.
Compared to a free domestic ACH or wire?
Internationally you have to pay exchanges on the receiving end >1% fees to convert it to something you can actually spend.
Buy $10M worth of bitcoin, and then sell it again the next day, and we'll see how much you lost (on average).
I'd guess you'll lose far more than doing the same with gold, because the market slippage due to lack of liquidity far exceeds the cost of those vaults, banks, and guards.
This is not true. I used to be a professional market maker in Bitcoin. This year, Bitcoin market is relatively calm in at least half of the time, meaning 12 hours out of a 24-hour day, longer than most established equity market. Under these normal conditions, trading $1m worth of Bitcoin moves the market by less than 0.01%.
Citation needed. Checking the bitfinex order book: https://www.bitfinex.com/order_book
A trade of $10M, or 1250 bitcoins, would move the market by 6%
Maybe pick an exchange that isn't #60 based on transaction volume?
https://coinmarketcap.com/rankings/exchanges/
I regularly use it to pay for gift cards on cardcash for an additional 2% discount. It makes a lot of sense for sites selling items highly prone to fraud or with thin margins.
It's solving a much much bigger problem than electronic payments (which was never really a problem in the first place unless you're overly concerned about privacy). We have a major problem with inflation in this world, you can't just put your money somewhere and have it retain its value anymore and it hasn't been like that for years, we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind - bitcoin actually solves that problem, and just to drive that point home, if you'd invested in bitcoin and held during just about any given 365 day period throughout its ten year lifespan you'd have likely beaten the stock market in gains by a lot, that helps a ton of people, especially young people who are saddled by debt. We have countries that have no reliable form of currency at all, again bitcoin solves that problem.
I agree with some of the sentiment of the article, bitcoin's energy consumption is something to keep an eye on and if we can seamlessly move to an algorithm that's greener then so be it but you have to realize the tremendous amount of good that bitcoin is doing for the world and will likely continue to do as it becomes scarcer and scarcer, don't knock a technology that can single handedly lift a continent like Africa out of poverty.
*edit: Nothing like defending bitcoin on Hacker News and getting downvoted to oblivion, hey rather than downvote why don't you point out exactly what you disagree with so we can have a discussion
> We have a major problem with inflation in this world, you can't just put your money somewhere and have it retain its value anymore and it hasn't been like that for years, we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind...
The Bank of Canada found that a Bitcoin based economy would have the same amount of drag as a 48% rate of inflation [1].
A 2% rate of inflation is trivial in the near term, and in the long term encourages productive allocation of capital. Inflation literally only matters to people sitting on cash -- and that's the point! If you invest it in anything inflation stops mattering and the constant-dollar return starts to matter.
[1] https://www.bankofcanada.ca/wp-content/uploads/2019/09/swp20...
So you're essentially saying:
"If you have cash, you should gamble it by investing it in stocks or business."
but that's risking the money I earned. I don't want to risk it, I earned it, I just want to save it and not have it evaporate over the years.
> we're forced to play the stock market game which just consolidates power to big corporations and leaves a lot of people all over the world left behind
We at least know the names of big corporations. Otherwise "we're forced to play the BitCoin game which just consolidates power to big anonymous holders and leaves a lot of people all over the world left behind".
85% of the BitCoins have already been mined. It's beyond the reach of people to participate in mining. What's left is pure speculation, based on the available supply. There's also a "culture" of HODL which means the actual exchange rate is determined by very few (big) sellers.
Even if the 'BitCoin' <sic> is distributed exactly the same as money is now the 80/20 Where 20% of the population control 80% of the money.
Wouldn't it be better if your money (that was BitCoin <sic>) increased 2% a year instead of decreased 2% a year?
> We have countries that have no reliable form of currency at all, again bitcoin solves that problem
Countries that don't have reliable forms of currency also don't have reliable power or internet access.
this will change with satellite internet coming for the masses and will make Bitcoin really useful in war regimes
I would argue all currencies are unreliable ,because they go down in value due increase of supply. Throwing 2-4% every year sounds awful
This gets repeated over and over again, but the causality of this has never been proven, as incredible as that may sound.
Yes, the causality of "create too much money -> inflation" is plausible (but note the emphasis on "too much").
However, we live in a world of endogenous money, where money is largely created by commercial banks in the form of loans to private entities. When prices increase, those loans get bigger. So there is also the causality "inflation -> create more money".
At the same time, there are other factors that can drive inflation, such as workers and companies exercising price setting power (which Econ 101 likes to pretend doesn't exist, but plays an important role in the real world).
So yeah, the causality that you're casually throwing out there hasn't actually been proven as the driving factor here.
At the same time, the widespread belief in it and similar misunderstandings causes us as a society to make extremely damaging macroeconomic policy decisions, in particular the decision to attempt to fight recessions using monetary policy instead of fiscal policy.
Thank you for reply, it is extremely interesting. Can you recommend books/any type of articles on this topic?
bingo, money is enormously more complicated than microecon suggests. Micro-econ thinks Keynesian economics are full of shit, yet they stimulated us right out of a micro-economic hole during the 30s.
Bitcoins rate of coin creation is also ~7% per year at the moment...
No; it's approximately 3%.
We had 4 years with 4x the reward, 4 years with 2x the reward, and about 3 years with the current reward, which makes for 1/(4x4+4x2+3) = 1/27 inflation.
and yet all you need is a simple phone and access to these satellites: https://blockstream.com/satellite/
I agree the infrastructure isn't there yet but problems with national currency is a government issue, infrastructure issues can usually be solved but governmental issues tend to be a lot harder and all countries that rely on fiat currency are subject to inflation
Countries that don't have reliable currencies are countries like South Sudan and Somalia. Do you really expect illiterate people (3 in 4 women in Somalia are illiterate, 1 in 2 men) to use Blockstream?
You can tell that Bitcoin, and its advocates, are from developed countries. No one who has lived in a developing country and seen crushing poverty would make such arguments.
Given the choice would you suggest a person from somewhere such as Venezuela keep their personal savings in Bitcoin or Venezuelan bolívars?
I'd suggest keeping it in USD or other hard currency. Bitcoin provides no advantages in obtaining/transacting hard currency relative to other currencies, nor any stability while holding it. Either way you are going to a black market, and you are paying real, unaffordable conversion rates compared to transacting in (worthless) hyperinflationary currency.
The bitcoin guy is not going to accept 1 Zimbabwe dollar to 1 USD any more than your black market dealer who has USD. The real currency conversion rate is the problem, not the act of obtaining actual hard currency.
USD bills can’t be easily transferred over the Internet.
look at this scrub who's never heard of venmo
yes, there are a lot of fungible ways to transfer hard currency over the internet... once you acquire it.
again: acquiring it is the hard part, because nobody wants to trade a zimbabwe dollar for a USD.
Bitcoin does nothing to help your zimbabwe dollars be less worthless than they are in USD, therefore they don't help the currency conversion process at all.
Venmo, the service exclusively available in the United States? https://help.venmo.com/hc/en-us/articles/235225428-Signing-U...
This is a false dichotomy, since USD are very widely spread on South America.
Each BTC transaction fee costs 2 weeks average wages in Venezuela my dude.
Here's a list I found earlier: https://www.wheretospendbitcoins.co.uk/search
I might order a raspberry pi from The Pi Hut and a hammock with 50% off for paying with BTC at another site.
There are hundreds of VPN services that accept Bitcoin. It's easier to list ones that don't: HideMyAss.
Many server, VPS and web hosting services accept Bitcoin.
You can buy giftcards for many sellers with Bitcoin.
And there are Bitcoin-funded debit cards.
And I have seen ever more who do such as Overstock, Microsoft, Expedia, Wikipedia, Namecheap, NewEgg. I'm sure there are more.
you missed the news of the last couple of years with all these names dropping btc because if the high fees, a problem that could be solved but wasn't due to politics
Also transaction times + volatility. Because it takes so long to confirm, the underlying exchange rates were shifting out from under customers, so even though you'd paid the right amount, by the time the transaction cleared, they either needed to refund you or you needed to pay extra. The whole system was so asinine nobody wanted to use it, and it created tons of customer service headaches.
the problem is largely allowing chinese nationals to extract hard currency past PRC capital controls (any electricity you burn is converted to BTC, and it's easy to bribe a local official to ignore it) and a side of russian mafia transactions (cryptolocker/etc)
there really aren't any significant (legal) north american/european transactions that occur in BTC
Care to cite your sources?
I have yet to see any POS that doesnt devolve into centralization or obfuscated POW.
You say pointless computation. I say layers on layers of security protecting the most sound monetary policy in human history
And I say it's denominating trust in watts.
Think about it from the opposite direction: trust is a ridiculously effective optimization of group dynamics, and humans come equipped with it by default. It allows us to engage in trade and cooperation without paying the cost of perfectly, mathematically, enforcing the rules. It takes a problem that would be O(n!) and reduces it to something on the order of O(nlogn), at very little loss in the optimality of the result. Taking this shortcut is a no-brainer, it would be immensely stupid not to do it.
It so happen that historically, we took that trade-off and built a civilization on it. It worked well. It works well*. And what bitcoin does is trying to make our economy run on O(n!) overhead, because some individuals think that a political ideology based on not trusting other people is somehow a good idea.
> protecting the most sound monetary policy in human history
That's a political opinion. But regardless of its validity, I'm not convinced that this justifies a single Bitcoin transaction producing as much CO2 as 700,000 Visa transactions.
Comparing Visa transactions to Bitcoin transactions is definitely comparing apples to oranges.
A Bitcoin transaction on the blockchain is layer 1. A visa transaction is layer 3 or 4?
Lightning network is layer 2 and you could have >700,000 transactions in a lightning channel before settling on chain, so there you go Bitcoin layer 2 is more energy efficient than the common financial system layer 4.
I think bitcoin won’t be able to compete long term because one way or another, it’s users have to pay for the tremendous energy expense.
I hope we recognize this rather sooner than later, such that we can stop wasting so much energy.
> it’s users have to pay for the tremendous energy expense.
They are. How else do you think miners pay for their electricity? And so far it seems like the users are happy to pay what it costs. The fact that you don't see the benefit doesn't mean there isn't any for them.
Miners more or less entirely pay the cost with the blockreward which means the users pay way way less fees for their Tx than it would actually cost in energy.
If we assume max 7Tx/s 1 block can hold 4200 Tx One block gets the miner 12.5 BTCs that's a 0.003 BTC "subvention" per Tx that would otherwise have to be pais as fee.
In other words the cost is paid by inflation which hurts most who holds and not who uses it. People don't care about a little inflation because the price gains where way way over that. But in the long run this system can not work. Every halving requires the BTC price to at least double (assuming the same mining cost). Problem is mining cost goes only up the halving is finite it goes to zero blockreward. Since the price can't go to infinite it's obvious that this system has to crash at some point we just don't know when.
Miners are not paying their electricity bills with bitcoin (most of them). It's the other buyers, that buy the bitcoins from the miner in exchange for dollars, that in fact pay the bills. And those are willing to pay the current price of electricity required to create the block.
And mining costs have gone down before. It's when bitcoin's price falls making mining unprofitable, so some miners stop, which lowers the difficulty, which makes mining profitable again at lower level - mining costs decreased to match the price.
That's word juggling whether the miners pay with bitcoins or sell bitcoins and pay with fiat is totally irrelevant. Fact is, mining is paid with the block reward. Bitcoin pays itself by "printing" itself. The value that goes to whom sells the energy/hardware is extracted from every bitcoin in existence via inflation. Unlike with Fiat the inflation rate is hard-coded and declines so hyperinflation isn't a problem but then gain inflation will stop and then user will have to pay for the bitcoin network. Which currently would costs several thousandth USD per minute in energy alone.
That true, mining cost can go down and it did but in the long run it can (must) only go up.
If we assume after block reward is gone or very low, fees pay miners less so most miners stop and difficulty is adjusted then we have a imminent 51% attack risk. Low difficultly, bankrupt miners, mark flooded with cheap mining hardware and suddenly drooping energy prices are the perfect conditions for such an attack. Once attacked the price drops pushes more miners out of business and attacks are even cheaper. A crash is inevitable.
If you are so sure, you are welcome to make some money on it by shorting bitcoin before the halving which is in May.
And no, it's not word juggling, the value of money comes from the people who exchange things for money. Here they exchange either electricity, or USD for it. Miners are paying their bills by selling virtual tokens, if those tokens didn't have any value for anybody, they wouldn't be able to sell them. Whether the token comes from block reward or transaction fees doesn't change anything on the fact that somebody gave up USD to get the token.
> Bitcoin pays itself by "printing itself"
Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Maybe I do that already? Or maybe not because I stated above that the crash could very well come after the next halving but it could also take another few more halving each coupled with price waves as we have seen in the past. I have no clue how long this self fueling will work. Anyway the whole "if you sure about xxx why you don't yyy" isn't an argument.
You don't seem to understand where the value from new minted BTCs comes from. How they are exchanged is completely irrelevant. Mined BTCs change the supply and that changes the price of all other BTCs. Any additional BTC makes all other BTCs a little bit cheaper/less worth. And that is where the value form the new BTCs come from.
Printing controlled by math avoids hyperinflation like I said above. Printing isn't the problem, that the printing stops is the problem. Or that the whole system was self fueling in the first place.
> If you are so sure, you are welcome to make some money on it by shorting bitcoin before the halving which is in May.
Only suckers take positions in a rigged game, short or long.
> Kinda ironic now after FED printed more money in one week than the whole Bitcoin economy is worth. I'd rather have the printing controlled by math, than any person.
Obviously that math is defined by people, so you're just pointing at it and pretending otherwise. The Bitcoin Core team can just change the printing rate any time; their lack of action is defacto action. Rather than an elected group of economists you've got a bunch of un-accountable, un-elected people with zero experience in the economics space shooting from the hip.
I'm really surprised to see so huge amount of misunderstanding of basic Bitcoin principles here on HN. These things were discussed 10 years ago. The Bitcoin Core team cannot change rules just like that, they are not the central bank of Bitcoin, while the elected group of economists have done that a couple of times before just to save their own asses. Talk about accountability...
Why are you replying to that post then? While ignoring all my arguments. I know very well that the devs can't change the rules. And you probably know very well that my arguments are very valid and there is not even a plan to fix this.
There's some question of what a crash looks like. If the block reward goes away but there are enough fees to cover a reasonable difficulty, the crash will just be the end of the enormous investment in chasing the block reward, the network might still be secure enough to be usable.
I haven't checked the math, but this article says the block reward is ~$45 per transaction, vs ~$0.70 in fees:
https://cryptoslate.com/each-transaction-costs-the-bitcoin-n...
If that is the case, it seems likely there will be a devastating crash next time the reward halves.
BTC can survive if the price at lest doubles before or after the halving. This is what happened in the past. It can happen again maybe even multiple times but certainly not forever.
A doubling leads to the rewards staying about the same. Whether that needs to happen for bitcoin to survive is not at all obvious. It would likely be sufficient for bitcoin to survive, it just isn't clear that it is necessary, maybe ⅓ of the reward would keep folks interested.
It probably needs more than doubling in the long run. For the following reasons.
Price is measured in USD and USD is inflationary so its purchasing power drops and BTC needs double the purchasing power not double the USD "value number"
The reward being constant would in the long run reduce the margins used as profit but also stop the re-investing of said profit to creating new hardware (ASICs) etc. That would stop or slow down the growth of hash/energy ratio which would make 51% attacks cheaper over time if we assume all other hardware on this planet keeps getting better and more.
Also keep in mind that BTC "only" doubling ever 4 year would significantly under perform most peoples expectation so if it's even lower, interest probably goes down rapidly as well which could trigger the collapse.
We will see in May.
> How else do you think miners pay for their electricity?
With speculation on currency (it's the primary use of Bitcoin) and theft - the latter less so, given the very high centralization of hashing power, but it was and still is common for a wannabe Bitcoin millionaires to run mining software on computers and electricity they do not own or pay for.
> common for a wannabe Bitcoin millionaires to run mining software on computers and electricity they do not own or pay for
Define “common” and provide sources for your claims please.
Monero Javascript miners are common to this day.
They're an easy way to donate to people in places where it is hard to transfer money. What exactly is the argument you are making here? Presumably the people running those things are definitely paying for their power one way or the other.
They get delivered through ads and sites directly in order to steal further resources from unsuspecting site visitors.
The days when this was either widespread or not blocked by mainstream browsers are behind us. At this point it is mostly scaremongering for no good reason.
the thread is about Bitcoin mining using stolen energy
And USD is guarded by guns, bombs, wars, lies, and so on. None of these currencies have free protection. That said, I do like Prime Coin's use of their energy going to finding prime numbers which (I assume) is useful to mathematicians.
Hashing solved a problem of limiting supply and spreading the work in a dynamic way to prevent takeovers.
Energy consumption would be dramatically less if ASICs weren't a thing. In hindsight it is obvious they would be built but give me a break.
What they accomplished was a decentralized balancing of power based on economics, crypto, and distributed computing. It is beyond remarkable.
So tell me, what is the carbon footprint of FedNet and all of the banks clearing the 3,000 tx/s demands and their collective datacenters...
What, you thought what we had today was free?
Are you aware that these numbers shared are not even 1% of the worlds consumption of energy or a quarter of what the us alone uses in merely datacenter costs!
I hate these fud charged articles with no balance, basis, or actual science.
> So tell me, what is the carbon footprint of FedNet and all of the banks clearing the 3,000 tx/s demands and their collective datacenters...
(a) whataboutism is a logical fallacy.
(b) If every Visa transaction took 625kWh, it would use 38X the entire world's power generation capacity and 3X the worlds entire rate of e-waste generation. Just Visa, not MC, UnionPay or Amex. Visa is literally 700,000X more efficient, and getting more efficient as technology does. Bitcoin becomes more wasteful as technology improves.
> I hate these fud charged articles with no balance, basis, or actual science.
A study from Cambridge University backs it up and is linked. Just because it doesn't agree with your preconceived notions doesn't make it "not science" all of a sudden. You could just be wrong.
> (a) whataboutism is a logical fallacy.
This isn't whataboutism. There is a system being used. Contrast it with what currently exists.
> Bitcoin becomes more wasteful as technology improves.
You misunderstand hashing difficulty.
This guy is a known troll spreading FUD. Look at all of the links he has posted. It is not science.
Stop embarassing yourself and read a layer deeper into the people writing the articles.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
Here is what a real scientist says:
Koomey says that de Vries’ work is “fundamentally flawed” because it backs into bitcoin’s power consumption by estimating miners’ revenues and expenses. “Any time you do that, you introduce multiple layers of error and uncertainty. It’s a completely unreliable way to do the analysis, and no credible energy analyst would ever do that.”
But of course you prefer this digiconomist spewing FUD as a hobby and winding folks up:
"Digiconomist's index has emerged as something of an authority recently. The index was developed by Alex de Vries, a 28-year-old consultant for PwC with a background in data and risk analysis who now specializes in blockchain, the technology that underpins bitcoin. He founded Digiconomist as a hobby in 2014 and acknowledges he has no previous experience in energy economics"
https://www.cnbc.com/amp/2017/12/21/no-bitcoin-is-likely-not...
The other side is that people who mine bitcoin have to have basically “free” energy - margins are too tight. So while it’s wasteful, people aren’t burning coal or gas to produce bitcoin in the big bitcoin farms. Hydro and geothermal rule.
Where they could instead be replacing fossil fuel-based capacity.
Free or stolen, some miners steal electricity to or bribe officials.
The headline article talks extensively about how this is not the case.
I am really surprised that Bitcoin (or cryptocurrencies in general) hasn't solved its energy use yet and is still legal.
I thought the world would switch to proof-of-stake coins and gradually make bitcoins harder to use.
> I thought the world would switch to proof-of-stake coins and gradually make bitcoins harder to use.
if proof of stake were implemented with the same security guarantees as proof of work, the bitcoin utxo set would be migrated over to it.
Should Christmas lights be illegal too because they are "wasting energy"? Shouldn't consumers be allowed to choose what they will do with the energy that they pay for? Or is this soviet Russia?
Should it be illegal to dump toxic chemicals into streams because they're "killing us all?" Shouldn't consumers be allowed to choose where they dump the cleaning products they paid for? Or is this soviet Russia?
Ok bad example because the soviets weren't known for their environmentalism, but you get my point. Once a problem becomes big enough scale that it affects us all regulation is justified.
Using energy is not emitting toxic chemicals. Burning coal is. Running your gasoline automobile is.
The disconnect in people's mind on this question seems to be motivated by either their ignorance or their biases.
vlad whatever was full of shit 4 years ago when he said that he thought proof of work would be eliminated within 6 months. I bought hardware on the basis that he was wrong and it paid out.
I dunno why anyone still has faith in eth as a concept, it's a garbage programming model, it's a garbage developer, who has failed for an inordinate period of time as measured by the crypto community. he's just trying to pump up his holdings.
(many of these deficiencies would have resulted in monetary losses for the developer himself, had he not used his central authority to roll back the blockchain. Literally anti-"crypto as a philosophy". So much for "code is law" and all that.)
https://news.ycombinator.com/item?id=14691212
He's 2 years beyond his 2 year worst case scenario and he has zero progress. And in the crypto community 4 years is a ridiculous period of time to be behind schedule. It's time to state the obvious: he fixed the broken script model that Bitcoin refused to fix, but he is incapable of adding anything significantly novel.
4 years of failed promises? With at least one rollback from a central authority? time to look elsewhere.
Otherwise, the obvious question: where is the Proof of Stake that he promised literally 4 years ago? How many more years out is it right now?
(nor is the "never increase past X amount of currency" even a good model. real currencies need to match issuance the amount of demand for currency... potentially even negative at times. And someone needs to do that. Otherwise, the currency will be subject to a wild amount of inflation/deflation... just like all previous hard currencies.)
Gosh, we could call that a "central bank". And electing an unresponsive 17-year-old as central banker is just about as dumb as it gets.
He is already making central banking decisions... just ones that the majority of the community (ridiculously) agrees with (throttling the amount of currency issued) because the community is centered around deflationary gold-bugs rather than actual maximalists.
You mean the guy who the machine elves made him do it?
https://coinjazeera.news/vlad-zamfir-looking-for-new-drugs-t...
Regarding the supply problem: The supply could be inflated and deflated with crypto backed stablecoins to adjust for whatever the market needs
See https://www.youtube.com/watch?v=Se2CDsmMqvE
Bitcoin is pure free market. People keep it because of its history - same as how people buy gold coins.
Except I'd put far more stock into gold coins (or gold in general) as a store of value.
But that's just me.
And there are enough people that take the converse position, that allows bitcoin to grow
Don't forget the blatant price manipulation from exchanges and scammers! Search numbers show fewer people care now than ever and yet the price is pretty high. You should be surprised by that because the block reward requires $5.25B in new money to enter the market to maintain the price, and yet...
Comparing this chart[1] with the chart found on this page[2] I very much doubt that assessment, specifically in terms of volatility.
Note the very, very different scale of those charts.
[1] https://goldprice.org/de/gold-price-history.html [2] https://en.bitcoinwiki.org/wiki/Bitcoin_history
edit: clarification
Bitcoin’s energy use is its most valuable feature. If you think it’s an issue - you don’t understand what’s valuable in Bitcoin.
You've made this comment twice yet haven't enlightened me. I have no ideological bias - what is the value of the energy use?
It's all about making a political statement.
https://en.wikipedia.org/wiki/Rolling_coal
Proof of work is the only objective datapoint that can’t be faked. It has value in itself proportional to how much energy went into the proof, so it’s wrong to say something was wasted - all the energy went into producing something of value.
With proof of stake if you get out of the bunker and are presented with multiple competing chains - you can’t decide which one is genuine and which is a malicious fork. With proof of work it’s trivial and that’s where value comes from.
Why compare PoW with PoS if there is consensus https://xrpl.org/intro-to-consensus.html which already solved the problems of both before PoS even existed. Consensus will never have 2 chains unless someone creates one on purpose. For all others it's always clear witch chain is the correct because everyone can check for correctness. in case the consensus fails (for example serious global network problems) the consensus would halt which is not ideal but better than uncertain chains.
> Each participant in the network chooses a set of validators, servers specifically configured to participate actively in consensus, run by different parties who are expected to behave honestly most of the time.
maybe you're fine with that, i'm not and everybody who values bitcoin aren't either. it's the kind of thing that PoW solves and PoS doesn't. every PoS system i've seen just obfuscates this glaring hole instead of admitting that there's no way around it - you can't know which chain is genuine without trusting third party. in Bitcoin you can, or at least it is trivial to detect when something malicious is happening. and i'm not talking about correctness here, correctness is trivial, you don't even need to bring it up.
Why exactly aren't you fine with that? You run a node and you decide which nodes you want to connect your node to. If such a node gets a Tx it will be relayed to your node and the other way around.
It's not like your node would copy their validation and just agree with what they agree. Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx. But it should make you overthink whether that node is trustable.
Trusting nodes is a "reliability rating thing" it doesn't really affect the consensus decisions because Tx are either valid or aren't. The consensus that must be found is only about the order of Tx. If the majority of the validators say Tx X was first and therefore Tx Y is invalid (attempt to double spend) but your node got Tx Y first then its totally fine to flip the order of these two since both are valid just not at the same time.
"Voting" which nodes you trust means you trust them to be reliable/fast and not controlled by a single entity or controllable by a single entity (gov.) So with a clever trust list you help decentralize the network and help that the network runs on the most reliable nodes. You don't change the rules or allow other to change the rules. You can even make mistakes. You can choose some nodes that turn out to be not reliable/fast or even actively malicious. It has no fatal effect and can be corrected as soon as it is detected. Only if everyone would select over 20% "bad" nodes it could halt the consensus. Still would not allow a single false Tx or a single Tx reverse. It would just stop until some nodes remove the bad actors form their trust list.
As your quotes says "...run by different parties who are expected to behave honestly most of the time." The "trust" you give them is very very very limited.
> Why exactly aren't you fine with that?
because i don't want to trust anyone. XRP is not trustless or decentralized enough.
> Every node always enforces all the rules. So your node checks if a Tx is valid anyway and if you get invalid Tx from a node you trust it wont make your node accept that Tx.
as i said - validity is trivial. i asked you to not bring it up but you did anyway.
> majority of the validators say Tx X was first
"majority of validators" is not something you can reliably even define for yourself because you don't know which parties have colluded with each other. this consensus model fails on every layer.
> Only if everyone would select over 20% "bad" nodes it could halt the consensus.
i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
i want universally objective measure by which i can compare competing chains. if your protocol doesn't provide it without having to trust third parties - it's a failure.
> because i don't want to trust anyone. XRP is not trustless or decentralized enough.
And yet you trust the Internet to get packets to HN. You trust the government to administer the roads, the schools, the army, the police, the firefighters, and so on for days. The FDA to verify your drugs, Agriculture to verify your food.
You trust so many people every single day to make it through from breakfast to dinner, and yet this is where you draw the line for some reason you can't really quantify.
What you’re saying is basically “things are horrible so why don’t you just bend over and let somebody fuck you in this other aspect as well”.
Yes, that’s where I draw the line today. Governments used to challenge our right to free speech and even right to live free - we don’t accept that anymore. In my opinion it’s time to untangle governments and money. You’re free to disagree of course and you’re free to entrust all sorts of strangers to make all sorts of decisions in your life, just don’t expect others to do the same.
> You’re free to disagree of course and you’re free to entrust all sorts of strangers to make all sorts of decisions in your life, just don’t expect others to do the same.
You already do though. You're just entrusting a different set of un-elected un-accountable strangers with no economics degrees with your monetary policy -- the Bitcoin Core team. And the PRC where over 50% of the hash power is located. They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part. Your government is accountable to you, the core team, to themselves.
If you tell me they wont then you're trusting them not to unless you can point to a math equation preventing them, I guess.
You're describing a libertarian pipedream that can't exist.
> You're just entrusting a different set of un-elected un-accountable strangers with no economics degrees with your monetary policy -- the Bitcoin Core team
no i don't. they just happen to maintain the reference implementation.
> And the PRC where over 50% of the hash power is located
no trust involved here either.
> They could change the number of Bitcoin on issue, the rate, the block reward rate, anything, with zero recourse on your part.
no they can't and the fact that you think this means you have zero understanding of how bitcoin works.
> If you tell me they wont
i'm telling you they can't. bitcoin is defined by consensus rules and releasing a binary that breaks those rules or mining blocks that break those rules doesn't change bitcoin.
It’s the politics. If the core team decided to change the parameters of bitcoin at worst everyone would fall in line and at best it’d fork and you’d lose a whole lot of value.
It’d be a fork either way and that’s the point. Still no trust involved.
Then "faith" that people are going to continue to believe in the Bitcoin that you believe in. I mean it’s not scarce anyone can clone and fire up their own bitcoin.
Please do, because until you actually try you will remain very confused about what is scarcity in context of bitcoin.
Trust can not be removed it can only be spread. If you use BTC you also have to trust that most miners/pools act honest. You can't even choose which miners you think are trust able. You have to just hope (trust) that at least 50% are honest an cant be compromised at the same time. How is that any better than (optional, yes completely optional) choosing trusted Nodes?
You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded. If Tx X was actually first but Tx Y reaches majority this simply means that either Tx X was not relayed fast enough to all the nodes OR it could mean that a lot colluded nodes voted for Tx Y.
Either way the consensus can "fail" because of technical reasons (slow relaying) or "fail" trough colluded nodes both "fails" do not lead to changed rules. No invalid Tx can happen this way. No Tx can be reversed this way. The whole situation can only ever happen if 2 Tx are valid signed but try to send the same funds (double spend attempt) and are inserted into the network nearly at the same time. Only one Tx will be processed. Enough colluded validators could effect which one but its completely irrelevant. Who cares which Tx of a double spend attempt is processed?
If you try to pay 2 persons with 100 bucks each by placing just one 100 dollar bill on the table in front of them, you don't know which one is gonna pick it up but clearly you have not fooled anyone into thinking you payed both.
>i don't care how small you think this problem is. i want to never rely on having to select "correct" validators to ensure my financial future isn't at risk.
You completely misunderstood, you don't have to choose "correct" validators to make it work correctly it can only work correctly! Bad validators don't "hurt" they just don't contribute.
Assuming 50% of all validators are bad and suddenly start censoring Txs or reordering non final Txs that would have the same effect as if these validators would just shut down. It does NOT produce a wrong output. Worst case is that the network halts and that is wanted because if 50% go offline at the same time there is probably something seriously wrong like a global internet collapse. Something humans have to fix first before resuming.
>i want universally objective measure by which i can compare competing chains.
By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point? Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
> You have to just hope (trust) that at least 50% are honest an cant be compromised at the same time. How is that any better than (optional, yes completely optional) choosing trusted Nodes?
51% attack exists for all cryptocurrencies. don't try to substitute "colluding 51% of selected validators" with "colluding 51% of global hashrate", you're being disingenious.
i don't have any trust in miners, all they do is send me block signatures and if the signature satisfies proof of work requirements i can be reasonably certain one would have to burn some amount of energy to override that.
you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
> You can very reliably define the "majority of validators" its defined as 80% it doesn't matter if or how many validators colluded.
80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
> By "universally objective measure" you mean you choose the longer chain? Fully aware that this can later change? Whats point?
universally objective measure is proof of work. you can't fake it without burning similar amount of energy.
> Having just one chain that is final doesn't need "universally objective measure" doesn't need comparing and makes final a binary option instead of "final" but better wait some more blocks to be sure.
who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
You means all PoW/PoS cryptocurrencies? Because consensus does NOT have something like an 51% attack especially not at 51%. Majority is defined as 80% for a reason. Colluding 51% of selected validators NEVER result in anything comparable to a 51% attack on a PoW network. Neither double spend nor reversing is possible with 51%. I already described the "harm" someone could do with 51%. Temporary Halt progress. Temporary censor/exclude some Tx. That would be bad but it would be detected and could be fixed.
Well I call that trust. You trust miners/mining pool operators to act by the rules. And even if they do you still could be on the wrong chain because of network problems etc. If you only see one chain you don't even know if there is another chain. Hence the waiting for several block for confirmation.
>you on the other hand have to trust third parties to know which chain is the "right" one exactly because PoS lacks this universally objective measure that is PoW.
Consensus isn't PoS there are no chains You don't have to trust any third party you can run your own node and validate the Tx in real time and confirm everything yourself. If the network and your node node would "fork" you would instantly know something is wrong (most likely something with your node).
>80% of what? 80% of the couple hundred ips that i will send you as "totally not colluding validator nodes"? you can't even know who's online at any point in time.
Well how about you read the documentation? Why arguing with me if literally all you arguments just show that you have never read how consensus works but you still wanna tell me why it does not work.
BTW Validators use public-key cryptography to communicate with each other and they know exactly which validators is online. That of course doesn't help at all against colluded validators. But then again like mentioned many times now, colluded validators can not trick any node into doing something wrong. No matter how many. Literally all validators could not trick your own node into accepting a Tx that isn't valid or to revers anything. It's like if suddenly all calculators except yours would calculate some things wrong. As long as you use your own to verify results you can't be tricked.
>who decides what's final? how much does it cost to bribe them? how much does human factor matter? how do they know they have quorum to make such decision? what if there's a network partition and two quorums have finalized two chains?
The answer to all these question is literally the consensus algorithm. Please just go an read how it finds consensus. I can only give some short answers but to fully understand you must read the documentation.
>who decides what's final? In short very simplified: Everyone who wants tells everyone who wants to hear, which valid Tx they would include in the next ledger. Everyone listens to who they want to listen to and skip the Tx that aren't suggested by at least 80% Everyone now has a bunch of Tx that they validated and they know most others agree on. That's it. That's final. Skipped Tx will be proposed for the next ledger.
Since everyone can say whatever they want but also everyone can just ignore what you say, colluded validators can tell sh*t all day long. You could even spin up 1000 Validators (way more thane 80%) and let them all propose wrong Tx. No one would care because no one has a reasons to include invalid Txs ever. An attacker would need to collude existing validators that others already listen to. But as soon as they propose Tx that are not valid everyone would stop listen to them. So you would need to collude over 80% of the existing validators then you could propose a wrong Tx AND reach 80% agreement. Problem is all other not-colluded validators would simply stop and all nodes that validate Txs them-self like the node of an exchange or a node run by a bank etc. they would all stop as well because even majority can not overwrite their code.
You end up with a network of colluded validator that make forward progress but no one listens to them anymore. All the honest player have detected that something is wrong and halted after the last correct ledger. Technically there is now a fork. One chain is halted and one is obviously wrong. Not exactly hard to pick the right one in this case.
>how much does it cost to bribe them?
Who knows? But how much is halting the network worth? It sure could cause damage (trades stop etc.) But it will not case wrong behavior so you can't exactly make money with this like with double spending. You could short and hope the price would drop because of the halt. On the other hand surviving such a large scale attack could also push the price way up. The XRPL never halted but the XLM ledger did (not because of an attack) a few month back for like 2h. It has no visible effect on the price.
>how do they know they have quorum to make such decision?
They don't. Consensus is reached not decided see above and documentation. They only decide if a Tx is valid and they use math to do so.
>what if there's a network partition and two quorums have finalized two chains?
That can not happen because nether partition could reach 80% agreement. The network halts in such situation for as long as needed rather than splitting.
>that's the thing with PoS - it's politics based currency. we've had that for thousands of years. it's not like some genius read satoshi's paper and thought "hey what if we just kind of like vote on which chain is the right one and lets name it proof of stake?", PoS was known long before PoW, it just doesn't solve the problem that bitcoin solves, that's it.
It's still not PoS why are PoW supported always coming up with flaws in PoS lol I already know PoS is flawed but so Is PoW.
> And even if they do you still could be on the wrong chain because of network problems etc. If you only see one chain you don't even know if there is another chain.
this is the key thing you don't understand, i don't even need to respond to the rest of your message because of it.
with PoW even if i see only one chain i can absolutely objectively detect if something cheesy is going on by observing the difficulty of that chain. no network connectivity required. no comparison with other potential chains required. until you understand how is that different from PoS there's no point in discussing benefits and tradeoffs between these systems.
I must disagree with that.
Detecting if something is cheesy in the chain is not enough. The chain you see can be totally fine nothing cheesy you could "objectively detect" yet the chain you don't see is longer and everyone will switch there. Your "objectively detected" nothing is totally pointless in this case.
Or what about Tx censorship. A valid Tx with reasonable fee isn't included because miners/mining pools colluded to not process that Tx. You objectively detected nothing because everything on the chain is completely correct. You can't detect what isn't there.
You still come around with PoS lol dude I never in the whole thread compared PoW to PoS. PoS is totally irrelevant. If it would not exist PoW would still have the same flaws.
> yet the chain you don't see is longer and everyone will switch there
No. No it can’t. No it can’t without somebody spinning up 100%+ more hashrate. And in PoS it totally can because there is no objective truth measure attached to it.
And again, 51% attacks are not solvable in principle and all your criticisms are basically “but what if your chain gets 51% attacked?”. Well duh, 51% attacked system gets destroyed, no matter if it’s PoS or PoW, the issue is that PoS gets destroyed in many more scenarios, not just the equivalent of apocalypse.
And you did bring up PoS multiple times. If you didn’t - we would t be having this conversation at all.
With energy becoming more and more renewable, does it really matter if BTC uses a lot of it?
It does, because it competes with decarbonizations of things our civilization actually needs. Once that's done, it'll still be ridiculous to try and base the economy on bitcoins, because proof of work scales so badly it'll happily eat any and all energy that's made available.
Thousands of years from now, when humanity builds its first Dyson sphere, I would like to believe the collected energy will be used for purposes like making everyone's life long and prosperous, or propelling great starships across the void - and not just to secure the Bitcoin network.
And you're just going to ignore that we can do layer 2 technologies like lightning network?
Explain to me how they prevent the energy requirements of proof of work securing the entire cryptocoin infrastructure from growing significantly faster than the market using that infrastructure, and without compromising the whole reason behind cryptocurrencies in the first place, which is decentralization and lack of trust?
Hm I'm not sure I understand, because the answer seems very simple: because they dramatically increase ratio of the number of meaningful transactions describing real economic activity to a MB of valueable block space (and therefore per watt of total global PoW calculation).
If all they do is increase the ratio, that's only constant scaling. So in no way does it compensate for the scaling of PoW energy use with respect to market size.
Why would you assume it would be constant? What equations you are using? How exactly are you projecting the market size to POW increase, and how do you calculate L2 changes? "Increase" the ratio does not mean it will increase by *2, it can be ^2 or whatever other formula might end up being real.
Renewable energy isn't zero carbon. At the very least you gotta produce the energy generating system somehow. Then maintain it.
But renewable is all wasted if there is no demand. Hydro power used for bitcoin mining doesn't find a new user immediately if bitcoin stops and the power can't be stored long term so it can be wasted.
Hydro is the one type of renewable with built-in long-term storage.
I think you misunderstand. Once the power is generated it can't be stored for long. And I understand your point but you can't hold water in a reservoir/dam indefinitely, at some point you either use it to generate power or you let it flow through without generating power because otherwise the dam overflows.
IT's becoming more renewable from a very low base. Electricity generated in most of the world is still dirty, electricitymap [1] has a good overview.
[1] www.electricitymap.org
So long as BTC is adequately carbon taxed, probably not.
Don`t mix up the idea of renewable and infinite. Theoretically it can be done but until we each that point it definetly is not working like that.
Until most mining moves to renewables, yes it does.
It already is due to energy being the biggest mining expense. Miners congregate around inexpensive sources of hydroelectric/wind/solar energy.
Ok, I should be more clear. Until we have enough energy that we're all running on renewables and adding more bitcoin-related load uses up spare capacity rather than increase overall usage - it matters.
I mean, unless it's a dedicated power generating station, you're still using renewable power which is not used by someone else and overall we're supplementing that with coal and others.
You’re wrong. If you think Bitcoin’s mining is wasteful you don’t understand what is valuable in Bitcoin. If you think there is duplication - you don’t understand how modern bitcoin mining even works.
Proof of stake doesn’t work and trust based models are the very thing bitcoin is designed to save us from.
If you have ideological bias here I won’t try to convince you, only time will.
I saw this a couple days ago when @arcticbull mentioned it here https://news.ycombinator.com/item?id=21256112
Jaw dropping.
Converted to Telsa Model S miles as per https://en.m.wikipedia.org/wiki/Tesla_Model_S
Comes out to about 2000 miles or 3200 kilometers for one Bitcoin transaction.
Astounding.
I mentioned it in a couple of threads and people seemed surprised, so I figured it would be worth surfacing more broadly as its own post.
Definitely agree.
I have some rather left-leaning friends, vegans and all, who recently mentioned they were going to take a punt on Bitcoin.
Might have to show them this.
It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
You cannot stop bitcoin.
Edit: You would end up burning even more if you tried to stop it.
nah, there's approaches. I meet with politicians and suggest a carbon tax on crypto exchange conversion to fiat - miners have to cash out, after all.
You have to tax the clean coins too, otherwise buyers will just exchange dirtycoin for cleancoin before cashing out.
Why not tax or make all energy more expensive? That way all wasteful usage will be curtailed and only the valuable use cases will be left after a while. If we do what you proposed it sounds like we should start taxing other behavior on the internet based on its usefulness to society and electricity usage.
We definitely should tax all dirty energy, and the shifting price landscape will do a lot to fix the environmental issues we're facing.
That said, it's not enough - because the market isn't some NP-complete-problem-solving magic oracle. It's just a greedy optimization algorithm. It's very prone to falling into bad local optima. We know that for a fact, that's the basis of most regulations around markets. Left unattended, the market would happily prioritize mining Bitcoin over producing food, as running Bitcoins in circles is more profitable than selling grain - up until there's an actual shortage of food and the market self-destructs.
Energy on it's own is not dirty or clean. You cannot test the wires in the wall to say yep, this energy is clean.
You can of course tax the energy producers, but that does not prevent fraud on it's own - see oil tankers converting gas pollutants to water and causing even more harm.
> Energy on it's own is not dirty or clean. You cannot test the wires in the wall to say yep, this energy is clean.
Yes. "Clean/dirty energy" is a shorthand for clean/dirty energy sources.
> You can of course tax the energy producers, but that does not prevent fraud on it's own
Sure. Taxing emissions is a necessary but not sufficient component of a sane energy policy.
> Yes. "Clean/dirty energy" is a shorthand for clean/dirty energy sources.
So how do you make sure you are not getting dirty energy ?
What is the purpose of this questions?
You purchase electricity with clean production guarantees.
That doesn't necessarily mean the electricity you use comes from that, or any, clean source, but that clean sources are used to contribute to grid supply equally.
If that's not actually happening then we can call that fraud, but that's a separate issue.
Are you claiming you were not aware of this?
Do you mean instead of taking on bitcoin? Please be clear.
Putting new taxes in place is not free of charge.
That’s an interesting opinion.
In the spirit of Hacker News, would you mind expanding on why you believe that to be the case?
We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Let me start with
> You cannot stop bitcoin.
See the way bitcoin works is anyone who wants to run a node on the network can just start without asking anyone for anything, or even letting anyone know they are starting. There is no door you can bang on to stop new users from joining. There is no server you can bring down to prevent people from joining.
> It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
This kind of comparison is flawed: Tesla was made for efficient mileage from electricity, but Bitcoin never aimed at transactions that require little electricity. You could compare an electric kettle to a smartphone and say that electric kettles are really bad because you could talk on the phone for 50 years instead of boiling water for some tea. ( If you don't believe me or don't get it, I don't have time to try to convince you, sorry. )
> Edit: You would end up burning even more if you tried to stop it.
Based on the above and other properties of bitcoin, it would not be cost free at all to try and stop it. I am convinced that the costs related to attempts to stop bitcoin would be much higher than the costs required to leave it be.
> We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Yeah I'd too appreciate if the debate here was more than yeah just tax it bro, they gotta cash out bro
Also the critical thinkers seem to never have even checked the source of this 600KWh / transaction claim.
If you actually cared to check [0] you would see that this claim is coming from estimating mining revenue and then sending 60% of that revenue to mining costs. That calculation is actually:
Mining revenue(in USD) * 0.6 / 0.05 / amount of transactions = KWh per transaction
Embarassing!
[0](https://digiconomist.net/bitcoin-energy-consumption#assumpti...)
The most powerful supercomputer in the world reaches 143 petaflops, bitcoin network in comparison reaches 80704290.84 Petaflops. Granted that a majority of this computing power is in the form of custom ASIC's, but the figure is really staggering.
And all of the 80704290.84 Petaflops, consume 73.12 TWh to repeatedly calculate SHA256 ! What could be the world's most powerful network does absolutely nothing but crunch hashes billions of times to discard almost all of the results anyway. Sheer waste of computing power.
It's incredible that people on HN, a technical readership, still don't understand why the energetic or computational "waste" of proof-of-work is needed.
There is simply no other known way of implementing a decentralized, censorship-resistant, robust digital currency. Without PoW you lose one of these properties.
Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. There are many other unsolved problems. That's why Ethereum is years behind schedule in designing and deploying PoS.
Replacing PoW with a useful algorithm (eg. protein folding) loses decentralization (a central trusted authority must verify/sample who performs the work correctly).
Trust-based systems (Stellar, Libra) lose censorship-resistance.
A "dumb" PoW is literally the only practical solution.
If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.
If the only way to have a decentralized, trustless, robust digital currency is to waste an inordinate amount of energy and increase our global warming and pollution problems, then we'll have to do without that kind of digital currency. It's a matter of priorities.
From a position of power it is easy to do without, because you derive no security or finances from this solution. After all, the status quo is paying you just fine. Why is what you say relevant for most people, who to varying degrees definitely don't have all the things that you apparently take for granted?
Is having food on the table and a roof on their head relevant to "most people"? Because, when we're talking about climate change, that's what is at risk for hundreds of millions of people.
Said the man living one of the most privileged lives possible on this planet. Bitcoin has a very clear use to the oppressed people of the world, and for that exact reason it’s popular among criminals.
"inordinate amount of energy"
It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Don't fall prey to the scary comparisons BECI employs to mislead its readers.
Global warming is critical, but there are other energy wasters much, much bigger than Bitcoin miners.
Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. A recent paper by Stoll et al. estimated CO2 emissions as being comparable to what a single city like Las Vegas emits: https://mobile.twitter.com/zorinaq/status/113943906857019392...
Right now the share of the world economy running on Bitcoin is negligible, yet its energy consumption is relevant. If that share became consistent, the price of Bitcoin would increase by many orders of magnitude, and mining bitcoin would become more and more competitive in relation to other uses of energy, and would increase in tune - that's why I say inordinate. PoW is just unsustainable by design.
Bitcoin's energy consumption is also by design self balancing - increase the price of electricity, less electricity will be used. With the same benefits for the network.
Not really, it's self-balancing with respect to the efficiency of the technology around it. As tech gets better, Bitcoin gets worse to compensate.
> It's comparable to what a single hydro dam like the Three Gorges Dam can produce.
Which happens to be one of, if not the largest hydroelectric dam in the world.
> Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants.
Which means that this renewable energy is no longer available for other uses.
It's not a "waste" if the result is a decentralized, trustless, robust digital currency.
And the global warming argument is a many times debunked hoax - if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable. Except in the other cases, the benefits go to the single entity that owns the business, whereas with cryptocurrency every participant benefits from the stronger network. Global warming is caused by using fossil fuels to make electricity, mining crypto doesn't require fossil fuels. There are other ways to make electricity, let's focus on them.
> if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable
I'm sorry, but you got this backwards. If bitcoin becomes a relevant part of the world economy, then it HAS to use a relevant part of the world energy, because consuming energy for PoW is the only limiting factor against a 51% attack. So, either Bitcoin is irrelevant - and thus its power usage is a literal waste - or it's relevant, and then its power usage has to become relevant in terms of global warming.
From the point of view of the miner, they have a supply of electricity at a certain price and can decide what to do with it. They might run their TV, computer, heating, industrial machinery, datacenter, or a bitcoin miner. They have to compute what profits can each of the options give them. If running bitcoin miners at that electricity cost and at that profit they can get from selling the bitcoins is more profitable than the others, then it's logical to do that. If on the other hand the price of bitcoin goes down, or the price of electricity goes up, or people start paying more for server hosting, then the decision changes. The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
If bitcoin is the dominant currency, another option exists:
51% attack, double-spend to get free electricity.
This is useful even when it makes an apparent loss by damaging trust in the currency: If you are, say, the USA president and you’re at war with Iraq, and Iraq uses bitcoin, you can outspend on energy until they surrender.
Unless the whole world uses bitcoin, but then the first few nations individually face the same problem, regardless of who else actually uses bitcoin — gotta keep the USA and China happy at the same time! (The EU isn’t integrated enough to do that sort of thing yet, but is a similar sized group).
Right now, 51% needs the cost of one very large power station from when you start until when you win — large nations, the sort with global ambitions, can spare a lot more. In the previous example, that’s close to all the power Iraq produces, but 5.4% of the USA’s output.
Then there’s the fact that most countries like being in charge of their own currencies as the ability to create or destroy units is a useful economic lever.
> The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
Or it’s speculation, like so many other things before and probably yet to come.
> you can outspend on energy until they surrender
If you have unlimited money then yes. If you devalue your money every time you try to outspend more then no, since you're actually bleeding money.
You cannot simply throw more money at mining, the difficulty adjustment would destroy you very soon.
There is no such thing as speculation by mining - if they wanted to speculate but didn't profit from the mining itself, it would be better for them to speculate by buying - instead of giving dollars to the power company, they'd just give them to other people on the exchange. Basically the only reasons for miners to "speculate" are long term contracts like lease contracts for warehouses. And those may or may not be long term.
And 51% attack has the designed side effect that all other people stop using the currency - they may keep following the previous fork without the double-spend - as shown by ETH and ETC. You'd also need some way of forcing all participant to stay with the now corrupted currency. Otherwise the attacker who performs 51% attack will gain the ownership of a network that immediately becomes completely worthless.
> And 51% attack has the designed side effect that all other people stop using the currency
That’s my point. That is literally the point. That is why it is a bad thing and why no sane nation would ever allow it to become their main currency. It is an attack surface. It is a vulnerability to your economy.
Why isn’t it a waste? You say it like it is a fact ... what’s the logic there?
"Waste" is when there is no benefit. But here the benefit is decentralized, trustless, robust digital currency.
I see no benefit in a trustless currency: If I have no trust in a currency, why should I trust the goods/services?
I see no benefit in a decentralised currency: gold is one (anyone can mine it) and there’s a reason we moved away from it.
I don’t buy that bitcoin is either decentralised (they who control the algorithm steering committee control the currency); trustless (why should I trust irreversible transactions? Why should I trust those who wrote my wallet? Why should I trust those that wrote my mining app?); nor robust (the domain of money is law, not logic, so always subject to government interference; the price is currently highly volatile; and apps always have bugs yet to be discovered).
Trustless currency means exactly the opposite of what you think. It means you don't need to trust anyone, because everything can be proven and verified mathematically without any authoritative figure that you'd have to trust. That's why you can trust the system itself.
And I'm sorry, I won't address your other points.
I think you have fundamentally misunderstood my point.
Let’s say I buy a widget. How can I trust that the widget will arrive? That it will do what widgets do? That it will not break? None of these are payment issues, but they might call for a refund. How can I get a refund? How can the refund system be resistant to abuse?
The answers we currently have are “the law”. If the law functions, I don’t need a trustless currency.
If I have a choice between math or "the law" as for which functions more reliably, my bet is on the math.
How does your maths enforce arbitrary quality control assurances? How does it guarantee refunds for breaches of contract?
> Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split.
Where can I get best details on this? Which papers? Thank you!
Once we have enough green energy I'd totally agree with you. But currently, I don't think we can afford adding that much CO² for a currency that isn't widely used anywhere in the world.
«isn't widely used anywhere»
Bitcoin processes 10 million transactions a month (300k/day) and it's generally been growing over the years: https://bitinfocharts.com/comparison/bitcoin-transactions.ht...
Which is negligible compared to the number of credit card transactions in the US (> 300 times as many per month) or bank transfers in Germany alone (50 times as many per month). And that's not even counting other ways or countries.
But how many useful transactions? Isn’t the vast majority of that trading and not economically useful activity?
Who is the global arbiter of usefulness? My transactions have always been useful for me and for my counterparty, if that's what you are asking.
https://www.coindesk.com/bitcoin-miners-send-message-at-fide...
Disregarding the energy cost, couldn't a "dumb" PoW be more computationally complex than Sha256, such that a relatively larger number of computers could compete in the consensus algorithm, thereby increasing decentralization? To me, Bitcoin doesn't seem that decentralized, considering the ASIC chip manufacturers control the majority mining stake. Intel has even gotten into the game.
More complex PoW, such as a memory hard one requiring several GB of memory to solve efficiently, can lower the efficiency gap between GPUs and ASICs to about one order of magnitude, but not much less. That means that ultimately, only ASICs can mine profitably (and only if they have access to very cheap power).
Yes but for what? Is this proof of stake worth how many dollars spent in energy consumption?
I am not that old and still I remember Ring networks (before ethernet), they were highly impractical and rudimentary, but they filled a purpose at their time.
Then Ethernet came. Anyone remembers the dumb hubs? when a computer wanted to send a message, the hub actually broadcasted it to all computers in the network... so inefficient, and yet, it served its purpose.
Later, came the network protocols. There was this protocol used for discussion groups/news, remember NNTP? wasteful, because nodes had to download / replicate the full history of posts. But still... served its purpose for its time.
Then came a messaging protocol, SMTP, very useful for sending "electronic mail", very convenient. But people started sending binary data files on it... by converting it to text (UUEncoding anyone?) so wasteful and inefficient. But it is still being used.
So, bitcoin for me is just that early system, that early test that shows a way to do decentralized, censorship-resistant, digital currency. Humanity will find more efficient ways to do it (and maybe they won't be used, as with Email) or at some point in the distant future, the power side of the equation won't be relevant (renewable energy? nuclear? who knows). But for me, that does not change the fact that bitcoin proposition is a stepping stone for society that sooner or later will change the way people transfer value.
SMTP came a long time before NNTP.
I invoke Cunningham's Law.
I invoke Zawinski's Law of Software Envelopment, and predict that Bitcoin will be replaced by artificially intelligent spam filtering software that can read mail.
https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles
Zawinski's law of software envelopment (also known as Zawinski's law) comments on the phenomenon of software bloating with popular features:
Every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.
> If the social benefits of a cryptocurrency are worth the computational power ...
They are not.
> If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.
But they aren't, and the whole exercise is comparable to trying to repeatedly solve ever-larger NP-complete problems by brute force. Something no technical person in their sane mind would consider a correct course of action.
And just like we use good enough polynomial approximations to get near-best solutions to NP-complete problems, we can do the same for running economy. Trust is not a liability. Trust is what makes economy efficient.
This is a bit of an iffy comparison.
The bitcoin network asics reach exactly 0 petaflops. Why? Because they cannot do any floating point operations. They can literally do just SHA256 hashes, nothing else.
The "worlds most powerful network" simply cannot do anything else than this. It's effectively just an expensive set of electrical heaters.
That's like saying a water bottle factory has only an output of N water bottles per day while the Three Gorges Dam can output N million liters of water a day with the difference that the Three Gorges Dam actually produces something useful, electricity, while doing so.
Just because it's a higher number, it doesn't mean it's equally useful.
It's more like instead of using the Three Gorges Dam to generate power you use the giant flow of water to fill 7 water bottles per second and divert the rest to dry up in a nearby salt flat, citing the renewability of the solution.
So supercomputers produce nothing useful but the bitcoin network does? In the long term I'm not sure we gained anything so far by all the energy spent on bitcoins. Some people got richer, some got poorer but I've yet to see any benefits for society from bitcoin.
So many times this argument comes up and every time I am amazed at how ignorant it seems to me. But it is very hard to discuss...
Can't we all just agree that what is a valuable use of someones watts or petahashes per second is a subjective choice? That people are free to value their resources as they see fit? You personally might not value securing Bitcoin network, but many other people find it valueable and it is perfectly fine in a free country to allow them do what they please if you are similarly allowed to do what you please (no one forces you to buy Bitcoin miners)?
No, we can’t agree on that.
The problem is the impact these things have on the rest of us when we ourselves have no interest in bitcoin.
If bitcoin existed purely inside a virtual world — say, if coin miners were a virtual good that WoW players could buy which made WoW money appear in their inventory according to similar rules but without the actual hard work of computing anything beyond a lightweight O(num_players) random number generator on the server, then it stops being anyone else’s problem.
Are my christmas lights that I put on during winter also everyone else's problem because they waste energy (that I bought with my own money)? Are you going to get into my business there as well and tell me what I can and cannot spend my resources on, because you claim that they have an "impact on you and you have no interest in them"?
I am pretty sure that the best consensus the western world has come up with is that if there are any externalities, they can simply be taxed in like for example a carbon tax. But telling other people what they should and should not find valueable as if you have some sort of ultimate authority on knowing what is valueable, well, I hope you can already see what is wrong with that. Value is subjective. As in, other people have a right to decide for themselves.
> Are my christmas lights that I put on during winter also everyone else's problem because they waste energy (that I bought with my own money)?
Yes but too little to bother about. Transportation and inefficient heat management are the only common ones that matter.
> they can simply be taxed in like for example a carbon tax
On that we agree. I believe car fuel is taxed appropriately in the UK, but in general these externalities are not properly accounted for. If they were, it would be a different matter, but they’re not.
People bought the energy with their own money, it's their own business what to do with it. Ie, not your business.
Also christmas lights do consume huge amounts of electricity comparable to energy budgets of some countries. https://www.igs.com/energy-resource-center/energy-101/how-mu...
Until and unless the carbon taxes are in place, it is everyone’s business.
Thank you for the link, I will now update my world model to include that data.
Yes but the bitcoin network computers don't _really_ coorperate (well they do, with a bandwidth of the order of 2MB/15mins), unlike supercomputers, so hard to compare. But yes, lots of waste.
Big number scary. Orange coin bad!
For the environment it certainly is.
If this is the level of intellectualism I can expect from the Bitcoin community the power consumption is starting to make sense!
Hey hey hey, tune down the constructive criticism!
Isn't it the idea behind some other kinds of blockchain ? computing things other than hashes so that you get currency and results ?
Maybe there are more values in investing into SHA256 hardware other than Bitcoin. That's 80704290.84 petaflops dedicated to break the SHA256 algorithm (finding a duplicate). Finding such duplicate could advance knowledge, mathematics, cyber security, society, etc
Clarifications (this website perpetuates some common misconceptions):
- A single bitcoin "transaction" can actually have thousands of inputs and thousands of outputs. So energy "per transaction" or "transactions per second" is not analogous to a typical monetary transaction.
- Bitcoin does not compete with literal credit card transactions (although some use it like that today). I'd compare Bitcoin on-chain transactions with how nation-states settle their central-bank ledgers with gold. Gold is the best comparison to Bitcoin because trading in hard gold is "final". Credit card transactions happen on a higher level in the financial stack. As does cash. As do bank transfers. All of these bubble down into interbank transfers that eventually settle on the base layer of central banks. So compared to shipping and securing gold, Bitcoin is quite cheap!
- Adding to the above point; if Bitcoin succeeds in beind "adopted", it would not mean we no longer use credit cards. Credit cards would just port their underlying mechanism on top of Bitcoin instead of fiat moneys.
The linked website attempts to quantify the impact with some stated assumptions. You’ve stated some alternative assumptions, but haven’t quantified the conclusions to determine if they hold.
I’ve been long on Bitcoin, but I am exiting my position over concerns about the environment impact. I don’t think it’s plausible that a proof-of-work based blockchain can be anywhere near as efficient as centralized ledgers are. If any of the proof-of-stake based solutions ever gain traction, maybe I’ll participate in those.
> can be anywhere near as efficient as centralized ledgers are
Yeah, no one ever claimed that they would be more efficient. If you have invested assuming the efficiency is the main goal, you have been misled. What they do provide is efficient decentralized ledgers, which is a whole other game completely.
Have a look at stellar.
> Bitcoin does not compete with literal credit card transactions (although some use it like that today). ... So compared to shipping and securing gold, Bitcoin is quite cheap!
I haven't heard the tagline "Bitcoin - it's cheaper than moving around gold on warships" yet. So far, Bitcoin has always been advertised as a new form of internet payment and a new decentralised currently for everyday use.
It's also the very point of cryptocurrencies that there are no intermediate agents, like central banks that could make up the lower levels of your stack.
So the usage patterns that Bitcoin was marketed with absolutely put it in competition with visa transactions.
I think it's fair to blame the marketing mistake. Bitcoin was built for the purpose of making convenient payments. However, it turned out to be an ingenious alternative to gold.
I wish it were labelled cryptoasset instead of cryptocurrency.
In the long-term, the objective nature of Bitcoin should prevail and we'll assess its benefit by whether it is a successful store of value.
Are you comparing Bitcoin to settlement with gold to make Bitcoin seem less inefficient? This seems like a misleading comparison, because which significant central banks still physically move gold around for settlement? Either they don't move gold or it is only moved virtually, and in either case Bitcoin is vastly less efficient.
I am comparing it to settling gold in that a settlement is "final". You can reverse a credit card transaction, a bank wire, etc. You cannot reverse a Bitcoin transaction or Gold shipment without significant risk and cost.
Example that leads me to believe central banks still settle gold: https://www.bullionstar.com/blogs/ronan-manly/bank-of-englan...
Off-chain transactions effectively don't exist at all in terms of transaction volume, and the players who staked money on Lightning lost approximately 99.97% of that money.
https://cryptobriefing.com/ln-nodes-lightning-network/
I think you haven't read how Lightning Network works.
People don't need to stake money, just create a multisig transaction with a peer and having a transaction signed by the other peer to get their money back when they want to close the lightning channel. They can get extra fees for enabling transactions, though not that big amount.
You misread the article. Those large nodes that used lightning had a rather small return (0.03%) but they haven’t lost their money.
Don't know why you were downvoted. Excellent comment.
Because many believe that Satoshi's vision was to do quick on chain transactions and be used like cash not like gold.
Perhaps the Satoshi group should have called their invention BitGold instead of BitCoin? Although it's normal to see tech guys bad at marketing/branding.
Per transaction is intentionally a bit misleading, as the amount of power usage is proportional to how-much-power the block-reward can buy regardless of there being 1 or 1 million transactions.
Not to mention, a single transaction can power an infinite amount of (wash) transactions thanks to 2nd layer stuff like the lightning network. So it'd be similarly misleading to try quote in terms of that.
So the correct unit would be power usage, per block or time unit.
The bitcoin network has a limited number of transactions per second that it can process (Limited by block size). Last time I checked the network was basically at the limit so per transaction is not an insane way of looking at it.
I get what you mean, if you decide not to make a transaction, the energy still gets spent but the more you use bitcoin the more valuable it becomes which incentivizes miners to keep mining. Also someone elses transaction will just slot in to fill the gap left since there is a very limited amount of space for transactions which is always fully utilized.
Nowhere near the limit, and hasn't been for a while:
https://jochen-hoenicke.de/queue/#0,24h
Not exactly. Second layer transactions sit on top, so the hard max of 4200 "settlements"[1] in a block does not necessarily mean 4200 transactions.
With enough people using the second layer network, each "settlement" could mean finalising hundreds of transactions for thousands of people. This second layer network acts like a caching layer, and consolidates many transactions into a single transaction (put into very simple terms).
[1] Combinations of inputs and outputs.
Ah, so how many percent of the network are currently using this second layer? If it sounds so good, everyone must be using it already!
The average number of transactions per block is easy to measure historically.
If each block takes 10 minutes, and the miner network indeed draws 73 TWh each year, then that works out to ~1.4 GWh per block.
The contrarian take on Bitcoin and carbon is that Bitcoin chases the cheapest energy, and solar is quickly becoming the cheapest source. In some areas of the world it already is (various subsidized infra in China).
See Ramez Naam (co-chair for energy and the environment at Singularity University) for more on this friendliness to proof-of-work. This is a good intro: https://www.preposterousuniverse.com/podcast/2019/09/16/64-r...
That's correct. Bitcoin actually accelerates the adoption of renewables because it provides an instant economic incentive to build e.g. solar in places where electricity demand doesn't provide high return on the investment.
The problem is bitcoin needs baseload power, not variable because the mining equipment is expensive. This is why bigger mining farms are located near large hydropower areas. BTC miners run their equipment 24/7/365.
The way the model works is very interesting:
1. Calculate total mining revenues, across all miners in the Bitcoin network.
2. Estimate that, on average, miners spend 60% of their revenues on electricity. (I believe the origin of this number are the calculations in this paper [0]).
3. Find out how much miners pay per kWh on average.
4. Convert the costs into a consumption.
There is some discussion of the origin of the assumptions, and some criticism and validation here [1] and here [2] respectively.
[0] https://www.cell.com/joule/fulltext/S2542-4351(18)30177-6
Specifically, see the calculations using Antminer S9 in Table 2.
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
The Bitcoin network has a fixed transaction capacity that has no relation to the amount of power expended to mine bitcoin.
The amount of power used is proportional to the value of the reward for successfully mining a new block, which happens about every 10 minutes (12.5 BTC or about $100k).
If the value of BTC goes up miners will increase their spend and more power will be consumed per block mined, and if the value goes down so to will the power used.
Regardless of the power used for mining, there is a fixed transaction capacity in the network.
Power used can also be a function of energy costs. It costs go down by half, miners will be incentivized to increase mining capacity (else their competition will) and as a result presumably energy consumption will double.
One of the main reasons why I dropped BTC.
"Getting rich" at cost of the environment (extremely high resource consumption)? No thanks, I'd rather leave that world for future generations.
I think the traditional stock market has significantly greater environmental externalities, even proportionally to net value.
Greed creates waste in all venues.
Greed also creates apologists and false equivalencies in all venues.
I think you're comparing apples and oranges here.
We're talking about just keeping track of who owns what amounts of a commodity. That part is using terawatt hours per year! I am very doubtful that the "keeping track of who owns what amounts" part of the stock market is anywhere near that.
One fairly-big sql database could do that.
Determining who has the rights to make changes to what data, auditing changes, auditing ever-changing access control rights, systematically changing these rules to adapt to technological advancements, etc. is the function which Bitcoin accomplishes that you are discounting from your perceived cost of the traditional stock market.
I very much doubt that. You have a source?
The financial sector is 20% of global GDP. Bitcoin is much less than 20% of world carbon emissions.
Further, fiduciary duty of corporations to maximize shareholder profit has led to almost every environmentally harmful exploit of externalities. I'd argue that the stock market is fundamentally responsible for 99% of all pollution.
Financial sector does not produce 20% of carbon emissions. They are maybe 0.1%. The act of trading on exchanges is significantly more efficient than the act of trading on blockchain. Because there really is no need for an untrusted ledger when there is the USG certifying that the NYSE and NASDAQ will not execute erroneous trades.
Bitcoin does not eliminate the idea of fiduciary duty. Bitcoin holders still expect bitcoin loanees to trade and operate in their financial interest.
> Because there really is no need for an untrusted ledger when there is the USG certifying that the NYSE and NASDAQ will not execute erroneous trades.
What is the emission cost of the system which enables this functionality?
for processing/validating transactions? couple hundred MWH. How much do you think the Nasdaq/NYSE mainframes really eat?
bitcoin numbers don't include the off-chain stuff either, lol.
Bitcoin energy is literally expended on a massive, inefficient mainframe that processes a couple hundred transactions a second. That's all - everything else is additional to that.
No, what is the cost of the system which enables the USG to reliably prevent the execution of erroneous trades?
Tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges, etc.
Obviously the purely digital systems consumes more compute, but I think you're discounting many of the true costs of the existing system.
The system doesn't just enable the USG to reliably prevent the execution of erroneous trades.
If you think that tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges are there just to prevent erroneous trades...
It seems that you are discounting a vast amount of things that the system does besides preventing the execution of erroneous trade.
Yes, I am being superlative. However the traditional system would not function without all those parts - bitcoin effectively accomplishes many of these functions with compute alone, while traditional stock market uses compute for a much more limited scope. I simply want to point out this vast discrepancy in scope of comparison.
I have similar feelings, but if you apply this attitude uniformly it's nearly impossible to participate in the economy at all, since it's mostly riding on fossil fuels in one way or another.
At least with bitcoin you could theoretically throw up a pile of solar panels and directly convert that clean electricity into money.
Same here but I left because of the high transaction costs and low anonymity. I prefer privacy coins. Only problem is not many people use the smaller market cap coins for buying/selling stuff.
At current difficulty rates, what is the profitability formula for cost of electricity versus hashrate?
example: if you aren't getting X Mh/s @ $Y kw/h, it isn't profitable?
There are various calculators that can do this for you and you can easily try different scenarios. https://btc.com/tools/mining-calculator https://www.nicehash.com/profitability-calculator/bitmain-an...
Depends on the hardware, mining difficulty, block reward. Right now? Something like 0.15 per kw/h is the break-even point, and if you're not getting below 0.10 you won't get the cost of your hardware back fast enough
In other words, you should mine if you're in China where you can get those rates
to add: china often pays zero, because they're bribing local officials to ignore their bitcoin farms
Pays zero what? They have to buy the hardware so I assume you mean electricity, pretty sure bribing allows them to operate, it doesn't cover electricity costs.
pays zero electricity costs, yes. A couple grand a year can buy you all the electricity you want. tens or hundreds or of grand per year, or millions. A couple grand is a lot in terms of China salaries.
https://www.theguardian.com/world/2019/jul/12/chinese-police...
http://www.scmp.com/news/china/society/article/2143758/chine...
https://www.ccn.com/chinese-police-seize-600-bitcoin-mining-...
http://www.scmp.com/news/china/society/article/2108486/four-...
https://kyc360.com/article/bitcoin-causes-electricity-crisis...
you'll never find a systematic article on it, but these aren't the first or the last incidents.
they also pay much lower hardware costs than the US does, because it all happens off the books. Chinese mining farms with internal hardware/super cheap power are nothing new.
china doesn't and never has played fairly in terms of hardware or power costs. crypto as a whole has been embraced because it's a good system to move value past chinese capital controls, you just are getting your beak wet as that money moves.
just like those 2 million dollar houses in vancouver or whatever. Sure, it's great to be trading in that current, or providing property management services, or to be holding the asset as it's pumped up by that money moving under the chinese capital controls!
I'm not "smart enough" to calculate that acurately, but if the "cost per transaction" is high enough to get a couple of articles written about it, I won't participate into that.
I'm more worried about humanity having a future.
Do/Will you also not have any children? Because that would probably make a better impact than not using Bitcoin.
Wow that's really noble of you, have you considered logging off permanently and living in a tent in the woods? You realize none of the world's problems ever get solved if you bury your head in the sand and ignore things right? I mean we could all go back and start living in caves again, that would certainly solve the climate crisis wouldn't it?
To put this in perspective, Bitcoin's 73.12 TWh annual energy consumption is enough to power over 10 million electric cars each driving 100 km (61 miles) daily, every day of the year.
This is obviously a problem if you expect small or even medium-sized transactions to be recorded on the blockchain itself.
It's less obviously a problem if the blockchain is able to function as a "trust anchor" for additional protocol "layers", e.x. Lightning Network.
TBD whether that actually works in practice at scale, but I believe it's Bitcoin's only hope.
This seems completely outrageous to me. I had seen similar numbers thrown around casually in the past but still found it hard to believe to be true, (despite being pretty bearish on Bitcoin myself). This seems to provide some pretty detailed evidence, analysis and validation directly addressing criticisms. It seems pretty thorough.
Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Is Bitcoin figuratively, and almost literally, a tire fire?
(Edit2: I interpreted your use of "outrageous" to mean surprising or unbelievable. If instead you meant inciting to outrage, then I agree, it is.)
My opinion is that if you find this outrageous then you don't understand the core principles of Bitcoin. The difficulty of mining a block on the network goes up with the amount of mining being done to maintain a constant block mining rate.
There are massive bitcoin mining warehouses in China, and for each one that opens all of them are less effective at mining, but still consume the same amount of energy.
So, yeah, it's pretty much a tire fire.
Edit: to add to this, many industries can use technology to produce more value with less energy. Bitcoin is fundamentally unable to do this for the same reasons I mentioned above. When bitcoin specific mining hardware first came out, it briefly gave an advantage to the first people to have it, but then the advances were completely neglected when they became widespread.
To summarize your excellent summary: bitcoin wastes energy by design. It cannot keep all the “features” it’s supporters value without wasting energy.
Proof of stake sort of solves this. In theory those with the most money can spend the most on mining equipment and get the biggest payout. Proof of stake short circuits this and just gives the biggest payout to the ones with the most money.
I'm afraid that the moment you chose to use the word "wasteful" it became a philosophical discussion and they don't typically have final words at all.
The stripped down reason you see it as wasteful is that you have some set of beliefs about what is "right" and "meaningful" (many of which, I'll take liberty to say, most likely likely NOT consciously thought out) and since the core technical principle behind Bitcoin is simple enough, it's easy for you to see it does something that seemingly does not contribute to the fulfillment of what you consider "meaningful" (i.e. performing tons of computation that essentially compute nothing "meaningful").
Technical principles behind markets, industries or your own existence are not simple enough, so you cannot see through them and decide at a glance that they are "wasteful". And since you generally avoid falling into philosophical discussions (rightfully so), this is good enough for you. This doesn't mean that they achieve something that will turn out "obviously meaningful" to you (I'm cynical enough to assume they actually not), it's all just too complicated to tell at a glance.
If this is all too abstract, I'm saying that Bitcoin is actually doing something, and this something is much more complicated than the technical principle you can easily see behind it. You should take this into consideration when thinking about what this giant CO₂ emitting machine actually is. It is not a machine for computing hashes, as it might seem from a purely technical perspective.
Bitcoin is absolutely wasteful to the vast majority of the population on earth. It provides no benefit to them, and makes their energy bill (and video card bill) go up.
But the same could be applied to almost any consumer product. My kids want to buy these crappy plastic toys at the supermarket, wastefully packaged and shipped from China, of no-use to anyone yet energy is expended to design, make and ship them internationally. And this is just one consumer product from China. Have you seen Alibaba offerings of late?
There isn't a person on earth mining bitcoin with GPUs.
Tons are mining alt coins with them. These stories never include the rather sizable market for alt-coins, almost all of which use the same energy-sucking design that bitcoin does.
I’ve never seen an article like this for the entire crypto space as a whole but I imagine it is much, much worse.
No, energy expenditure for bitcoin mining is larger than that of all altcoins combined. Despite the considerable technical innovations of some altcoins, bitcoin remains king in this world for now.
The energy consumption of the next closest altcoin is almost an order of magnitude less even with ASICs. After that, you'll find the security model of almost every altcoin to be total garbage (low energy consumption).
The increased electricity demand may drive research funding resulting in more efficient energy production.
LOL. Sure, but that is only being done because bitcoin gobbled up all the electricity that could have been used doing useful things like running data centers, smelting aluminum, air conditioning homes, etc.
Bitcoin is a drain on the electrical system. You are basically arguing that it is okay to litter because it will create jobs and spawn new anti-litter technology.
Doesn’t work that way, sorry.
I'll shutdown my bitcoin mining operation if you shutdown your AC. I find 21c living to be incredibly wasteful and a luxury only offered to those blessed to be born in the first world.
This type of argument goes nowhere fast.
Of course I can see. People’s sense of entitlement means we are all doomed. Mass extinction is always someone else’s fault, not my problem.
Please turn off your computer. You're wasting watts shaming first world folk. Go convince the 3rd world to stop burning trash and making babies. Oh, right - they'll stop by themselves when they reach your level of wealth.
That electricity could not always have been used to smelt aluminium or whatever else you suggest. Some of that power is hydro based and cannot travel a significant distance. You can move bitcoin mining equipment closer to power sources much more easily than you can move an aluminium furnace and supporting infrastructure.
Or you could say Bitcoin is wasteful because PoS accomplishes the same thing with 99.99% less energy.
Oh, does it? Does it accomplish all the speculation, all the drama going on? All the drug deals made with Bitcoin, all the kids that became rich out of nothing because they played with some obscure technology 10 years ago? I'm pretty sure you don't know everything Bitcoin accomplished (or maybe still does). Neither do I, nor anyone.
To be clear: if you ask my opinion on technical side of Bitcoin, I wouldn't be really praising it. But, as I said already, Bitcoin is not a technical thing. It is a very complicated sociocultural phenomena that definitely did achieve something. And you need to consider everything X is, to apply words such as "wasteful" to X.
Again, if this seems too abstract: if you are living in the USA, you are consuming twice more energy (per capita) than Japanese people, having lower life expectancy (both are far from the ends of the spectrum, BTW). So, the existence of USA citizens is wasteful.
Now, doesn't stripping down all the nuance of living different lives in different countries seem a bit outrageous to you? It surely does seem so to me.
PoS opens up new threat models concerning the tyranny of the majority.
PoW utilizes the honest indicator of un-forgeable expense to mitigate this class of risks.
A class of risks that the normal financial system doesn’t have. My bank doesn’t expose me to “double spend” attacks.
I don't know. My bank "double spent" a hundred bucks the other day, that took them half a month to return.
There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks.
I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
Yes they absolutely do. Someone buys something from you and then they reverse the payment. They go on and buy something else with the same money. Reversible payments are a huge issue for online merchants.
At the cost of 2 trillion a year. Or 1 trillion if if you only count service fees and not liquidity.
https://www.mckinsey.com/~/media/mckinsey/industries/financi...
Care to actually quote where the banks are spending $2 trillion a year to stop double spends?
The world is. There is no engineering reason why it’s so expensive to move numbers around in a bank.
In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
Dude. That $2 trillion is all of finance. Finance is a hell of a lot more than preventing double spends (which don’t exist outside of bitcoin). On a per transaction and even global domestic product basis, the cost of our financial system is tiny. By comparison the cost of bitcoins financial system by any metric is astronomical.
Read the report, it's 2 trillion of revenue for payments only, not all of finance. That report doesn't cover trading, derivatives, mortgages, etc... 1 trillion of payments revenue comes from credit lines, about 1 trillion is fees moving money around.
Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions.
There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either.
So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
Fraud is absolutely a big deal in banking.
Thankfully many types of fraud can be reversed in our modern financial system. With bitcoin, virtually any form of fraud leaves you completely fucked with absolutely no recourse.
Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
You're discounting the costs of maintaining system which allows fiat to keep it's value: 20% of the value of human productivity is spent maintaining the financial system.
Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
> can be reversed in our modern financial system
It's not like it is free to have a system like that!
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful?
The carbon estimate seems very poor.
> Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining.
The reason many miners are in China is that they can access cheap off-grid renewable sources of energy there, such as excess hydroelectric, so using an on-grid CO2 estimate doesn't work.
I love when bitcoin promoters claim that bitcoins massive waste of energy is okay cause “it’s totally renewable”.
Setting aside the non-trivial ecological damage caused by dams.... all that renewable energy could have been used to power something that actually adds value to society. Instead it is getting flushed down the toilet solving useless math problems so that a relative handful of people can milk a larger set of rubes for all their money. Oh, and enable criminals to continue their criminal behavior....
I don't own any Bitcoin and never have, and am not especially fond of it.
> Setting aside the non-trivial ecological damage caused by dams..
I don't think anyone is claiming that the dams were built to mine Bitcoins. The power generation was provisioned to power towns, but it is generating more electricity than the towns can use or profitably transport away.
> all that renewable energy could have been used to power something that actually adds value to society.
There is a market to buy the energy. If anyone wanted it for basically any other purpose, the price would increase and the miners would presumably go anywhere else in the world with overprovisioned renewable energy, so that their profit can be preserved. Mining doesn't have many requirements: it doesn't even need to be on-grid. It's created an arbitrage market for cheap electricity, and people will search out the cheapest electricity in the world to use for it. By definition, the cheapest electricity will be the least wanted.
> all that renewable energy could have been used to power something that actually adds value to society.
If the miners are using excess production, then by definition, that power could not have been used for anything else; otherwise, some consumer in the grid would have used it!
And you say they are using “excess energy” based on what? What is “excess energy” anyway?
Haha, so naive. In a perfect economy, yes. In the real, world, in China. Good luck.
It's written in the page that they're Carbon Emission Footprint are totally biased and flawed:
> The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid
You just need to read.
I've thought of a good way to put this perspective.
The block reward is 12.5 BTC (and fees are neglible), which is $100000. There's a new block every ~15 minutes, which means 35000 blocks per year. ($100000 * 35000 / 73 TWH) = $0.048/KWH. So miners spend at most $0.05 per KWH on electricity. Assuming they spend 60% on electricity, they spend ~$0.03 per KWH, so not an outrageous price.
The problem is BTC grew too big too fast. The block reward is very large, but once it drops to the magnitude of fees ($2000 / block), we'll probably see a decrease in the energy usage to the (perceived?) value of decentralized payment system.
Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
>Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
Which will disproportionately hurt the poor.
That's why some people suggest rebating the carbon tax as basic income.
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Its not the final word, but it is something to vigilantly monitor in case the following changes:
Most bitcoin energy use is from mining, and that mining uses renewable energy or energy waste byproducts. Source: my experience with mining companies that don't publicly disclose how they do this profitably.
So for now, try to corroborate it yourself. I would say that 70-80% of bitcoin mining is not a wasteful use of energy and that merely estimating the energy numbers doesn't tell you anything about the source. What I mean by "not wasteful" means that it isn't pulling away from another use of energy that was ever going to happen.
This wasted energy is usually in the form of byproducts around other power facilities that cannot be economically converted and transported to residential and commercial areas. This is where bitcoin mining shines: Bitcoin mining does not need a robust internet connection and does not need to occur in residential or commercial areas. A computer with a satellite connection can submit hashes to the bitcoin network, and pools further make it practical to have lower latency, because they merely pay out based on your contribution to the pool.
So miners that use energy waste byproducts (converting those byproducts to electricity at the source and taking transformers there) often times are doing a favor to the power company or whoever is there.
What to monitor: if nation states start competing over power of this network, they may disregard the economic feasibility of doing so, and then it will be incredibly wasteful uses of electricity.
Bitcoin Core is 100% a tire fire, Cryptocurrency, like Ethereum and Bitcoin Cash are on the other hand killing it.
Perhaps look at it another way: this is what people will pay to avoid tyranny.
Well, the bad news is that this method is unsustainably expensive, then. And it also fails the test of avoiding oversight, so...
More like to choose a different tyrany.
That's not an accurate statement, since the pollution costs of Bitcoin are an externality not being paid by the people using it. It's more like Bitcoin users are dumping costs on the unconsenting public to avoid the "tyranny" of AML/KYC banking regulations.
That's great, but you could argue that AML/KYC has pollution costs of a different nature in regards to personal liberty. Whether or not they do me suggesting that is about as baseless as suggesting bitcoin has huge negative externalities.
Without explicit evidence of a market failure it's probably fine to assume that negative externalities are factored into sticker price of goods as the opportunity cost of product X eventually must take into account those externalities as applied to everyone.
Yes, in these sense laws against theft "pollute" the personal liberty of thieves.
How are KYC laws against theft...?
They're literally there to prevent money laundering and other financial crimes.
Those don't sound like theft. KYC is supposed to make it easier to trace money, ostensibly if used in crime. But doing this before any crime has occurred seems like a violation of the 4th amendment, and probably only passed constitutional muster at the time because the laws force a nongovernmental entity to infringe on your rights.
The problem with KYC and banking laws are that you can prevent anyone from conducting business for any reason. They've not seen abuse per se but people have been caught up in them with no recourse. Their application in reality may see them ruled unconstitutional.
Bitcoin, then, is just a correction in the other direction. Because face it: large financial institutions still facilitate money laundering, just not for small people.
There is no constitutional issue.
No one forces you to have a bank account, just like no one forces you to have a driver's license - which also involves giving up some rights, btw.
Alright, that vein of arguments are the biggest cop-out ever. It's like trying to say the 4th amendment doesn't apply to houses because no one forces me to have a house.
The constitution recognizes the inherent right to be secure in your personage and effects. This should include your financial information.
I think it odd that people accept the abrogation of their rights w.r.t. driving. Yes, the government can definitely tax you for road use, but imagine having to carry an ID around that proved you paid your income tax, and that you were required to be IDable at almost all times to be sure you were not committing tax evasion.
Indeed.
Cost of running this public tamper-proof database is $4B + Personnel + Amortizing cost of ASIC Forms, Say $6B
Where does the money come from? This Database isn't selling any service to Enterprise or Government or Public to get revenue. So, the $6B money has to come from Bitcoin holders or new suckers.
Every year it has to get $6B new money just to maintain the current value of Bitcoin.
A bitcoin miner is in essence a kind of inside-out electrical meter: It measures, with remarkable precision, how many electrons (bundled as SHA256 operations) you burn to support the network finding a block, rather than how many you bought, assuming you even bought them at all.
The question is not how many you burned, which is what the mining algo answers with such precision, but how much you paid for them in the first place, which it can offer no insight into.
Some possible shortcuts to paying retail prices for electron mining fuel:
1. You're a large business power customer and pay vastly discounted rates on a contract basis.
2. You're stealing some or all of your power, either by pirate wiring or by paying some official to look the other way, or a little of both.
3. Your mining operation is a pork barrel project with funding secured from your local government's (either clueless or remarkably pragmatic) business development office. Sometimes there may be a legitimate exit plan for this, like repurposing the new datacenter facility you built, after wringing every mining penny from it possible, to host cloud services or as the core of some government-sponsored technology park.
4. You may have been mining quite along time and now have enough early coin held back from the $100 days to slowly sell off into the retail market at 80x profit, or borrow against. It may even be that this reserve of held back coin is partly responsible for the thin liquidity in the market, and consequent bubbled-up price.
5. You publicly, or covertly own or have an interest in one or more of the mining pools and public exchanges, and retain a share some of the Tx and conversion fees which helps subsidize the mining costs.
6. Same as above but for mining rig manufacturers and fabs. Mine on newly manufactured chips for a few days or a week before shipping (for 'testing' purposes ofc) and you get to stay ahead of the difficulty curve as well as get free subsidy from your own customers.
Darkweb, murderers, VCs and drugpeddlers can help run this network of "decentralized futuristic currency" or whatever buzzcrapwords people use for Bitcoin ...
Wasteful compared to what though? How much energy, human capital, and resources are consumed by the banking industry?
If (and big if) bitcoin is able to replace a significant fraction of the banking industry it will be extremely efficient in comparison. Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
> Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
This idea has been around the corner for a while now. How likely is it really, how long will it take, and what will adoption look like? Until it happens and is popular, it seems fair to discuss how much a Bitcoin transaction actually costs...
It's up and running now: https://bitcoinvisuals.com/lightning
Too bad lightning network requires bitcoin at the on and off ramps to function. Those transactions alone would kill bitcoins pathetic transaction rate if the ecosystem ever took off.
Here's an apples and oranges comparison.
According to the article, bitcoin consumes about the same amount of electrical energy as Austria, a nation of 8,857,960.
According to Bureau of Labor Statistics, ~8.6 million people are employed in "Financial activities" in the US.
BLS: https://www.bls.gov/emp/tables/employment-by-major-industry-...
I mean, the article lays out the energy costs of competing transaction processors. But if Bitcoin is just a clearinghouse for large-scale reconciliation, then... who is the audience exactly? Large banks that have to operate using real money under actual governmental regulation have no use for Bitcoin's naive guarantees, which pretend that the court system and human ambiguity don't exist.
> Wasteful compared to what though? How much energy, human capital, and resources are consumed by the banking industry?
The article actually answers this to some degree. See the following graphic: https://i.imgur.com/8TdKevG.png
As others have commented, per-transaction is a very misleading metric. Hashing difficulty is based on the number of other miners and time between blocks, not based on the number of transactions.
With something like lightning network, a single Bitcoin transaction can facilitate millions of 'lightning' transactions.
> As others have commented, per-transaction is a very misleading metric.
Can you name a better metric that we can measure?
Well, what do you actually care about? Why choose, for instance, cost per transaction instead of, say, cost per USD (or equivalent) transferred?
I like cost of electricity. While Chinese plants are subsidizing the BTC network right now, we can estimate the cost of "unsubsidized" BTC in the future based off of electricity costs today.
--------
With regard to the Lightning Network, it seems that it requires a bit of supervision to be secure. https://themoneymongers.com/lightning-network-watchtowers/
That supervision probably will have a cost of some kind.
> You can hire watchtowers nodes for a fee and design the revocation transaction in such a way that the watchtowers will also receive their service fee when you get funds of the other party as a penalty.
So we're adding many, many more middlemen to the picture. Not only do we have to pay for the final transaction (which requires a large amount of electricity to be "mined" into the blockchain), we have to hire watchtowers to ensure that our Lightning Network transactions remain correct even if our counterparty tries to screw with our transaction history. (Remember: the full transaction history in the Lightning network is off-chain).
It should be possible to build watchtowers into the protocol itself. A lightning node could elect some number of random nodes as watchtowers at bootup, similar to how many clients now elect random channels.
Being a watchtower is extremely low cost, it only requires a small amount of memory. Every full lightning node is watching the blockchain anyway so it is easy to watch for some extra transaction ids with a certain prefix. Transaction IDs are sufficiently long that only part of the txn ID (half) needs to be shared with the watchtower. The tower can only decrypt and send the revocation txn once the malicious txn is broadcast, and the watchtower reward can be built in to the revocation txn.
> watchtower reward can be built in to the revocation txn.
How much will watchtower rewards cost?
The economics aren't fully studied. But I'd expect a good watchtower would be proportional to the amount of the transaction. That is, if you wanted to protect a 100 BTC transaction, you'd want to spend more on the watchtower reward than if you wanted to protect a 1 BTC transaction.
Hypothetically, if you spend too little, the watchtower + your opponent can collude to effectively steal some of your money. (Ex: the Watchtower could be paid by your opponent to NOT send the revocation message).
The reward can still be low because you can choose many watchtowers. If you have a high value channel, you could choose for example hundreds of watchtowers. Only the first one to broadcast the revocation would get the reward.
The reward only has to be high enough for it to be worthwhile for other nodes to spend a small amount of memory storing your txn.
What's the point of being a watchtower if only one watchtower gets the reward?
In the case of 100x watchtowers watching one transaction, each watchtower only has a 1% chance of actually getting the reward.
It's true, I believe the low probability of getting the reward is the greatest flaw with the watchtower reward scheme. Not just if you have many watchtowers, but the likelihood of a peer attempting a channel breach in the first place esp. when watchtowers are in place would be extremely low since that peer is almost certainly assured to lose money.
There are some services currently providing watchtower for a flat fee instead, and the going rate is low (1 satoshi / txn watched) =~ $ 0.00008
How much energy to mine an ounce of gold?
Since gold bullion isn't legal currency anywhere, I'm not sure it's the most relevant comparison.
From the US Mint's financial statement [1]:
2017 cost $13.5 million dollars in "Communications, utilities, and misc charges", which presumably is the bucket that electricity bills falls under. There's no breakdown of overhead between currency coinage production and bullion/numismatic production, but the manufacturing obligation suggests that currency is roughly ⅕ of their total costs, which suggests that we might ascribe about $3 million in utility cost to produce coinage. The coins themselves were worth about $870 million, which suggests about 250 kJ (or 0.07 kWh) per $1 of coinage if we assume the Mint pays $0.05/kWh. I'm not including the energy cost of metal production itself, because I don't want to spend the time to track down that information.
[1] https://www.treasury.gov/about/budget-performance/CJ19/23.%2...
> Since gold bullion isn't legal currency anywhere
Neither is Bitcoin, so it should be a perfectly valid comparison?
This is a good relevant question. Both are easily verified, impossible to duplicate, convenient value density, and (!) production correlates to increase of total world economic value.
As such, the question is interesting: how much energy required to produce one new ounce of gold? vs one bitcoin?
Why is this getting downvoted, I'm curious as well.
I don't think any modern currency is really using Gold these days. The cost of creating dollars is basically the cost of the Fed signing a few papers. A lot of modern currency is fully virtual.
So I don't think "mining gold" is an appropriate analogy.
EDIT: Case in point: how much did it cost for Visa + Bank to increase a credit-card from $500 credit limit to $2000 credit limit? $1500 of credit appeared out of thin air.
I think your Edit example actually points to the root of the issue with these comparisons.
The first credit limit increase "from scratch" costs hundreds of billions of dollars in creating a system of legal compliance, accounting, communication, internal and external risk management, executive compensation, regulatory oversight, credit ratings, cybersecurity, salaries of millions of workers, building public trust in the credit system, writing and passing legislation, even Fed responsibility of building and maintaining a fiat currency.
The second credit limit increase once this system exists is essentially free.
To what extent do these costs need to be accounted for in creating an accurately comparable 'per transaction' metric? By replacing much of the logic with 'just math', Bitcoin has the potential for a much higher theoretical efficiency than the current banking system. Whether market penetration will ever reach the current banking systems levels - and function without replicating these same structures - is certainly highly debatable and for many of the above items implausible.
Bitcoin transactions in isolation are also essentially free - it's the maintenance of the system which keeps it secure and trustworthy that is expensive.
This is a different metric akin to mining a bitcoin. Making a transaction with gold can be carbon neutral, it would seem to me.
Bitcoin physically cannot scale to replace any substantial portion of the financial industry. That is a primary design feature of proof of work systems.
It's this wasteful at this level of scaling. That only gets worse.
There’s no indication I’m aware of that Bitcoin is removing any labor or equipment from the banking system. So far all I’ve seen is traditional banking layering crypto on top.
There's nothing fundamental about this state of affairs. We're simply early in the adoption curve: the network of services around fiat is larger than the one around cryptocurrency, so to use cryptocurrency effectively you have to connect with fiat.
The infrastructure required for functional cryptocurrency usage in society is far smaller than for traditional money, so with enough adoption to supersede fiat, there would be efficiency gains.
Remember, we used to need the phone network to connect to the internet. 30 years later, the trend is reversed and it's telephone that we layer on top of the internet.
it's cheaper to transfer Bitcoin and immediately convert to fiat than to do a wire transfer from overseas. Then you're using the home banking system like ACH in the US and SEPA in Europe
Wires cost me $50+ because of intermediary banks, even if I don't pay anything at my own bank, someone is getting a big cut.
Don’t companies like TransferWise already do international payments electronically without the need for a blockchain? I definitely support lowering the amount of human labor required for payments, but I don’t see the need for many coal plants worth of computers randomly hashing a bunch of junk over and over again when a normal efficient server can do it.
Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human, so it seems like the human labor in the banking system is a regulatory issue, not a technical one.
Maybe to sign up, but to actually make trades it's just taking orders off the book.
Sure, but why do I need a blockchain for that? Can’t the service trusted by the government to enforce KYC regulation also run a normal commodity server to process transactions, without burning the earth?
> Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human
I'm curious - what did you have to write? Is it just part of proof of identity, or something more?
Usually the date and name of the exchange, to comply with "Know Your Customer" regulations and fight duplicate accounts.
It is only cheaper today because the price of those traditional transfers are set artificially high. Make no mistake if banks had real competition for inter-bank transfers you’d see the price drop to near zero.
It's not just the banking industry that trustless cryptocurrencies can do without, but also the whole infrastructure necessary to maintain the value and trust in fiat money.
This encompasses a very large part of the responsibilities of the political system, army, secret service, ...
Those cost centers can't be ignored if the goal is an honest comparison between the energy efficiency of bitcoin vs. fiat.
A footnote says:
> The assumptions underlying this energy consumption estimate can be found here [1]. Criticism and potential validation of the estimate is discussed here [2].
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
FWIW, [2] doesn't seem to offer substantive criticism at all. It mentions a couple independent verifications of the numbers in [1], with one complaint (from a very biased party) whose claims are not sourced.
This pretty much lines up with what I've seen in all Bitcoin energy use debaters: the evangelists insist the numbers are all wrong, but never really provide any evidence to that point.
New Dark Forest theory: The universe is teeming with alien civilizations that have survived The Great Filter ...but they all built Dyson spheres around their respective stars to harness the maximum amount of energy for mining cryptocurrency.
Now they pass the time counting their money until their stars burn out.
If only governments and corporations did not insist on limiting people's freedom to trade freely and anonymously we wouldn't need that. Just make trading and privacy fundamental human rights like air breathing is and huge amount of energy will be saved.
Didn't realise cash was suddenly outlawed
C'mon, it's 21-st century, we need electronic cash we can send to a person we don't know instantly with a press of a button without revealing ourselves. We could use more traditional banking if only anonymous accounts were legal and banks were banking secrecy was guaranteed.
I've never bought anything illegal (but some weed perhaps) yet I feel very uncomfortable every time I have to share my personal details with any party.
I also want anonymous P/O boxes.
I just bloody don't want any party to track me nor tell me what I am and what I am not allowed to buy (unless it's a weapon of mass destruction or a human slave and there are other ways to bust people selling these).
Don’t worry it won’t be suddenly outlawed but all the governments will gradually outlaw it as it directly threatens their power. I hope somebody manages to release a conscious AI before they manage to completely outlaw it, otherwise it will be very hard to fight against tyrannical governments.
India suddenly demonetized a large portion of circulating cash without warning.
https://www.theguardian.com/world/2016/nov/08/india-withdraw...
Already, businesses in the UK that accept cash payments worth over €10,000 must register with HMRC as a "high-value dealer". In France, it is illegal to perform a cash transaction over €1,000 (yes, one thousand). And the same is true in Italy.
In the US, if the cops notice you have large amounts of cash in your car during a "routine traffic stop", they will take it from you on the basis that you must be a drug dealer.
> Didn't realise cash was suddenly outlawed
First: it absolutely is being outlawed, slowly but surely. The US is not yet fully there (although: try to buy a 1M USD house cash and see what happens), but most EU countries are fully there.
Second: Try and wire a large sum to your brother who happens to currently be stationed in disreputable country X or Y, and see what happens. Or mail him a box full of cash. See what happens.
>"Single transaction footprint: Equivalent to the carbon footprint of 742,348 VISA transactions"
One thing is clear, no matter how far blockchain technology progresses, proof-of-work will never reach the efficiency of a trusted intermediary.
Iceland using more electricity for bitcoin mining than for its households is interesting, but at least it's a greener energy:
https://qz.com/1204840/iceland-will-use-more-electricity-min...
but reopening closed coal power plants for crypto mining is more worrying:
https://qz.com/1250980/an-australian-coal-power-plant-will-r...
This does not seem to include transactions on the Bitcoin Lightning network which are transaction that are handled offchain so they are not included in blocks. I don't have the exact number of lightning transaction ocurring but it is the Bitcoin Core developers' plan that the scaling to thousand of transactions per second will and should take place on the lightning network (this is where they differ from their competitor Bitcoin Cash which is aiming for bigger blocks and onchain scaling). Bitcoin is still a technology in its infancy ten years after being started.
Because they basically don't exist. How many Lightning transactions are there per day?
> Bitcoin is still a technology in its infancy ten years after being started.
Meanwhile Apple introduced the first version of the iPhone, completely transforming the mobile landscape.
Meanwhile, Uber and lyft upended the taxi market completely.
Meanwhile, we have private companies sending payloads to the space station
Meanwhile, electric cars are increasingly becoming mainstream.
In what possible way can you claim bitcoin is “in its infancy”?
The market cap of Bitcoin is above 120bn USD, less than Apple and Facebook but more than Netflix. But that is still only about 0.1 to 1 % of its potential. So, big but in its infancy.
Besides it being completely different in other ways, the market cap is not value. You couldn't realize a tiny fraction of that without tanking the market cap.
The opposite also applies: You couldn't buy up a large proportion of Bitcoins without the price skyrocketing. Prices are determined at the margin, what the marginal seller (probably miners) will sell for and what the marginal buyer will buy for. They are the best measure of "fair value".
Bitcoin is another wonderful example of trying to solve a people problem with technology.
A complete and utter waste of resources, which at best fills a gap while the actual problem remains unsolved.
Although interesting in its own right, Bitcoin's energy consumption is in no way a good basis on which to judge its social value.
Bitcoin is fundamentally an asset. A useful analogy is to think of it as gold. Gold can be used to make payments, but it is not convenient. Same goes for Bitcoin. But they are both useful as a robust way of storing value.
Maintaining the Bitcoin network costs energy, but almost nothing else. Given Bitcoin's price history, it's safe to assume that Bitcoin's total energy cost is a tiny fraction of its current market cap of around $150b. Now compare that to the social costs of protecting gold, which probably has an over $7 trillion market cap. Wars were fought and lives lost for its ownership.
In conclusion: a large and liquid crypto asset like Bitcoin provides a much more advanced solution of value storage and transfer than traditional physical assets. Its net social benefits should be orders of magnitudes higher than its energy expenditure.
Bitcoin is an ongoing environmental disaster, profiting off of subsidized coal power in China and elsewhere in the world. Millions of people die every year from air pollution.
But on the other side, hey blockchains are so cool they can do the same work as banks but six orders of magnitude less efficiently.
By that measure, the problem is the pricing of energy, not Bitcoin.
Doesn’t work that way. Bitcoin’s block reward system is designed so that the systems energy consumption costs are basically some percentage of the price of bitcoin. The higher the price, the more energy used. Drop the price of energy, and all rational miners will just buy more hardware. Why? If they don’t, their competitors will and the odds of them getting block rewards will go down.
I'm arguing the opposite -- if energy cost more, less energy would be consumed by Bitcoin.
That's not Bitcoin's fault though.
Otherwise, we could also argue that iPhones are a humanitarian disaster.
Cryptocurrencies provide benefits that banks do not provide. That's why people use them in the first place.
Or $68/transaction supposedly if electricity cost at 11 cents per KwH is used. Actual transaction fees run around $0.20 for on-chain which implies either math is wrong or per block reward is sufficient still (total blocks I believe are fixed with increasing difficulty).
Does this analysis take into account secondary network transactions? For example wire transfers are relatively expensive to process still, but are often used to settle huge volumes of things like ACH payments, nightly sweeps etc.
Transaction costs are currently being socialized across all holders. The block reward is sold to pay the power bill creating downward pressure on price for everyone.
I wonder how that compares to mining various precious metals.
Quite arguable numbers that seem to be used to drive traffic to this site rather than do a proper scientific report like done by the University of Cambridge https://cbeci.org/
The CO2 emissions heavily depend on the actual use of renewable which nobody can be sure about. In some cases like bitcoin mining using fuel that would otherwise cause CO2 emissions, you actual have a net gain. (See companies like https://www.upstreamdata.ca/)
So even by those arguable arguable CO2 emissions it's actually less than 0.1% of the world's total.
I wish people that have knee-jerk reactions about this, actual think about the big picture and what actually causes high CO2 emissions and offer way fewer benefits than censorship-resistant money.
The luxury fashion industry for example for a long time has had a big negative effect, from drying up whole lakes, to child labor to effectively destroying villages for what... anyhow.
The idea that bitcoin is 'wasteful' is entirely missing the solution that bitcoin is. Byzantine Generals Problem.
This network is unmatched in it's provability and security.
There is a turing complete machine, operating that can be trusted. Seriously, the possibilities are limitless but guess what, they do have a cost. And there are too many con-artists around. But an industry that is changing the entire monetary policy around world is very impactful. It's changing it and you'll notice in the coming years how much monetary policy is going to change. The grand experiment is about to happen. Are we going back to gold? Are we going to innovate a replacement that's better than crypto? How is 'money' going to function in the 21st century?
P.S. Proof of Stake is terrible in it's economics. If you think rent-seeking is good, then PoS is for you. It's not for me and I think it's terrible based on the game theory of it. Remember the 'We are the 99%' chants? Yeah, not going to go over well.
If PoS is rent-seeking how come PoW isn't rent-seeking?
In a PoW network (read Bitcoin), those that have the currency (satoshis/'sats') don't gain any more sats by just possessing them. The only way to gain more is from either those that have some or to mine more (until 2140).
In a PoS network, those that have the currency can "stake" their possessions to gain more. They don't need to spend in hardware/electricity to mine more. There is a built in function to extract currency.
One bitcoin transaction is not directly comparable to one transaction on other payment systems. One bitcoin transaction can represent thousands or millions of transactions. It isn't fair to say bitcoin requires this amount of electricity. Different people all over the world choose to spend electricity to try to find new bitcoin. The amount of new bitcoin is exponentially decaying to zero. It's like telling someone their gold jewelry uses up too much electricity because someone they don't know is spending electricity to mine gold. Some amount of mining is necessary for the security of the network. Most global endeavors use electricity, whether it is traditional finance or video games. Bitcoin mining believed to be one of the greenest industries (a very high percent of electricity comes from solar, wind, and hydrolelectric). This is due to some of the cheapest electricity in the world being from green energy in remote places (and bitcoin mining is extremely portable)
To put this somewhat in perspective, we can look at Wh/$
From the article, Bitcoin used 73.12 * 10^12 Wh and generated $5,749,979,074 in mining revenue
Googling shows that the US economy used 3.82 * 10^15 Wh and generated $ 19.39 * 10^12 in GDP
So bitcoin uses 12,716 Wh of electricity for every $ of revenue, and the US economy uses 197 Wh of electricity for every $ of GDP.
Some counter points to consider: https://www.youtube.com/watch?v=uvFqEofdAZ0
More nuanced: https://www.youtube.com/watch?v=iTelx_iGajE
I developed something that can help reduce some of these problems. The energy used to mine a resource trends towards the value of the resource. The resource in cryptocurrencies is the block reward + fees. One can reduces pollution by paying miners only transaction fees and not inflation. One further increase savings by utilizing an existing network, and employing time locks. More hashrate is not what matters most. Hashrate from honest, non cooperative parties is what makes the system censorship and collusion resistant. It's interesting to note that the people you "defend" yourself against in sha256 hashing are only the very same people you're paying, as only they have equipment relevant to attacking. On GPU and CPU mined algos, hash rate matters more as a larger set of humans can become attackers.
Shut it down.
Can a couple of these people agree that a well-coordinated merge & release to sabotage proof of work is ethical.
https://github.com/orgs/bitcoin/people
Even if you got a maintainer to commit and release code to disable PoW, you'd still have to get enough node operators to update, which... I doubt would happen.
You may not be able to be so forthcoming about the transition
You greatly underestimate the resiliency of the Bitcoin network.
That would be difficult to pull off. bitcoin code merges are highly scrutinized, and disagreements in blockchain projects just result in forks and new networks.
A better way would be a global ban coordinated among every nation, and even then that would be difficult to pull off.
Difficult to pull off, but they could make it happen.
The earned value would need to transition to the non-proof-of-work favoured network.
Turmoil would take care of the $ value of the forks (crypto confidence is rattled enough as it is)
Bitcoin appears to be highlighting the issue of how we price dirty energy vs clean energy. There is nothing Bitcoin miners would like more than for all energy have the correlated carbon tax associated with it in the price.
I don't think this makes even sense to account. Try to look at internets energy consumption as a whole and how much of it "makes" sense and provides real value - tranferring memes, DDoSes, ADs and so. Look at all animated websites - how needed is this "feature", what value it provides (usability? haha) and how much total energy it consumes in sum across all devices. I really "love" that Belgium uses city night lights on their highways - this is total nonsense. Compared to these, Bitcoin energy consumption makes complete sense.
Do your research on the guy who writes these articles.
Alex de Vries (blockchain hobbyist with no scientific / economics background who started digiconomist)
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
Oh yeah, and he invented this energy consumption index...stop letting yourself get trolled.
Personally I prefer to use the CBECI
https://www.cbeci.org/
Bitcoin is good for the economy because it encourages spending. It's better than having a electricity as a resource and not using it. Miners buy equipment which is income to the producer. Also increases employment in the power plant and the factory producing the equipment.
One transaction of bitcoin:
> Equivalent to the power consumption of an average U.S. household over 21.13 days.
Can someone tell me whether this is ever going to change? When the last bitcoin is mined?
Not even then, and that won't be for a while. Even though about 85% of all BTC have been mined, the process gets exponentially slower the closer you get to the final blocks.
After the last BTC is mined, miners will still presumably be able to profit from block transaction fees. That might help power a little bit since they'll worry more about being efficient with which transactions go into a block.
Block reward halves in about seven months, if the price doesn't go up, miners will start turning their rigs off.
Cannot the bitcoin developers put in a massive difficulty jump at this point? Just make mining useless.
It won't solve the transaction cost, but I thought sharding was supposed to help that, although I never bothered to learn about lightning network.
> Just make mining useless.
This would make Bitcoin useless.
> Cannot the bitcoin developers put in a massive difficulty jump at this point?
No, because the miners will continue to run the useful version (for some definition of useful). Changing the algorithm would require a hard-fork and a hard-fork to turn down the network will result in the "new" branch of the fork ... turning down, while the old one continues.
Why would people no longer mining make bitcoin useless? There's a supply of existing bitcoins that can be split to ludicrous degrees. Scarcity is already enforced by the difficulty, and a huge difficulty jump won't affect that.
If bitcoin can't survive without mining (which IIRC isn't related to transactional processing or any actual use of bitcoins), then bitcoin has a guaranteed uselessness point when the difficulty jumps exceed, I dunno, the output of the sun?
As for code changes, what is the lightning network about? Isn't that a code change? And if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take, then those coins would be worth much less.
I'm not saying the code change is easily done or even technically feasible. But it should be considered.
Bitcoin is immoral in the age of human global warming.
> Why would people no longer mining make bitcoin useless?
Because mining is what secures the network.
> which IIRC isn't related to transactional processing
Transactions are confirmed by being included in mined blocks. The amount of compute power burned to mine that block, and the following blocks, is what prevents someone from pretending a different transaction (moving the money somewhere else - a double-spend) happened first.
> what is the lightning network about? Isn't that a code change?
Software running on top of the existing mining network, although downwards-compatible changes were made to enable it. The downwards-compatible is key here.
> if every major exchange enforced the switch, and miners kept mining coins that the exchanges didn't take,
Then someone would make an exchange that still trades "original Bitcoin" and get rich, and the exchanges would go bankrupt.
More sensible and less controversial changes failed or resulted in splits (with the chain that remained downwards compatible being the most valuable one).
(Downwards compatible is the easiest approximation I can come up with for the much more complicated reality.)
I did not know mining was performing blockchain transactional comps. I thought it was a scarcity mechanism.
Thus BTC is a bankrupt idea, since it assumes geometric growth in energy/computation. Time to sell!
It makes no sense to me to put Bitcoin under different scrutiny than, say, Christmas lights, Netflix or the US Military. We need to decarbonize our energy sources, but Bitcoin or not is not the answer to how.
https://bitcoinist.com/bitcoin-mining-energy-consumption-us-... https://www.thesun.co.uk/tech/9062282/netflix-energy-crisis-... http://theconversation.com/us-military-is-a-bigger-polluter-...
Unrelated to the content itself, I like the inclusion and format of the Recommended Reading section, especially "If you find an article missing from this list please report it here, and it will be added as soon as possible."
For anyone that wants to promote a free-market cryptocurrency ecosystem, my suggestion is to look at the Stellar Foundation. Doesn't fill the earth with C02, and enables trades across borders
https://arxiv.org/pdf/1904.13302.pdf
only 2 nodes away from failing :)
Are the smooth raises and flat lines in the estimated values explained somewhere? Seems highly questionable if the hash rate is fluctuating.
How much would an average BTC transaction cost with proper carbon emissions pricing? Carbon emissions are already priced in Europe.
Bitcoin is China's way of exporting subsidized coal via the atmosphere.
https://www.buybitcoinworldwide.com/mining/china/#reason-2-e...
Reason #2: Excess Coal
Coal is the cheapest power source but also the dirtiest. It’s well-known that China has comparatively lax environmental policies. Major cities like Beijing are notorious for their high levels of smog, produced mostly by burning coal.
Energy producers can freely burn coal and use the energy for Bitcoin mining. Instead of physically transporting the coal, it’s easier and more cost-effective to establish a Bitcoin mining operation near a source of coal and convert carbon directly to crypto.
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
https://twitter.com/el33th4xor/status/623178828727361536
#Bitcoin enables Chinese entrepreneurs to export coal by burning it and using the energy to mine.
— Emin Gün Sirer (@el33th4xor) July 20, 2015
FTA:
Carbon footprint
Bitcoin’s biggest problem is perhaps not even its massive energy consumption, but the fact most mining facilties in Bitcoin’s network are located in regions (primarily in China) that rely heavily on coal-based power (either directly or for the purpose of load balancing). To put it simply: “coal is fueling Bitcoin” (Stoll, 2019).
https://www.wired.com/story/bitcoins-climate-impact-global-c...
Bitcoin's Climate Impact Is Global. The Cures Are Local. To measure bitcoin's contribution to global warming, you need to know where it is mined and where those computers get their electricity.
...
Not so fast, said county officials. They pointed to a different culprit: a giant coal plant halfway across the state. If energy from the dam went to bitcoin mining, they said, the county as a whole would wind up using more coal. In April, officials required all future mines to build their own renewable power.
Missoula County was on the right track, says Christian Stoll, an energy researcher at the Technical University of Munich. In a paper published Wednesday in the journal Joule, his team takes a closer look at the energy consumption of bitcoin mining, based on where miners are located and the types of machines they are using. “Coal is fueling Bitcoin,” he says. “The question is how to prevent it, and that’s up to local regulators.”
> convert carbon directly to crypto
That's the coolest phrase I've read today. What would someone from before Bitcoin think about that?
Superman can convert coal directly to diamonds, but their value is artificial too.
I read that some miners operate right next to hydro electric stations where electricity comes cheap, that would mean they are using excess energy that would have been lost in transit?
https://news.bitcoin.com/how-big-hydro-power-partners-with-b...
One could drive an electric car for nearly 2000 miles with that much energy.
small price to pay to put the vampire squids out of business
Define “transaction”.
>energy consumption of VISA offices isn’t included
if true Bitcoin needs to die, and eventually will under its own weight.
The traditional financial system is the root cause a significantly greater amount of pollution.
Here is the proposition: let's make an inherently deflationary currency suitable for black market transactions that will become even more polluting with every transaction.
CryptoKidz: I'm in!
But haters gonna hate, and downvoterz gonna downvote. what evs
A little late to the party, but here are my two cents.
First of all I also want to mention "Cambridge Bitcoin Electricity Consumption Index" (https://www.cbeci.org). In my opinion it makes better comparisons (https://www.cbeci.org/comparisons/).
The strongest hypothetical argument against the consumption is that Bitcoin incentivizes green energy. The mining operation is mostly interested in one thing: access to the cheapest electricity possible. Currently China is still subsidizing electricity, which has attracted a lot of Chinese miners and apparently is tolerated by the state.
But in the longer run I believe that Bitcoin will be the thing that will allow investments into green energy on a big scale. This is currently only happening by e.g. governments guaranteeing a minimum electricity price with other horrible consequences (see Germany: https://translate.google.com/translate?sl=auto&tl=en&u=https...).
Bitcoin however provides the incentive by itself to invest into green energy. This also is regardless of the fact that where there are optimal conditions for green energy often no infrastructure is available to add it to the grid. Bitcoin only needs an internet connection and consumes energy on-site.
Regarding arguments that compare transactions with energy spent (comparing apples-to-banana...), I will make a counter-comparison: "The amount of electricity consumed every year by always-on but inactive home devices in the USA alone" spends three times the energy of the Bitcoin network (see "Fun Facts" at https://www.cbeci.org/comparison).
Comparing the energy consumption of a transaction is meaningless, because this transaction may enable thousands of off-chain transactions (see Lightning network) and vary in actually block-spent-size depending on if it aggregates many actual transactions or not. It also shouldn't be a surprise that a lot of energy went into it in the first place, since otherwise the whole point of Bitcoin, namely being open, borderless, censorship-resistant and neutral, wouldn't be possible.
It's like saying that all the many maintenance checks of airplanes (https://en.wikipedia.org/wiki/Aircraft_maintenance_checks) wastes so and so many hours and energy of engineers' work-time, just because you don't see that they make air travel safer.
It's disturbing that people are still praising Bitcoin in spite of that fact that it can only handle at most 4 transactions per second and consumes as much energy as Austria.
Same goes for Ethereum at 15 TPS... Ethereum is an over-engineered mess of technical debt. It's been stretched way past its original design goals.
All these valuable cryptocurrencies are a symptom of a failing capitalist system. The only reason that they had value in the first place was because the rest of the economy was so inefficient and speculative that they started to look like a wise investment in comparison (especially as a hedge).
The rise of useless jobs is real, this is especially true in the cryptocurrency industry. The amount of human effort and talent which has been wasted on Bitcoin, Ethereum and other overhyped, poorly engineered cryptocurrencies is staggering.
Not only is it wasteful, but this industry is producing a new wave of engineers and scientists who are gullible (hype-driven), unskilled and complacent; a dangerous combination.
Most cryptocurrency projects were created by juniors who had limited understanding of distributed systems and scalability at the time. If Vitalik Buterin had to start Ethereum from scratch today (knowing what he knows now), I think he would design it very differently. But instead, he is forced to support the existing network and protocol even though the only real way to fix the project is by starting from scratch with a new foundation.
It's like if you start building a 1-storey apartment and after you finish, you realize that you actually needed a skyscraper; but instead of starting again from scratch, you decide to re-use the existing building foundation with the same investors, same architects, same engineers, same builders. You even allow the existing tenants continue to live inside the house while you continue building on top. It's probably not going to work because you don't have the right foundation, your team doesn't have experience building tall structures and you don't have any experience leading projects of such complexity - The fact is that your odds of success are extremely low; your foundation is probably not strong enough, your team is probably not smart enough and not adaptable enough and you, the leader, are probably not humble enough to accept reality; so you will fail to take the necessary steps to fix the problems.
HN think segwit is BitCoin hahahaha
BitCoin is a world computer
>central bank energy consumption index
Codswallop.
Bitcoin is artificially limited in capacity by people like Adam Back and his company Blockstream.
The number of transactions is a simple limit set by whoever controls the Bitcoin GitHub Repo, thats it. Bitcoin Cash is much closer to the "Bitcoin" described by the inventor Satoshi Nakamoto.
Bitcoin has grown a complex mining ecosystem that is pretty difficult to understand. Bitcoin has high level of energy consumption because of its demand. If demand goes down, energy consumption will go down. From what I've seen in the market, Bitcoin works the best.
Many coins attempt to tweak this Proof of Work model. The result is not wasted energy but wasted human effort. What we need is to go back and explore Bitcoin Proof of Work model. It's works and simplest to configure.
I create Bitflate, a Bitcoin fork with constant inflation. I get to see a small-scale, simpler version of Bitcoin energy consumption. Currently, it costs me about $3/day to mine coins and verify transactions. I get about 12-14 TH/s. That is cheap for running a digital ledger system. It's cheaper than renting any server on AWS. I imagine, in the future, businesses can run private permissioned digital ledger system to verify their own transactions. A Proof of Work system like Bitcoin is not wasteful.
It says a single transaction generates almost 300kg of CO2. Surely not. 95g of e-waste also seems incredible. And 600 kwh of energy per transaction? Really.
Edit: based on a cost of electricity at $0.1/kwh, and assuming bitcoin operators break even and are rational, one transaction costs less than 3kw of energy:
https://bitcoinfees.info
If it cost 600kwh, we would assume a transaction would cost at least $60.
Electricity is probably a lot cheaper in China. If it was half as much we would be looking at under 6kwh of electricity at the most.
They're missing that the reward has fallen below the cost of non-renewable energy, such that the only profitable way to mine Bitcoin now is with renewables. The only way to profitably mine Bitcoin with any country's electric grid would be if someone else is paying the electric bill for you.
> Electricity is probably a lot cheaper in China.
Specifically, miners in China are famous for colocating with overprovisioned excess hydroelectric power that is not transportable elsewhere via the grid.
Easy to miss the point that the power would be lost if it wasn't used.
An average block has something like 2500 transactions in it. It means that there is about 1-2 transactions per second. Bitcoin network is running at 100 million TH/s. Modern mining hardware does 10 GH/Joule = 10^10 H/J, so 100 million TH = 10^8 * 10^12 H = 10^20 H is 10^20/10^10 = 10^10 Joules. 1 kWh is 3.6 * 10^6 joules, so 10^10 Joules is something like 3 * 10^3 kWh, so 3 MWh. One ton of coal produces something like 2 MWh. So yeah, assuming some of the electricity is not coal, the numbers do add up.
Do you have some back of the napkin counter calculations? Or critiques of their methodology?
I'm not sure if the article is right or wrong, but the commenter above you was probably getting at this:
You can see how much money a block miner receives for a block of transactions, and given the money they received, and an estimate for the cost of power, you can estimate how much power they might have been willing to expend on it
Going off the guy's link, I guess it's 24 cents to get into the next block, and a block has about 500,000 transactions, so whoever mines that block gets $125,000. Assuming 4 cents per kWh, the presence of only one miner, and no other operation costs, he'd still be breaking even if he expended (1 kwH/$0.04)*$125,000 =~ 2,500 kWh per block
(and by the same napkin math, that's 6 kWh per transaction)
What's weird is TFA seems to be using a similar methodology (but looking at total bitcoin mining revenue instead of an individual block), and yet they came out with a number 100x as large. I'm not sure why there's such a big discrepancy.
625 kwH is microwave oven running continuously for about 3 weeks. This is a lot of energy.
If 625 kWh per transaction is accurate, then 300kg CO2 is plausible depending on the grid. Many electric grids emit 500g CO2 per kWh or more. Others are much cleaner depending on the production mix.
See: www.electricitymap.org
I don't think most Bitcoin mining is powered by a grid at all. I think the reward would be less than the cost using grid power.