I'm shocked and disheartened by how infrequently environmental concerns are brought up when discussing crypto. Proof of Work vs Proof of Stake, security, storage size - these are problems for the network and those that want to see it become a real part of our economy. (I am one of those)
But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.
Of the 203 comments (at the time I am posting this), there are only two uses of the word "environment". One of these is about the "regulatory environment".
Let's say Bitcoin, Ethereum, or another coin achieves an economic value & level of efficiency that makes mining an accessible investment for low-income people. Instead of server farms in Iceland, mining would be done by millions of people around the world. Some of the energy used for this would be renewable - but plenty of this is going to be coming from coal. In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)
My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.
I'm not here with an answer. There are many problems that I think crypto can solve and I'm glad it is something on the horizon.
Bitcoin is one way to use energy. There are hundreds of thousands of other ways.
When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".
That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
Which is great, but I could say the same thing of Ferraris for show-off producers in LA, or Hello Kitty backpacks.
What justifies focusing our attention on Bitcoin per se, and not those? Do you plan to publish a universal, agreed-upon list of things whose social value doesn't justify its environmental cost?
The real problem is energy users not bearing the full environmental costs of what they do.
The thing is, we have a well known solution to that: cap the total carbon emissions, or tax them in a way that reflects the harm.
Yes, Bitcoin creates an incentive to use energy. And it will be spent by miners who weigh the costs of the energy against the value of the Bitcoins produced. Like every other good on the market, it will respond to incentives created by laws.
If the damage of energy isn't priced in, then there will be too many resources spent on mining relative to the environmental cost. But this is true of every other good as well.
All Bitcoin does is amplify the problems of the existing failure to appropriately price energy. But this is true of literally every other energy-using good in existence!
There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.
"I don't want wiggins at my university. They cheat!"
'Well, a certain percentage of any demographic is going to ch--'
"Irrelevant! We're talking about wiggins!"
EDIT: Should probably add the disclaimer that I'm long Bitcoin.
An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.
You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.
That said, I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
> You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals.
I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.
> I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
It sounds like you're projecting what you think Bitcoin should be.
> We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
10 transactions per second on the L1 network (averaging $10k-20k each), and many thousands possible today on L2. Plus a way to securely store the transacted value.
To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
> I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.
Technically the brain is just another layer of encryption to the data. And that level of encryption can often be solved by the purchase of a $5 wrench.
> I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.
No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
> It sounds like you're projecting what you think Bitcoin should be.
Probably, yes. Bitcoin is a failed project. It spawned many others, some of which may be successful. I am interested to see how they do.
> To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
That's assuming that banking is JUST storing and sending value. Banking does a whole lot more. I understand the drive behind taking that power away from banks, but it's just not going to happen until one can fluidly exchange USD for some for of highly-stable distributed currency. And once that happens, banks are still going to exist and handle most of the transactions! Please, take a stroll in r/cryptocurrency or r/bitcoin and see how many people are whining about how their private key got lost or stolen or etc etc. Banks exist because they not only store value, but protect it in numerous ways. They will continue to exist past whatever cryptocurrency-revolution people envision.
> You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
Great? So a fraction of the energy would have been wasted anyway. Fine, use that for bitcoin mining. For everything else, it's pouring carbons into the atmosphere so idiots who don't know how investing works can leverage 100x on margin while the exchange they're betting on is manipulating the price to call their bets and wipe them out.
> It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
Really? "Let's buy a bunch of toxic waste and dump it into the river because the government will be incentivized to not output toxic waste" isn't the best argument for why bitcoin is useful.
> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
Yes, for those amounts. But for several purposes, unfortunately most of them 'evil' (money laundering / terrorism), this works fine. I know it's used a lot for people in countries where getting currency out above a certain threshold is very hard unless you are at the highest level of corruption with great success. They are not so bothered with losing a few 1000$ by fluctuation as their goal is getting it out and converted to something else (safer) (USD/EUR) asap.
And when the internet was first a thing, shortly after, most traffic was porn, until fairly recently porn was surpassed by social media. And since then, there have been world changing social movements enabled by the internet, and the exposure of horrible abuses (police, clergy, dictators).
Tomorrow, who knows. if North Korea or Russia or China turn half of the US into a nuclear wasteland, the banks are unlikely to function very well for those who remain. There are hundreds of such scenarios that could play out in the next 50 years -- Bitcoin is a great disaster hedge, if nothing else. Everyone should have 1% of their portfolio be crypto, IMO.
The criticisms of its fluctuation are valid, but like you said, there are plenty of people today for whom the fluctuations are tolerable for their use case. As the fluctuations get less, it will become tolerable for even more.
It's an Ethereum-based scheme that's tied in value to the U.S. dollar. That sounds good. The methods to achieve that look... complex... to say the least. If they work, then there's at least one of them that's stable so long as there's no serious problems in it and/or Ethereum. Well, that sounds promising. ;)
It's a bunch of math that uses market mechanisms to try to solve the problem of stability when the only real answer for the question "how do I stabilize a cryptocurrency" is "for each unit you issue, you have a bank account with $1 matching USD in it."
Maker essentially banks on the fact that a bundle of cryptos (ETH and a few others) will not drop past a certain amount in relation to USD over a given amount of time. They've been correct, so far, but that doesn't mean there won't come a time when the markets drop past whatever magical threshold they've set.
I'm not putting down the project, I followed it closely for a while and a lot of work went into it. My point is you can't really have a stablecoin unless you have the USD to back it up.
An interesting plot twist will be if Maker derives from other stablecoins (ones backed by USD reserves, like GUSD) and not ETH.
I would think that, regardless of the math, the token prices might remain stable just because people think the algorithms are doing their work. Kind of like an "invisible hand" situation.
Circulating supply fluctuations don't seem to have much of an influence on crypto prices (as seen with quarterly Binance Coin burns for instance)
That is a big "if". Stability is a principle which has been tried time and again in fiat money and failed. Too many times to count. See GBP peg etc. for examples.
If something is unstable, it is because the market deems it to be. Adding an artificial support goes against that same market.
Cryptocurrency circles like to talk about government control being a bad thing. But in the same vein cheer stablcoins which exert near similar control - by algos or by adding coin supply. They want to have their cake and eat it too.
> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
From an outside perspective, I don't think it's worth continuing the discussion as is. Perhaps you should both come back in a few hours when everyone is a bit calmer.
> No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
No, this is an important distinction. Bitcoin isn't liquid enough to count as actual money and proponents of the idea that sending bitcoin is the same as sending money are glossing over the cost to buy bitcoin, and the cost of transferring it back to actual money on the other side.
Having access to 30K BTC doesn't do you much good if nobody is willing to trade you goods or real money for it on the other side.
For what it's worth, I disagree. I also think Bitcoin's energy usage is an existential issue and agree it's ridiculous we think things like "I can memorize my wallet passphrase" are at all at the same level of importance.
> An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.
Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."
Removing externalities of electricity pricing solves this. That's the point. If a kilowatt of electricity usage costs enough to offset its environmental impact, then who cares if a tiny minority of people are doing some wacky confusing things with their computers?
> If a kilowatt of electricity usage costs enough to offset its environmental impact
The day that markets actually price externalities into the costs of goods and services, whether by benevolent owners or force of regulation, I'll gladly declare Bitcoin useful.
This seems like a completely arbitrary and absolutely biased place to draw a line. Why Bitcoin and not luxury cars or Hello Kitty backpacks? How about we shut down Six Flags and Disneyland?
This sounds very much like you've decided that you don't like Bitcoin (and that's fine, with good reasons) but you have rationalized it with an argument that is almost certainly inconsistent with the rest of your worldview. Bitcoin isn't any more bullshit than countless other systems/goods, the argument based on environmental externalities is a very weird reason to draw such an absolutist line given all the other (arguably) bullshit systems that incur the same costs.
Perhaps orthecreedence would also support shutting down all kinds of other useless services. I know I would, but since we're commenting on an article about cryptocoins, the discussion about Bitcoin is more relevant than a discussion about luxury cars.
My real point is that there is no such thing as a "useless" service. It is a completely subjective distinction. At what point do cars become "too luxurious"?
Either we have a fully managed economy (which I'm pretty sure the historical consensus is clear on) or it has to be guided by attaching costs to externalities.
All this is doing is just picking on Bitcoin because people don't like it. There is no principled economic or environmental argument here, just a biased rationalization applied inconsistently.
The point is that the environmental argument is completely irrelevant if externalities are removed, which they absolutely should be.
It doesn’t make sense to make the environmental argument for things that you consider wasteful, but not for other things that other people may consider wasteful.
> The point is that the environmental argument is completely irrelevant if externalities are removed, which they absolutely should be.
Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens.
Until then, I'd rather see some form of distributed currency that doesn't rely on pissing finite resources away to function.
I get where you're coming from, but our planet is at a critical point right now objectively. Pouring pollutants into the atmosphere so people can play with FunBux is an incredibly stupid use of resources. Yes, markets should price in externalities. That would solve SO MUCH MORE than just bitcoin's energy usage. But unfortunately that concept is at odds with market capitalism, and as such, I believe my critique of bitcoin stands. Markets are not rational, prices are not accurate, bitcoin is a polluting waste of energy.
I don’t think anyone disagrees that reducing the energy requirements of cryptocurrency without any capability loss would be great. The trouble is when people who don’t like cryptocurrency for other reasons, or just don’t care about it, focus specifically on complaining about its energy usage.
Say you don’t care much about professional sports. Of course you would think that any innovation that reduces the energy requirements of professional would be great (more efficient arena lights, climate control, etc.). But I think it would be inappropriate to single out sports as a waste of energy, because it is only a “waste” because you don’t happen to receive and of the benefits.
Damn bro, you are missing the point. As has been described, pure market mechanisms do not and cannot price externalities correctly.
That’s why we have environmental regulation, as imperfect as it is.
This implicitly means a society does make choices about how energy is used. Therefore, a discussion about societal priorities amongst individuals is essential.
Likewise with regulation related to finance and money.
Energy and money. Among the most highly regulated things in all societies.
I agree with the poster that POW cryptocoin systems are a shocking waste of electricity.
In addition, the only use cases that have proved viable are illegal or highly destructive to the social fabric.
When you look at the sheer amount of money transferred from losers to winners, it’s clear that this is not a benefit to anyone. The scams, the hacks, the thefts. Bitcoin and it’s ilk are parasitic systems that weaken the host.
To compare to Ferraris, well Ferraris are a niche product, are already regulated, and have a historical component that accounts for their hedonic properties.
To compare bitcoin to hello kitty backpacks is just a category error, which belies that the argument is disengenuous.
Perhaps you’re misunderstanding my point. I’m not against environmental regulations and I don’t expect market mechanisms to eliminate externalities. On the contrary, I want environmental regulations that reduce (ideally eliminate) externalities in the cost of energy. This should, almost by definition, be the goal of environmental regulations. Cap and trade on energy producers, for instance, can and probably does do this.
As for the stuff about cryptocurrencies being associated with scams and wealth inequality, to me that’s entirely independent of environmental impact and should be dealt with (and probably can be dealt with using existing laws) regardless of the environmental impact.
I guess the issue I have is such a tiny minority of people are using such an excess of energy to do something that adds very little value to society. Even if the value of bitcoin is subjective, there's still a tiny minority of people consuming vast amounts of energy to derive what value it does bring them.
It just feel disproportionately harmful at a time when our top scientists are blue in the face from telling us to reduce carbon emissions.
I understand that it's not my place to judge what people derive value from. I also would argue that energy should be neutral (similar to my views on internet access). I guess my biggest gripe is probably something you and me share in common: the understanding that market mechanisms allowed this waste to happen in the first place. So you're definitely not wrong, and your argument about externalities is well-taken.
I’d rather not have environmental regulation that needs to decide the value to society of every activity. If the regulation just internalizes the costs of energy production, then I don’t care what you use your electricity for (up to some obvious and less-obvious limits, which can be and are handled by completely separate laws).
"Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens."
The same could be said for people changing their behavior because you complain about it on a message board that the people in question don't even read. Nobody's going to stop using Bitcoin because you don't like it, so why bother?
That said, I think the cryptocurrency world is moving in that direction anyway. Most of the more exciting new cryptocurrencies use non-PoW consensus mechanisms, eg. IOTA = tangle, Ethereum Casper = PoS, EOS = DPoS, Stellar = SCP. And there's a strong economic incentive for that: when you reduce the cost of computation, you can use those computations for more applications, which drives adoption, which increases the value of peoples' cryptocurrencies. The challenge is that the fundamental benefit cryptocurrencies offer is computational trust, so until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
> Nobody's going to stop using Bitcoin because you don't like it, so why bother?
Perhaps someone who did actually read what I wrote will realize that there are many, many things that do what Bitcoin does without the power usage of Bitcoin and perhaps seeks those as an alternative (like, PoS coins). And originally, the argument was "this is an environmental crisis," someone said "no it's not because of ferraris and backpacks," and I countered and said, yes, it's an issue. Why does anyone argue on an internet forum? I guess in the hopes of changing minds. I hope you would not find debate a waste of energy, at least not in a democratic form of governance.
> until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
Yeah, that's the real meat of the argument, I suppose. We know PoW is at least difficult to attack. I am very happy that other consensus mechanisms are being explored though. I'm also not convinced existing non-PoW consensus mechanisms won't be as secure trust-wise as PoW.
I guess the overall point of this is that, yes, there's nothing I can do about people doing horribly wasteful things. But let's not pretend that bitcoin isn't horribly wasteful. Let's call a giraffe a giraffe. And maybe it's ok to be a giraffe if you're aware of the trade-offs, but it's certainly not a gazelle just because you're uncomfortable with the properties of giraffes.
I have bad news for you, which may or may not be fake: in the future, we all live inside. Our houses aren't self-sufficient bio-domes at first, we pipe in fresh air and water from centralised facilities; then we use it, and pipe it back. At the centralised facilities where air and water is recycled and power is generated, waste just goes outside. Some modicum of theatrical effort is put into loading the particularly radioactive stuff in steel drums and telling the concrete trucks cover it over, but nobody really cares. As we approach the limit of a dead planet, the externalities of energy production cease to be negative -- there's no harm in beating a dead horse. This is when the cost of energy will accurately reflect all externalities, not before then. A society which slows down energy production will be outcompeted, and then they won't be in charge of the inside. The outside is already a lost cause.
>Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."
You just proved their point. The beneficiaries of Bitcoin – like you – have a subjective viewpoint. You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders (the relatively few people who hold Bitcoin and actually profit from it). Objectively, it's largely a method to siphon real wealth from many to few, bearing a striking resemblance to Tulip Mania. That doesn't mean that all crypto and blockchain tech is somehow inherently evil, it's just not doing a lot of public good in this particular incarnation. One can argue it does the opposite by facilitating criminal enterprise.
Your point about externalities is correct but moot, as no one is successfully passing on the full cost of electricity production to the consumer.
> You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders
That's a different claim, and I agree with it. In fact, the entire point of my comments in this thread is that I want environmental regulations that internalize all the costs of energy usage.
>...transact without overly-censorious middle-men who take a cut while adding nearly no value.
We have the internet, now. Payment networks should have died years ago.
nearly no value = many more transactions per second for much less energy cost.
The "value" is the payment network itself (plus stupid things like rewards which are taken from the businesses and distributed to the consumers). However, the payment network can easily be superseded by the internet, and all that's really needed is to build a ledger on top of it (and using something like PoS it could use an amount of energy probably on par with Visa, or at least comparable to it for the same number of transactions).
I mean, it's at least not "easily"... I'm sure in 5 or 10 years looking back it might seem easy, but looking back over the past 5 or 10 years it doesn't seem like it's easy.
I can use bitcoin to buy things on the internet, or send money across borders, or bring money across borders, all without anybody's permission. So it's pretty successful in my book.
Oh wait, you're bringing sin into the argument. My bad, I thought we were being rational.
And just a side-note, it irks me when people say that bitcoin uses as much energy as the country of Iceland like that's some kind of horror. Iceland is pretty damn small, with a population smaller than the mid-sized city I live in.
It also doesn't use as much energy as the country of Iceland (living in Iceland here). You what we use the MOST electricity for here? Aluminum smelting. No one seems to care a lot about that waste, it seems.
Making aluminum isn't a waste! You can build airplanes out of aluminum. You can also relatively easily recycle aluminum into more aluminum things, so it's not like you have to pay that smelting cost every single time you want to purchase anything.
It's still subjective. We can argue all night about what does or doesn't deserve to have energy used on it, that doesn't change the fact that Bitcoin is a rounding error in terms of global warming.
If the purpose is to limit environmental impact, why are we choosing by subjective value instead of actual impact?
> An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.
To be fair, I feel the same way about the stock market as I do about bitcoin, so yeah some of the sentiment is shared. At least with capitalism, for better or worse, just about everyone participates.
That said, I don't think a complex economy can really operate very well without some form of market (at least not until we're at 80%+ automation). And with markets come waste.
I guess I'm not saying anything should be done about bitcoin, but rather that I personally believe it's a complete waste of energy when there are already many better alternatives.
>An enormous amount of energy used to support a tiny minority of people participating in a highly-manipulated wealth redistribution mechanism is, objectively, a complete fucking waste.
You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.
Nano claims to do it in action. So do others. Some of them might even be proven right, the vast majority will not, so acting like it's some kind of trivial solved problem is disingenuous. Ethereum's PoS has been in development for years and there is still no consensus that it will be a better mechanism than PoW.
> acting like it's some kind of trivial solved problem is highly disingenuous
I said it's possible. I didn't say it was easy. That said, PoW on a small scale is an interesting experiment. On a large scale, it's a horrible way of allocating energy usage. So while the databases running on PoW are working, they are a stupid waste of energy.
That's like saying space travel is a stupid waste of energy because it costs more than driving. Some things are expensive, sometimes they get cheaper. In the meantime if you want to get to Mars you either buy the proven rocket or the cheap one.
" it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second."
I think it's more accurate to talk about the amount of value the Bitcoin network is storing than the transactions per second.
Bitcoin currently has a market cap of $68B. I'm not aware of any other distributed system that's worth that much money. It's definitely interesting that a fully distributed system has been able to achieve that valuation without any centralization or governing authority (debates over developer and miner power aside).
If bitcoin users went to make withdrawals en masse, I suspect they'd quickly find it's not "storing" anything like USD 68 billion of value.
Market cap is a farcical number to look at for a thinly-traded asset on unregulated markets. If I make my own new cryptocurrency, print 100 million tokens, and then talk my friend into buying one for $10, does that mean my token has $1 billion market cap?
While I agree that the valuation can rapidly fluctuate. Bitcoin is successfully storing a large amount of value in a distributed manner. More than any other system that exists. There is a huge incentive to create transaction fraud with that much money on the line and Bitcoin is working and intended and acting as a distributed, transaction fraud free public ledger with a trade-able currency.
> "Bitcoin is successfully storing a large amount of value in a distributed manner. More than any other system that exists."
No it isn't. The market cap of bitcoin, which is a bullshit number anyway as already explained, is dwarfed by other forms of distributed wealth storage such as (but certainly not limited to) old fashioned pieces of gold. Gold is distributed. If you revise your assertion to be distributed and digital then perhaps you're correct. But the more qualifications you tack on, the less impressive your claims to fame become.
Don't bother mistaking me for some sort of gold bug either. Real Estate is another form of distributed wealth storage that blows bitcoin's pathetic market cap out of the water.
>[Bitcoin] is dwarfed by other forms of distributed wealth storage such as [S.A.] old fashioned pieces of gold
Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA. Also can you let me how how I can costlessly assay gold when I accept it as payment? or make the supply of gold only dependent only on time and not how it currently is (price and time)? Whenever the price of gold goes up, they mine more of it :C this makes its Store of Value property worse than bitcoin. Looking forward to your reply and our future endeavor together. /s
I think it's absurd to think that it should be possible to package 150 years of median US household labor into an easily transportable, easily securable form. That simply will never be possible. It's not a technology problem.
Even if you could somehow do this, you would be incredibly vulnerable to extortion, and I doubt you would actually really want to do this even if you had the capability. There are people that have significant wealth that exists outside of "official" legal capacities (drug lords, dictators of small nations, etc.). They have to spend incredible effort on maintaining security of their assets. Pretty much the only thing that works is giving an army of people a better deal than they can get from someone else to steal your wealth from you.
>Even if you could somehow do this...That simply will never be possible
You already can: bitcoin.
>I doubt you would actually really want to do this even if you had the capability
If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.
> If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.
I didn't disagree with any of that. My position is that if you are actually in that situation, bitcoin doesn't help that much, and no technology can. If you attempt to actually execute this plan, the risk is extremely high that you will be detected, and a corrupt government doesn't have any shortage of ways to force you to comply with whatever they come up with.
Are there any examples of a Venezuelan moving a significant amount of wealth out of the country via bitcoin?
> Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA.
You're supposing that the vast majority of people using bitcoin are using it to exfiltrate money out of countries. That niche application is very far from the reality of what most bitcoin advocates are doing.
But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.
It's a single example of the value of decentralized property rights. Say I'm an alcohol maker in Sharia-law country, I want to be able to make wine but prevent the state from expropriating my wealth because they ban alcohol. Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.
> Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.
The moment Bitcoin becomes a viable way to subvert the state, they'll just change the laws. And if people actually start using it to smuggle money internationally the feds will get involved. The entire idea that Bitcoin can subvert the state is absurd.
And if you don't believe me, look at the evidence. ICOs got regulated. Silk roads got shut down.
And furthermore, while it's convenient to use oppressive regimes as examples for this Bitcoin "feature", it's way, way more likely the 1% (you know, the people who actually have money) will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
>The moment [cryptography] becomes a viable way to subvert the state, they'll just change the laws.
Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
>if people actually start using it to smuggle money
If? People already use bitcoin to evade capital controls in China, Venezuela etc
>the 1% will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
You're confusing equity (something you own) and equality (rights that you have). Bitcoin promotes equality (each client has the same rights). Arbitrarily making certain people unequal (different people have different rights, some have their wealth stolen, some don't) always leads to more inequity. Voting about who to steal from doesn't legitimize theft. If people who generated wealth through voluntary exchange want to protect their property rights from theft, I won't deny them that. Agents who use the state to expropriate wealth through artificial privilege (the real enemy here) want to perpetuate the existing system, not encourage a neutral rights network such as bitcoin.
>> The moment [cryptography] becomes a viable way to subvert the state, they'll just change the laws.
> Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
Your argument is that Bitcoin will let you subvert existing state monetary policy and other regulations. My argument is that once that happens on a significant scale, states will change their policies and enforce them more or less with state violence.
A good example is anonymous payments via a tumbler. As soon as these payments start seriously foiling law enforcement, states will outlaw tumbler services. If that doesn't solve the problem, and the problem is severe enough, they'll outlaw Bitcoin. The way they would do that is to outlaw exchanges and pursue them over Tor the same way the pursue dark web markets, by enlisting banks, employing cyberwarfare and other espionage, and ultimately with on the ground law enforcement.
It's very, very hard (maybe impossible) to solve a political problem with technology, unless that technology is weapons. It's immoral in a democracy because it by definition subverts the will of the people.
>> if people actually start using it to smuggle money
> If? People already use bitcoin to evade capital controls in China, Venezuela etc
I mean "on a significant level minus state actors".
> equity vs. equality.
I think if you're a "taxes are theft" person then we have deeper disagreements, because I'm a "property is theft" person. But those antipodes aside, Bitcoin no more promotes equality than regular currency does, in fact there are lots of services that only let you do certain things with certain account balance amounts.
Furthermore, I have no idea what you mean about a "neutral rights network". Do I get to vote on things because I hold Bitcoin? Did I miss the votes on various forks? Does my vote count equal to one of the Winklevoss'?
I think the exact opposite is true. Not only is there no voting, but holders of lots of Bitcoin (which you can only accrue with actual currency or mining, which you need to spend actual currency to get the equipment for) have far more power over the Bitcoin network than I do. I have no idea what "rights" you think I get through Bitcoin, but I'm pretty sure the answer is "none".
EDIT:
Also, come on, I'm fine with "crypto" meaning "cryptocurrency" now, but it absolutely doesn't mean that "cryptography" means "cryptocurrency" now. This is a hill I am willing to die on.
Many lower income individuals struggle to see their income increase faster than inflation. By contrast when you have immense wealth, it's pretty easy to achieve extremely stable returns on that immense wealth well beyond inflation. In cases where this is true it means the net effect is that the poor effectively pay more while the rich effectively pay less.
There's also an issue of debt differences. One of the big 'benefits' of inflation is that it makes old debts worth less. This is a major incentive for pursuing investments on debt. Not only can you see investments on money beyond what you presently have, but the debt that you took on becomes worth less - meaning it takes a smaller share of your profits each year assuming the principle is not growing. For instance during the government auto bailouts Ford took on a loan for billions of dollars of debt from the government. The interest rate on that loan is sub-inflation. Unsurprisingly, they aren't paying it back since each year it becomes worth less, and given enough time, it will become worthless.
By contrast when a lower income individual takes on debt, it's often 'consumed' such as in the case of education. And the debt becoming worth less over time is not true if an individual's income is not keeping pace with inflation. And another big issue is that lower income individuals are also often going to be seeing rather high interest rates on their loans further diminishing any theoretic benefit of inflation.
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This is not to say inflation is bad. You can create a comparably negative argument against deflation. I don't really have much of an opinion one way or the other. We've seen how depressive systems can end. And while our current inflation and debt driven system has not yet collapsed, it's not looking as stable as it once did to put it very mildly. I think in 20 or so years (and especially once the petro dollar is 100% dead) we'll have a much better idea of the pros and cons of each system.
> But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.
Given that some forms of cryptocurrency can be stored using only a memorized passphrase and nothing else, (ie. a brain wallet), it's pretty much guaranteed that getting cryptocurrency put of the country would be easier.
You're supposing the government doesn't know you bought those bitcoins (or at the least doesn't know that you are somehow hiding a lot of money without knowing the details) and isn't willing to beat it out of you.
Most cryptoanarchists are deluded nerds who would fold in less than 5 minutes of waterboarding. Do you think these thugs who are willing to look up your ass for a few pieces of gold aren't willing to violate you in other ways? Of course you don't believe that, you've merely failed to seriously consider that possibility.
The only reason smuggling BTC sometimes works right now is because they're not looking for it.
Tell me how anything you just said shows how it could be easier to smuggle physical currency out of the country than digital currency, which was the point that I was refuting.
> it could be easier to smuggle physical currency out of the country than digital currency, which was the point that I was refuting.
Then you were refuting a position I never espoused. My point wasn't that gold is easier to exfiltrate, but rather that BTC isn't necessarily easier to get out. If the border agents of the tyrannical government you're fleeing know you to have wealth, and are informed about bitcoin, they have many options available to them to prevent you from leaving with your wealth, including simply forbidding you from leaving at all. At that point, you'll have to smuggle your body out, so smuggling a few pieces of gold along with your body isn't a huge inconvenience.
If on the other hand the border agents don't know that you're trying to smuggle wealth out of the country, then it shouldn't be to hard to get through the border no matter what method you choose.
The one scenario in which BTC seems clearly superior is when the border guards are simultaneously alert but ignorant. Looking very carefully for money, but totally oblivious to the possibility of BTC. This might work during the present, but don't count on this remaining true forever. If enough people start using BTC for this, tyrannical governments will wisen up pretty quick.
Here are a couple of other scenarios where having BTC works as an advantage:
1. The government doesn't know you have any money, but you are targeted in a random search.
2. The government does know you have money but doesn't know how much. Simply give them X out of Y cryptocurrency keys. They won't know you have any more.
I don't know how much exposure you have to tyrannical regimes, but they aren't as efficient as you seem to think, in that they don't really have much grasp on how much money people own, nor are able to find out instantly.
They also do care about how they are perceived and aren't going to grab some tourist and with no proof whatsoever, torture him to death because he might possibly have some cryptocurrency.
Real estate is likely the best storage of value there is. It's only distributed across governments though. When you own a piece of land you actually trust your government to protect your right to it.
Gold is fantastic. Apart from its physical properties, we all agreed to assign value to it and it's been working for thousands of years.
But wouldn't it be great to have gold in a digital form? Something easily divisible and transferable, yet as gold is, not dependent for its value on some 3rd party? Something that is truly yours not just IOU. Which can keep value.
Forget about Bitcoin, how would you envision something like this?
Apart from technological problems, we have a problem of initial trust and distribution. Please stop here and think for a moment, this is a hard and interesting problem. I'm not saying you can solve it with a few minutes of thinking but just after a few moments some things clarify.
Now imagine we do have it. We did it. Because it would be a cool future where we do have this digital gold. Is it a safe storage of value? What if some better digital gold 2.0 comes along? If people would prefer to move their wealth to it then the 1.0 would become less desirable, so its value should drop. But if it does, then it's not a good storage of value after all.
You can devise a system in which 1.0 tokens can be exchanged to 2.0 but then you cannot change the initial distribution.
If all that thinking is not enough, it is interesting to ponder impact of an actual perfect storage of value system on society. Wealth can be leveraged to generate more of it.
Not that it's something completely new, we had a few close enough matches throughout the history. That's what most wars are about. Although it's easier to go get something if you know where it is.
Run that one by me again? If tomorrow, a manufacturer announced the new Super Duper Quantum ASIC for Bitcoin that can perform hashes at 10 times less energy cost, everybody would switch over to it, and the total hashrate would increase 10x. Neither the number of miners, the proportion of mining held by each person, the distribution of mining rewards accumulated, or the total power consumption would be affected at all. Therefore, the amount of trust in the system would not be changed at all.
Cryptocurrencies are not secured by the hashrate, but by the cost of exceeding the hashrate of the network.
I'm probably way out of my element here (I don't own bitcoin or play video games). Are you telling me that the power consumption of the bitcoin network is constant and based solely on the most popular bitcoin mining hardware?
I wouldn't say that it is constant, as the energy consumption has been increasing. However, it does not depend on the efficiency of the hardware being used.
Think of bitcoin mining as a raffle. You can buy as many raffle tickets as you want, and so can everybody else. Each raffle ticket costs $1, and so people buy tickets until the prizes start getting spread out too much. The next day, though, the raffle tickets are only 10 cents apiece. However, the prizes are still the same, so the break-even point is still the same when expressed in dollar value. As a result, the same amount of money is spent, just buying 10x as many raffle tickets.
In this analogy, each hash performed by the miners is buying a raffle ticket. The block reward is the prize at the end of the raffle. Going from CPU mining to GPU mining to ASIC mining each increase the efficiency of performing a hash, analogous to lowering the price of a raffle ticket. Just as lowering the price of each raffle ticket results in an increase in the number of ticket sales without changing the total value of ticket sales, so decreasing the cost of each hash results in an increased number of hashes performed, without changing the total amount of electricity spent to perform those hashes.
Okay, I think I get it. So the power consumption of the network is based only on the power available to miners, which is probably reasonably constant since the mining pool doesn't change much? So putting aside market hype the main thing impacting the value of a bitcoin should be the cost of this power?
I agree it doesn't sound like the most efficient system and these incentives are somewhat perverse, but there weren't any systems like this before bitcoin. If cryptocurrencies do have valuable attributes that cannot be attained by conventional currencies and bitcoin introduced these concepts to the world in the first viable way and the popularity of these networks has lead to people researching more efficient analogues such as proof of stake and the techniques mentioned in the original article then can't we still say that the existence of bitcoin had a utilitarian benefit for the world? If the popularity of bitcoin goes down and these more efficient networks supplant it then the total energy-expenditure should be minuscule compared to the total energy usage of all humans over all time. Given the the rate at which these technologies seem to be maturing it will likely still be a lower expenditure than bootstrapping many other equally useless human endeavors.
It is a new application, but I'm not sold on it at all. I don't see anything that cryptocurrencies do that fiat currencies do not do better. Irreversible transactions, for example, is touted as a benefit, but I believe is a major disadvantage. As a result of them, consumer protections against theft and fraud are impossible to implement. Any reverse payment requires the cooperation of the fraudulent actor.
Furthermore, the decentralized nature of bitcoin cannot last indefinitely, and arguably has already ended. All mining nodes need to have a record of all balances, in order to verify that incoming transactions are valid. This places a limit on the ability to contribute to trust by mining, and will result in further centralization of miners. If a cryptocurrency were to replace fiat currency, it would not be a change from centralized currency to decentralized. Rather, it would be a from a centralized currency controlled by an elected government to a centralized currency controlled by conglomerations of miners.
I have done my best to understand their use, their applications, and their limits. With that in mind, I believe cryptocurrencies to be a obfuscated form of pyramid scheme, with additional externalities of heavy power use.
"Increasing trust" doesn't add value if the system is already sufficiently trustworthy for the task of processing transactions. Based on that reasoning the cost should ('should' meaning: it is beneficial) increase forever because an infinite amount of energy burned is infinitely trustworthy.
If you are transacting small amounts of money (less than is spent on mining a block) then waiting for 3 confirmations is probably sufficient to consider the transaction settled. But what if you send a transaction with a 100 times higher value than goes into mining a block then you will need to wait for over 100 confirmations till you can be sure it doesn't make economical sense for anyone to try to double spend your transaction by orphaning the first block your transaction was in (with a very simplified incentive model not taking into account other transactions in these blocks).
Thus the money spent on mining blocks determines how much value can be transferred in one block. Allowing for higher value transactions is good thing imo, is necessary for its success as digital gold and therefore justifies the higher energy consumption (especially since there don't seem to be any alternatives with similarly good or better robustness against attacks yet, proof of stake can't work under the same assumptions bitcoin does [1]).
> PoW systems are the only ones where "higher value transactions" need security proportional to their size.
Every other currency is either backed by men with guns and transactions are reversible (fiat) or you have to spend a roughly proportional amount of resources securing it (e.g. gold). I didn't look at the data, but judging by US military spending I'd guess that the strongest economies also have to spend the most to keep their system safe.
You can still argue that the assumption of pseudonymous actors in bitcoin makes the proportion factor larger (=system less efficient) than for systems that can use identities and attribution and I'd agree with that. But that's only because it can operate with less assumptions (no identities), which I see as a feature.
> Every other currency is either backed by men with guns?
So what? Men with guns are also the foundation of property rights, law and order, and national sovereignty; they are not an extra cost of fiat currency, they underpin the government's ability to maintain order and structure within society. I shouldn't have to explicitly point this out.
> transactions are reversible (fiat)
Cash payments are not reversible. Reversible payments are also a feature that nearly everyone wants.
> spend a roughly proportional amount of resources securing it (e.g. gold).
Gold is not a currency.
> that's only because it can operate with less assumptions (no identities), which I see as a feature
Untrue. A centralized anonymous payment system is technically possible, the limitations are strictly legal.
Is bitcoin sufficiently trustworthy without proof of work? I'm not a bitcoin expert, but my understanding was that this is an integral part of the trust model. If so then we're just back to talking about inefficiencies.
I can't imagine the processing being done by my computer right now is all strictly necessary to read and post these comments, and I'd wager this site is more efficient than most these days. Still I accept reality and pay these costs in order to talk with you on the internet because this is the world we live in. It looks like these nice people at MIT are working on some of the inefficiencies of cryptocurrencies, so let's rejoice.
> Is bitcoin sufficiently trustworthy without proof of work? I'm not a bitcoin expert, but my understanding was that this is an integral part of the trust model. If so then we're just back to talking about inefficiencies.
Yes, that's exactly the point. Bitcoin is insanely inefficient because PoW is insanely inefficient. Unlike other "inefficiencies" where there is a logical relationship between "energy spent" and "useful work accomplished", with PoW there is no such relationship since the energy isn't spent doing useful work (i.e. processing transactions). Yes, more power into the network makes it "more secure" by making it "more expensive" to perform a 51% attack. The increased expense is distributed across the network in the form of increased difficulty. If a 51% attack was already implausible (which most bitcoin enthusiasts would say is true), then making it even more expensive doesn't actually do anything useful.
>the processing being done by my computer right now
Well it depends what you are considering. Arguably, yes, your computer finished the HTTPS connection long before you got around to reading the words on the page itself. But the scale of an idle CPU compared to a 100% CPU is not even close. Mine is sitting at 2% use while I type this.
You could put that money into mining actual gold, and literally make 4x as much as mining bitcoin [0].
>Bitcoin is wasteful because the increasing energy costs does not increase the total number of transactions that can be processed.
Are you saying the number of transactions the market will demand of a system is independent of the trust of the system? If I need to move $250,000[1] in one hour with ~100% certainty are you saying an IOU from a bank janitor is equivalent in value to a bitcoin transaction? An increase in attack costs increases the types of transactions that can occur safely on L1. The number of L2 updates are unbounded by L1 transaction capacity, increase attack costs gives the market confidence L2 updates cannot be erased.
A high cost to signal which money you're willing to use filters out fraud attempts. Which should I trust more, Malory Money who double-pinky swears to run her Malory Money servers 5 years from now but is signaling with no costs or Bobby Bitcoiner who signals by billions of dollars in single-use capex (ASICS)
> Are you saying the number of transactions the market will demand of a system is independent of the trust of the system
No. I'm saying that if a 51% attack is practically impossible today, the increasing amount of energy consumed to secure the same amount of transactions is wasted. It's also a sign that the system is broken because the amount of energy consumed has no practical impact on security. Reasoning otherwise would suggest it is justified to consume infinite energy because that would be infinitely secure.
It appears you think a 51% attack is when an external agent attempts to out hash the network. This is only one type of 51% attack.
A 51% attack means there is a almost equal amount of hash rate being applied to two divergent, consensus equivalent chains. This can happen in above scenario or when existing miners attempt to reorg blocks (See ETC 51% attack) There is nothing stopping this behavior from occurring at any point in time. The only check on this behavior is the cost to rewrite history, decrease this cost, and you increase the profitability of such attacks.
Is the American military wasteful because it provides too much security? How much should it be reduced to provide sufficient security? This is a legitimate question/ I don't have an opinion either way - but it seems to be a fair corollary.
Unlike bitcoin, every person in the US has an (more or less) equal vote to help decide that. Congress's job is literally to decide whether to spend more money on military, among other things.
And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens. What does bitcoin provide in terms of add-on benefits like jobs? The ability for power companies to maximize profits by having their supply used more fully?
Edit: Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe. There are numerous areas such that, if money was not a concern, could be made safer and more profitable by adding more security. Creating infinite trust in bitcoin would... do what exactly? Let nerds buy drugs on the internet?
> And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens.
Jobs are only useful if they waste people's time? Mining is a job. Mining can also become green much faster than constantly moving around millions of tons of vehicles can.
> Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe.
I would argue it decreases security, with all the wars and disruption it caused in the last decades.
Some would argue that it fixes the economic system so that we won't have booms and busts anymore and can start seeing capitalism in action proper. That seems to be a worthwhile investment, and may even help prevent wars (which are often financed by currency debasement).
The author of your paper appears to be attacking another author and yet has nothing to back up their claims other than "Trust me I'm an expert and I know a guy in Hong Kong who tells me what's happening in China!"
The argument summary of your article is hand waving, claims that the sum usage of software designed to be increasingly energy wasteful (Satoshi's random nonce lottery as a means of increasing CAPEX and decreasing production output)
In what way does this address the parent post's argument that to the extent Bitcoin produces more negative externalities than positive effects, it is because the price of electricity is not set correctly by governments?
> When you say Bitcoin "hurts the environment", what, concretely do you mean?
We mean that mining Bitcoin is extremely energy-intensive by design. This is to say that the energy consumed by Bitcoin's economic activity is deliberately and gratuitously significant, not incidentally so. Moreover, the energy consumed by Bitcoin mining scales commensurate with how many Bitcoins have been mined thus far.
So yes, that makes it categorically different from other energy-expensive activities like farming or hospital maintenance. We are actually economically incentivized to consume less energy over time in most energy-expensive activities. With most cryptocurrencies, energy consumption is a design imperative.
> There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.
It's not special pleading if I'm equally annoyed by Ferraris and other environmentally disastrous forms of conspicuous consumption. I don't know enough about Hello Kitty backpacks to have a serious reason to be against them.
It's perfectly consistent for me or anyone else to leave a negative comment about Bitcoin on an online forum and then as much or far more to tackle a different issue that I/they consider pressing. And this, largely, is how it seems to be playing out: nobody has been arrested for using wasteful PoW schemes yet, because we have bigger fish to fry.
Oh sure, buying fresh berries imported by plane from the other side of the world is no better than this bitcoin mining business! But it's not a competition to single out the worst offender.
I feel the parent comment shares this common intuition that there must be some way to design and code any crytocurrency to offer the same features without having to consume so much energy in the process.
I'm no expert on cryptocoins but we surely can agree that any hope to see them mainstream won't rely on countless power plants to brute force computational puzzles.
> When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".
Perhaps a more direct analogy is "literally miming gold hurts the environment (since I highly doubt renewable energy is significantly leveraged in the supply chain)".
> That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
It makes me wonder if you couldn't somehow tie a renewable energy certificate (1) to a mined coin. I suppose green coin (2) is a similar, albeit indirect concept (i.e. value is from a unit of carbon sequestration).
> When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment". That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
For myself, that is not what I mean when I use the phrase.
Bitcoin hurts the environment because Bitcoin, by design, wants to use as much power as available to secure it - and conversely is vulnerable to anyone who has significant power available, and so it had to design itself so that the rational thing to do is to commit that power to Bitcoin itself.
Bitcoin automatically adjusts its difficulty based on the computational speed of the network over the past few thousand blocks. There is a target mining speed of one block every ten minutes. If someone throws more computational power at Bitcoin, Bitcoin itself will adjust to the additional available power, so that nothing more gets done, it just uses up the power. This is not a claim that the benefit is too low relative to the additional energy; this is a claim that the benefit is zero, by design, relative to additional energy, and that this property is inherent to Bitcoin.
There is a reason to single out Bitcoin and blame it for environmental problems. No other product, concept, or idea in human history (besides Bitcoin clones) has been designed in a way where it expands gas-like to all the energy available to it (... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change).
I'm supportive of other forms of cryptocurrency without this property (weakly supportive, given that I haven't used any of them in detail, but they seem promising). There seems no particular reason to use Bitcoin if alternatives exist without the burn-all-the-available-energy property.
Thank you, this is a very productive reply, and you are highlighting specific things that are unique to Bitcoin.
You're right that a core part of its design is making sure real computational resources are spent on it. That means the (total, social) cost network as such will scale with the size of the economy, not the number of transactions. So, in a sense, there's (something that looks) like an arms race going on, where more resources spent on it don't mean more transactions. Point taken.
But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked. At equilibrium, the cost will be some fraction of the economy, not all available growth or energy (like a gas). That amount of energy that this involves will decrease as energy is taxed.
That's pretty much the dynamic of gold mining under a gold standard: the larger the economy, the more money being spent mining (literal) money.
I agree that it's a high price to pay, but I don't think the benefits should count as zero. Being able to bypass financial choke points so you can donate to Wikileaks is definitely a positive.
> But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked.
Hypothetical scenario: a hardfork of Bitcoin is developed that maintains all of these wonderful properties — impossible for any one party to control, bypasses financial choke points, impossible to censor — but requires orders of magnitude less energy. It utilizes a variety of clever mechanisms to achieve the same goals without using Proof of Work calculations to secure the network. This sort of thing is what the exactly what the MIT team in the article is attempting to accomplish, it's not an intractable problem.
Would you support switching over to the new fork? I would. It does all the things I like about Bitcoin without this big carbon footprint. No downside.
But do you know who will never support the fork? Bitcoin miners. They've invested millions in custom hardware to let them process proofs of work as quickly as possible. They have a massive economic incentive to continue to use PoW. Forever. Even if there exists a better way.
Maybe in this world the price of BTC would go down as people moved to alternatives. I'd like to think people would be ashamed to use an unnecessarily inefficient currency. But when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy, it doesn't make me terribly optimistic.
> when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy
... You know, when you put it that way, there's another problem with this argument. "Bitcoin is good because governments shouldn't be interfering with my ability to give money to Julian Assange. They shouldn't even know that I'm paying him. And if it hurts the environment, well, that's the fault of governments not taxing energy usage appropriately. They should be paying close attention to what people spend money on and dissuading uses that have harmful effects for society, as determined in their sole opinion."
There's a few big differences between gold and energy. First, energy is consumable and gold is generally not. If I mine a bitcoin, the coin itself is reusable, but the energy is turned into heat and lost. If I mine an ounce of gold, I can turn it into jewelry and melt it back into gold, so the mining of gold serves to make the resource more accessible, not less. Second, gold has limited uses beyond being a store of value - while it's useful for jewelry, electronics, etc., most manufacturing processes have little use for it. Increased demand for gold does not compete with much. But energy (either as electricity, or as fossil fuels) is useful for approximately everything. Increased demand for energy drives up the cost of production of everything because everything uses energy. A shortage of gold does not hurt a working-class family earning minimum wage; a shortage of energy does. And, finally, that's assuming that the process of mining isn't inherently harmful. Mining gold has none of the environmental externalities that mining bitcoin via burning fossil fuels does.
So I don't think there's a comparison in how the economy correlates. As long as gold is mineable in the earth, a growing economy mines more gold. But a growing economy demands more energy, which can go either to the economy or to Bitcoin. Bitcoin has no way of saying "I want this portion of the energy in the world, and no more," the way that mines are naturally filled with resources other than gold; all it can say is "I want all the energy possibly available."
(If you could store energy and use it as the basis of a Bitcoin-style network, such that your limited resource was energy itself and not loss-of-energy-per-unit-time, it would kill basically all of these arguments. There would be other arguments about the fairness of OilFuturesCoin, but it wouldn't be these, and it would basically be the arguments about any natural-resource standard.)
And yes, the benefit of Bitcoin is a permissionless network, but the entire question is whether this energy-monster property of Bitcoin is required to have a permissionless network. You could donate to Wikileaks just fine with, say, Stellar's consensus protocol, could you not?
"(... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change)".
Also life. Evolution, birth, and metabolism also result in all available energy going into increasing the complexity of the system. The real reason we have an environmental crisis is because there are 7.5B of us, but few people recommend destroying all life on earth to save the environment.
Sure. The claims about needing to avert climate change before it "destroys the planet" are not about the literal annihilation of the world itself, but about its inhospitability to human life.
Humanity, to some extent, competes with capitalism for resources. But while resources are not at their limit, we can grow together, and capitalism seems to bring us benefits. Humanity also competes with Bitcoin, which is a much newer system that has become seriously competitive very quickly, and it's much less obvious that it's the best or even only way to solve the problems it sets out to solve.
These tiny blobs of data with utterly fake scarcity consume more energy than whole countries. And you try to argue that they’re a good expenditure of energy?
The only reason to single out bitcoin is that it’s a highly visible waste.
But just because there’s multiple ways we waste a ton of energy, does not mean we shouldn’t fix any of them.
> you try to argue that they’re a good expenditure of energy?
I think his argument is that it shouldn't matter whether it is a good expenditure of energy or not. Environmental costs should be priced in the energy costs. Then it wouldn't matter for the society and for the environment how much energy you use or waste.
But apparently there is some point where a large enough majority converts an ethic from subjective into objective. For example "murder is wrong" is considered objectively true even though serial killers my disagree.
And at least in broad strokes, it is possible to determine benefit to harm ratios. It is esntially uncontroversial to say "Coal Rollers"[1] do more harm relative to good than candy manufacturing or face lifts.
And a cap/tax carbon emissions would be great. But that hasn't happened, effectively isn't going to anytime soon and is more complex than it seems. Consider that spikes in green energy use will drive its price such that petroleum becomes more attractive in spite of a tax. And there is no way to correctly price carbon emissions when the effect will be felt by hundreds of generations and the extent of the harm is still unknown. It is, after all, simpler to try to persuade a smaller interest just to stop mining (even though that too has almost no chance of happening).
I have no idea whether Bitcoin is being unfairly singled out or not. But since the thread is about mining efficiency, it is the logical topic rather than say deforestation.
So it's not a-priori impossible that it does more harm than good. And even if not a catastrophic problem, surely it would still be nice to reduce the harm if possible.
This is a long-winded argument that says only that Bitcoin shouldn't be singled out as a waste of energy. Fine, many things are also wasteful and pointless, but that doesn't absolve Bitcoin of anything.
No offense but this is some pretty strong whataboutism. The amount of energy that would be used by a crypto currency that gains mainstream adoption would be pretty substantial, certainly much, much more substantial than traditional currency/credit cards/etc.
A correction - bitcoin is not anonymous enough to enable any of the use cases you mentioned. But that misses the points - tools can't be blamed for secondary use cases - do you blame physical dollars for enabling child porn?
As far as our carbon budget, how we choose to create energy and how much energy something uses are unrelated concepts. If people pay a proper price for energy that reflects its scarcity and externalities, then there is no problem. In a world where we use 100% renewable energy sources, would you complain about bitcoin mining? In any case, one could argue that the amount of energy required to secure the bitcoin network is a drop in the bucket compared to the amount of energy that (for example) the USA uses to secure the value of the dollar. If we then factor in the pretty obvious benefits of a decentralized currency, it seems like a great idea if the downsides can be properly addressed.
This kind of hyperbole suggests you didn’t read the person’s comment very closely.
How is using X joules mining bitcoin worse than using it for anything else? Eg. mining gold?
If the energy grid was 100% sustainable would bitcoin still be “literally killing the planet”? Surely not, so maybe the problem is actually the energy source, not this particular use case.
Indeed it might be still killing the planet, if all the renewable energy we can make at the moment were to be used for Bitcoin and so the other needs must use fossil fuels. At the very least, this argument leads to the conclusion that we ought to stop mining Bitcoin until all energy is renewable, but something tells me its advocates won't be happy with that.
> In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)
And that's also the solution.
The reason people are interested in decentralized trust is that the existing system of centralized trust is a dumpster fire. Politicians want to use the banking system to attack their enemies, but not all politicians are good and not all of their enemies are bad, and there is a vast amount of collateral damage.
You can't get your payments processed if you're a terrorist, but also if you're suspected of terrorism without any real evidence, or suspected of political heresy without any real evidence, or suspected of supporting someone else who is suspected of political heresy without any real evidence or due process etc.
People who are afraid to reveal their identities because they have powerful adversaries are impeded from raising money for their cause, or even just making a living, and it's really not obvious that this results in less radicalization. Things that make people angry and scared generally don't.
But it's all caused by AML/KYC laws. The promise of Bitcoin is that you can't have your accounts locked out and your funds stolen because a lazy or corrupt politician in a foreign country leaned on a bank that leaned on a corporation that decided your business was worth less to them than the effort required to resist, regardless of your guilt or innocence.
So now we have a choice. Either we stop using the banking system as a tool for surveillance and political pressure, which cuts the legs off the demand for cryptocurrency, or we keep trying to do that and then all the innocent and guilty people who it was impacting get together to build a workaround, and the rules are ineffective regardless but now people burn an extra billion tons of coal.
This is my primary motivator for supporting Bitcoin. No one supports criminal activities, but we underestimate how much AML/KYC laws have produced a chilling effect on an open society.
The relative ease with which your assets can be frozen, compared with how difficult and opaque it is to get them unfrozen; is something I have witnessed many times and I feel is absolutely unfair. This leads to self-censorship and dissuades the public free exchange of ideas.
If Bitcoin can eventually fund for example; a pro-democracy movement in China or a pro-secular movement in the Middle-East, then it is definitely worth all its flaws.
I find it baffling how much power Visa and MasterCard have over people's lives. I can't even imagine what it would be like to be banned from using or benefiting from one of them.
I'm not sure whether this is true, but I expect that electricity-from-coal for Bitcoins isn't a massive problem because doing so is simply unprofitable: the electricity costs more than the value of the Bitcoins, so it would be irrational to do.
I would expect that mining has become an arbitrage market that narrows in on the cheapest possible electricity anywhere in the world, and as such is dominated by excess "free" electricity from e.g. hydroelectric power that is generating more electricity than can be used (or transported).
Well, it's not true. Bitcoin has increased the demand for coal power in China. Bitcoin miners flocked to New York State for cheap natural gas power.
Green energy is not necessarily the cheapest form of energy. If it were, it wouldn't even be _hard_ to stop burning fossil fuels and prevent climate change.
Here's a NYT article about Bitcoin miners moving to New York State last year, but not for natural gas -- instead to a depressed ex-industrial town that has overprovisioned hydroelectric, as you'd expect:
Green energy isn't the cheapest source everywhere in the world, but Bitcoin mining has no geographic restriction. Instead of picking a location and then choosing an energy source once there, as most of us do, they can first pick a green energy source and then choose a location anywhere in the world that provides it.
Thus, there's no analogy to the challenge the rest of the world faces in moving away from fossil fuels.
That might be the case in some countries, but in China for example much of the mining is done with stolen electricity, or bribing officials for an unreasonably low rate.
> In that sense, the coin would create an economic incentive to pollute
I think if anything it creates an incentive to use renewable energy. If miners are able to pay less for power, they make more money. As the cost of renewables continue to drop, more miners will move to it.
If it uses many orders of magnitudes more energy per transaction than all the existing ways of people sending money to each other, it's being peed away.
It's worse than that; there is essentially no relationship between the amount of transactions processed and the total amount of actual energy burned so the system is obviously wasteful (compared to other systems where e.g. less transactions = less energy spent)
Sure, but estimates for marginal energy costs for bitcoin transactions sit at around 150-250 kWh.
A 310L fridge [1] (random one I found) for context uses about 280 kWh per year [2].
I think it's pretty ridiculous to say that the average bitcoin transaction provides approximately half the value (in the best case scenario) as having the ability to refrigerate food for a year. I'd say "pissing away" is a pretty fair comparison.
It's being used to help people send money to each other very very very inefficiently.
As someone else in this thread pointed out, there's only 500,000 active Bitcoin addresses, and yet the Bitcoin network consumes the same amount of electricity as the entire country of Denmark
> It is being used to help people send money to each other.
Probably 95% of it is being used for speculation/gambling and scamming the uninformed. 4% on drugs, and 1% on anything else. I'm being generous here. Bitcoin advocates are pool sharks, they want the rest of the world to be their marks.
Who the hell pays rent with bitcoin? Who buys groceries with bitcoin? Bitcoin could drop off the face of the earth this instant and I wouldn't shed a tear.
They generally have high capex and low opex, having a strong outstanding demand by a centralized consumer willing to build a data center nearby makes the business case for a solar farm more attractive.
It is not irrelevant. Crypto mining provides a very nice energy sink for inconsistent renewables to put their energy into, when that energy would have gone completely to waste.
It is a subside to renewables, where they can make money on energy that would have been thrown away. It allows better managements of the peaks and troughs that commonly plague reneweable energy sources.
This perfectly encapsulates exactly how wasteful and backwards PoW cryptocurrencies are. In a system that wasn't wasteful, adding in huge amounts of otherwise unused renewable energy would be a great thing because it'd mean more energy for doing useful work (i.e. processing transactions), instead, adding in all that extra energy actually decreases efficiency because everyone else must now work harder to process the same amount of transactions because of the increased difficulty rate caused by more people competing for block rewards. These new competitors don't actually add value to the network, they just make useful work more expensive from an energy perspective.
It's not a subsidy to renewables. Bitcoin miners don't give two shits about whether their energy is green or not.
You want to help level out peaks and troughs of electricty production: Improve battery technology, don't just waste the energy generating sha256 over and over.
>Before: The energy from a hydro plants gets wasted when it is night time.
Hydro plants can usually turn off relatively quickly. They can be used as pump storage, which is an incredibly efficient way of storing energy - >70% efficiency [1].
Energy is created to meet demand. It is not consumed to meet supply.
The exception to the latter is where excess energy is created because a method of energy production is created to meet peak demand, but generates more energy than is needed off-peak. While some of it could be stored, storage is inefficient and it is better to sell the excess energy cheap, so that you can continue to expand your energy production capabilities.
Miners take advantage of off-peak energy excess, whilst at the same time, increasing the on-peak demand. This means that the provider of the cheap renewable energy source needs to invest in producing more, and cheaper energy to meet the higher peak demand.
I work in the FMCG industry, and we treat supply is effectively unlimited. You will constantly have suppliers begging you to buy more, and to buy new products as they expand their range.
However, as a trader, you will only ever buy what you expect to be able to sell. It would be pointless stocking up on goods which you aren't going to sell, especially in FMCG where you need to sell them before they go out of date, else you lose all of the money on your purchase. Sales are almost always the constraint under normal operation.
Suppliers are attempting to create new demand by creating new markets. They usually offer freebies or discounts for new products in order to gain penetration, but it is then up to the market to decide whether that demand warrants them to continue producing the good. Without demand, they cannot continue to produce, because it would be a loss making endeavour.
Electricity can be seen under the same lens. Like FMCG, it loses value with time rapidly, because it gets lost as heat through storage, and it also costs to store. An electricity producer is never going to create more than they expect that they can sell. They might produce a bit more than actual demand as the means to try and capture new markets for greater long-term profits. Mining is part of this - if they can capture a new market for bitcoin mining, they will generate profit in the long term by continuing to supply that demand.
> I'm shocked and disheartened by how infrequently environmental concerns are brought up when discussing crypto. Proof of Work vs Proof of Stake, security, storage size - these are problems for the network and those that want to see it become a real part of our economy. (I am one of those)
You know that one of the major motivations for Proof of Stake is environmental, right? Proof of stake eliminates the energy waste problem. That is one of its major motivating factors.
yes, definitely, and that's why I'm excited about it. What I was writing about when I posted that comment was more about how the environmental impact is often just left out of the conversation - and I was surprised that the original article didn't even give it a mention.
Ah, I guess I just assumed it was implied at this point. People in the space consider it pretty important, I think, and it's well understood as one of the principal motivations for the switch to proof of stake.
Proof of stake may not involve energy costs directly but it has far worse consequences - costs are just shifted into political plane. Which is essentially what bitcoin was designed to avoid.
You do know that idea of pos is older than PoW, yet nobody cared for it exactly because you end up with financial system run by politicians - exactly where you started.
I see people say this sometimes, and then provide no real evidence that it is at all true. PoS systems exist now, they don't have political problems to speak of any moreso than PoW coins. I see no reason to think that PoS would induce any sort of great political struggle that PoW wouldn't.
It’s natural way of life. If a system is subject to being controlled by political process, which PoS is unlike PoW, it will eventually be overrun by politicians. Just common sense.
they cannot without expending large amount of energy and even then it will look extremely shady to both old and new nodes. in pos you can generate an entire new blockchain from genesis and new nodes won't have a clue which chain is "real" while old nodes will be very much confused having to make a decision on the split and reorg.
point is - pos is based on trust, pow is based on laws of physics.
A PoS that actually matters will turn into a political game as large stakeholders play negotiation games of where the project goes next. Much like stockholder corporations today.
Serving advertisements is certainly very bandwidth and energy intensive at least when talking about news/media sites.
The majority of the data that is getting pushed around during a page load is ad delivery or tracking code to inform the ad delivery. That is a lot of servers, load balancers etc etc working hard pushing around ad code. The actual text of a news article is a tiny part of the whole workload.
Once the site is being loaded by your browser (ie you have downloaded all the JS and your machine has parsed a few MB of ad/tracking code), depending on the site's ad provider(s) there is potentially a real time auction going on for every ad slot on every page load. Multiple ad networks hold automated auctions within themselves which are rolled up into an auction between the winner of each of those auctions. There are literally banks of big beefy servers scattered around the world bidding on ad slots 24/7.
A breath-taking amount of energy and bandwidth get used up to display an annoying 'sweater for dogs' ad next to a news article.
They do significantly more than this, even if you wanted to (incorrectly) classify all of their products like this, they actually do more than that to entice people in.
You mention proof of work vs proof of stake, and then two sentences later you claim that nobody is paying to the environmental impact of cryptocurrency mining.
The whole point of proof of stake is to avoid the energy waste that proof of work requires to secure a blockchain. It's not just a technical challenge -- it's one potential solution to very problem you're describing.
Is proof of stake actually going to work at scale? I don't know for sure, and I don't think anybody else really does -- but the point is that not only are people talking about the environment, they're actively working on solutions.
Bitcoin does use a lot of electricity, exactly how much is hard to judge, most of the shock headlines seem to trace their way back to Alex De Vries who uses some questionable assumptions. He seems to calculate the energy use by taking the price of BitCoin and guessing how much profit is being made by miners and how much they pay for electricity.
Nevertheless it is safe to assume that the energy use is significant, even at half or a tenth of Digiconomist estimates it is still quite large. It is broadly true that the energy use of Bitcoin is related to the value of Bitcoin, via the mining reward.
The arguments against the energy use that are based upon the merits of Bitcoin are not valid. If Bitcoin is useless and doomed it stands to reason that the energy consumed is a waste, but that is true of anything. To argue specifically against the energy consumption you have to make the case that it is not worth the cost even if Bitcoin is a success.
If you assume that the costs and profit for mining are more-or-less static then the mining network will use roughly the same amount of energy if Bitcoin doubles in value every reward halving. That flattens out to about a 20% increase in value every year. To accept that the energy use will continue at this rate you would have to also accept that Bitcoin will increase in value at that rate. To date Bitcoin _has_ increased in value quicker than that, which is why the energy use has grown so high. Hardly anyone would argue that the increase in value will be sustained perpetually. If just holds its value the mining reward and power consumption will reduce accordingly. If Bitcoin ends up worth pennies, the consumption will be minima.
Furthermore, Bitcoin mining adds options to _how_ electricity is generated and consumed. Being able to convert electricity into money not only acts as a stimulus for cheaper energy generation but as a motivator for building new capacity. We are already at a point where Solar and Wind are becoming the choice not only for Environmental but also Economic reasons. Any new power plant needs customers, those customers take time to appear. If a power plant sold excess generation at cost to mining facilities the investment required to build a new plant is greatly reduced. This presents the possibility of developing nations introducing power generation to areas that currently have little or none.
If Bitcoin did end up stimulating the increase of carbon neutral capacity and efficiency, then people in the future might end up making the argument that Bitcoin ended up carbon negative.
Environmental costs are( to some minor degree ) included in the energy costs and payed by Bitcoin users. Markets tend to favor efficiency and bitcoins compets with less energy intensive crypto currencies. In the end, the most cost-efficient project should win - which will also reduce environmental costs. This process is slowed down by the fact that only a tiny part of the environmental costs is represented in the energy costs.
>"But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being ... But we need to talk about the environment."
Great, put it in context then:
A. What is the total energy content of the resources consumed each year?
B. What percent of A is lost to "waste" such as powerplant and grid inefficiencies?
C. What percent of the remaining is spent on crypto?
D. What other things are consuming the same order of magnitude or higher than crypto?
E. Which energy use described in D is easiest to make more efficient without harming the purpose/quality?
Then improve #1 discovered in E until it is below #2, then start work on #2, etc.
I think you will find stuff like getting everyone to use i.reddit.com instead of reddit.com and netflix to stop their annoying auto-playing previews should come before anything to do with crypto.
On the other hand I am shocked and disheartened by how infrequently environmental concerns are brought up when discussing the cost of maintaining the US dollar as a currency. Specifically, it takes a huge amount of energy to maintain the military and police power that backs the US dollar.
Your understanding of why bitcoin uses energy is completely skewed. Bitcoin doesn’t use energy to process transactions or ensure a functioning p2p network, bitcoin is the first time in history of money, that money can be expressed as energy units.
Bitcoin doesn’t use energy, bitcoin is energy, or more specifically bitcoin is as much energy as people value the function and security of money.
Trying to reduce it is absolutely misguided - if you figure out a thousand times more efficient way to generate sha hashes (mine bitcoin), it won’t matter in the slightest - bitcoin mining difficulty will rise thousandfold and exactly the same amount of energy will be spent going forward.
Or a little more precisely a bitcoin is a provable record that a significant quantity of free energy was once turned into heat. So it does use energy, in the creation and once it is created, that energy is wasted unless the created also needed to heat something.
energy would be wasted if it wasn't possible to prove the thing you said bitcoin proves. proof is the product of spent energy, therefore it's not wasted.
that’s the whole point - bitcoin manages to do that without trust. Trust is dangerous, we’ve been dealing with trust based financial system failures for hundreds of not thousands of years.
> that’s the whole point - bitcoin manages to do that without trust.
Well that's nonsense for a start.
Bitcoin simply shifts trust from a middleman to a vendor I am interacting with.
A middleman that is highly regulated, with all sorts of protections and restrictions in place to protect me.
A vendor who has a financial incentive to rip me off, and thousands of years of history to show us just how much they do when given the chance.
The trustlessness of cryptocurrencies is a lie. They move trust from a small number parties you can actually trust most of the time, to a huge number of unknown entities with perverse incentives.
nope, you're the one talking nonsense. when your bank tells you you have $100 on your account - it's a lie, all you have is a record in a database and never actual $100 in a safe to back that up.
all you have is trust that the bank will provide you $100 when you ask for it.
> nope, you're the one talking nonsense. when your bank tells you you have $100 on your account - it's a lie, all you have is a record in a database and never actual $100 in a safe to back that up.
Don't care.
> all you have is trust that the bank will provide you $100 when you ask for it.
Yup, turns out this trust is pretty good, it's backed up by all sorts of regulations and insurance, all sorts of protections and security, and in the last resort by the state.
> when you have 100BTC, you actually have 100BTC.
Who cares? When I have $100 in my wallet, I actually have $100.
You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.
> When I have $100 in my wallet, I actually have $100
yeah, tell that to Venezuelans.
> You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.
that wasn't actually the point, or at least was completely off target, but sure, i can address it - banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies, they will just have to face the reality that nobody is going to inflate them out of their financial screw ups.
and finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc - i'm ok with your choice. just get off your high horse and don't claim nothing should be attempted to fix that by and for people who are fed up.
> banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies
Then they, and I, have no incentive to use cryptocurrency.
>finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc
So far the current sytems in western democracies have outperformed any other system, ever. Further, having a centrally controlled currency is a good thing, yes, it allows monetary supply to be altered and manipulated to support the economy. Unlike, say, gold, which turned out to be a bad choice for a currency.
I'd far rather have monetary policy set by a government, or a quasi-independent entity like the Bank of England, than by some geeks and a bunch of miners.
> claim nothing should be attempted to fix ...
Your 'fix' doesn't actually fix anything and it makes a lot of things worse. That's why you get called on it.
Missed the 'vendor' part. Most folks dealing in bitcoin, don't trade a whole coin at a time (which is what, $20K?) They use an exchange. Which is the same as now, except without any federal safeguards. In fact bitcoin exchanges have infamously been hijacked and abscond with everybody's coins.
And the other 'whole point' is, its ridiculously expensive to the planet. Its playing mind-games with the ecosystem, burning terawatt-hours to enable imaginary points to be traded without imaginary safeguards.
Of course they are just like religion, law, right and wrong and on and on. You can tell what is real, and what is all in Sapiens' heads - ask your dog. They know what real is.
I don't think you understand what you think GP doesn't understand. Bitcoin uses energy to establish distributed consensus. What's technologically missing from the protocol is an energy-efficient way to establish distributed consensus, not a faster PoW algorithm.
Bitcoin is the most energy efficient way to establish distributed and trust less consensus. Have better ideas - link me to your whitepaper, I’m sure you will become more famous than satoshi.
The best way to make a service provider care about the environment is if trees can somehow be the customer.
A big part of a decentralized database's design is its protection against DDoSing. Proof of stake is very low environmental cost but you'll discover that the proof of stake networks with low fees can be DDoSed extremely cheaply.
Other networks use the networking architecture to protect against DDoSing.
> amount of energy being used to mine bitcoin is a real problem
Yes, it is. Although I'd like to say that if bitcoin energy use has a crowding-out effect, like an electric car does, then I'd favor mining bitcoin resulting in more hydropower dams being built than people doing business that can't be centralized like mining can and requiring liquid (dirty) fuels.
Datacenters as a whole can be made really efficient and are, in my opinion, a decent investment that can be repurposed better than e.g. an office building full of people doing traditional banking.
So it's not super straightforward even if on net we don't need cryptocurrency miners and I of course agree that it's bad for the environment.
Isn't the environmental concern temporary? Once all the bitcoin has been mined, the computational requirements for maintenance of the network will certainly decrease significantly.
One could argue that Bitcoin should reach the limit sooner, so that mining difficulty would not increase so much, but the mining incentive is mainly a bootstrapping strategy for a currency. Now that everyone is familiar with how the ecosystem works, another coin could launch that was identical in every way except a shorter period of time before all coins were mined.
The energy cost isn't exactly in creating bitcoins. The energy cost is in securing the network against people doing 51%-attacks, and bitcoins are set to be minted out of thin air and transaction fees are paid out in order to incentivize people to protect the network. Mining will still be necessary after all bitcoins are minted, or else anyone could 51%-attack the network and double-spend bitcoins.
What percentage of CPU power do you think will be mining bitcoin 5 days before vs 5 days after all of the coins have been mined?
If you think the amount will be roughly equal, then you are predicting that transactions that end up in blocks will need to voluntarily contribute an amount equivalent to the block reward in order for the system to continue functioning. This seems unlikely to me.
Transactions already include fees today. The minting rate of new bitcoins goes down over time, so when minting finally ends, it won't be a sudden change to the mining rewards. It's expected that the mining reward will be mostly transaction fees by the end, so the mining reward will only be a little affected by the minting being stopped.
> the minting rate of new bitcoins goes down over time
Isn’t the difficulty level calibrated based on 10 mins per block? I don’t see how your statement above can be true. Seems like it goes from one reward every 10 mins (on average) to 0 rewards as soon as the last one is mined.
There's a block every 10 minutes, but the number of bitcoins minted per block goes down over time. It used to be that 50 bitcoins were minted every block, but currently only 12.5 are minted each block. The amount minted halves every four years. (Personally, I think it's too extreme that it instantly goes from x to x/2 in one block. The mining rate generally dips a bit for a while when this happens. I think it would have been better for the minting to decrease in a much smoother way.)
If you care about the environment the best you can do is to stop using bitcoin and become vegan. And don’t use the Internet. Every single human wastes energy. Make something more efficient and it will gain currency, thus harming the environment even more. Technology and environment just don’t mix. You can talk as much as you want, but unless you become a full fledged Amish, that talk will always be hypocritical.
I am not going to make the argument that Bitcoin is energy efficient cause I know that it isn’t, but it is designed to be inefficient on purpose in order to provide trust in a decentralized way.
Does that make it a good use of energy? That is debatable, but energy is used for all sorts of things. How much energy is spent producing weapons, bombs, tanks, etc.? How much is spent producing addictive drugs? Cigarettes? Non-recyclable plastics? How much is spent on illegal surveillance of individuals? Why is it that no one ever talks about these examples?
It is very likely that Amazon, Google, Facebook, Apple, Netflix, Microsoft, etc. each use orders of magnitude more energy than Bitcoin does yet no one ever talks about that either.
Bitcoin gets trashed because people believe that the energy used to run the Bitcoin network is wasteful, but the energy used for other things is not. I am sure that opinion is shared by the majority of folks here as well, but that is what it is. It is an opinion. Does Facebook really improve our lives in a way that can totally justify the energy needed to run it?
Bitcoin mining will accelerate environmental friendly energy production because excess energy can be converted into Bitcoin instead of going to waste. Miners who don't use excess energy will be priced out and there is plenty of excess energy around the world.
> But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.
How much energy was used to establish and perpetuate the existing fiat currency infrastructure? Has any such comparative analysis been done? Without such an analysis, it seems a little premature to unilaterally declare that bitcoin is a real problem by comparison.
And you think the existing infrastructure for Bitcoin or other cryptocurrencies cannot support such services? The smart contract languages were designed for such things as far as I understand.
Currently? No I don't believe that this infrastructure comes close to providing the functions of the financial industry, and as such the energy comparison are completely spurious.
The smart contracts languages can have whatever intent they like, the fact is that comparing the power use of a full financial system to something which is effectively operating as a bad payment processor is so wrong it's funny.
You seem to be missing the fact that the infrastructure in place is sufficient to not only specify but also enforce the properties needed for all the functions you describe. So while you call the comparison spurious, the fact is that no additional energy would be required to achieve the functions you think are missing. So the comparison is not as spurious as you imply.
Most* Bitcoin mining is done with renewables. Mostly hydro. Hydro power is often remote from cities and other main electricity consumers, and too weak to transfer over long distances. So they’re a natural place to set up Google data centers and cryptocurrency mining operations on-site, which is pretty much what’s happened with Bitcoin.
*Don’t have a citation but there may be some research on this being published soon, it’s an open secret in the industry.
Independent of whether this is true (and I'm sceptical), Bitcoin mining requires computation (and lots of it). Computation requires power. Even if that power is renewable and would be difficult to use for things other than computation, there is still a huge demand for computation. Hence it's still a choice to spend that power on Bitcoin mining rather than other computation tasks such as simulations for scientific research.
Yes that’s a thing. The problem for cryptocurrency is there’s no free lunch, and to gain significant security of a public ledger you have to spend some resources to do so. Bitcoin spends electricity, Chia.Network is working to spend unused disk space instead which is an interesting approach. Others like Algorand, Dfinity, Ethereum 2.0 etc are working to hopefully prove that rule can be overcome with less resource-hungry sources of cryptographic randomness. Hopefully they’ll succeed, but overcoming that rule would be a significant technical accomplishment, and not a given.
> The problem for cryptocurrency is there’s no free lunch
There absolutely is a free lunch.
In renewable energy, there is a massive amount of "free" energy that is not being used for anything, and is literally being thrown away, because it can't be stored or used during the time of day that it is generate.
That energy is free. There is zero downsize to spending it on guessing number. It might even be negative value energy, actually.
Did you know that sometimes energy prices go into the negative, and people will pay you to use it? Something to do with the electric grid, and difficulty of destroying energy, I am not sure.
You're asserting that there's a huge demand for remote offline computation by scientists, but no such market exists as far as I can tell. Cryptocurrencies might end up creating such a market eventually, since they're researching solutions to the problems of verifiable and secure decentralized computation (e.g. Golem) and incentive for file storage (e.g. Filecoin).
Are you claiming that crypto-mining is pricing out useful scientific research? If so, can you provide evidence for that claim? Keep in mind the geographic nature of electricity generation and transmission.
I don't have a citation either, but you can empirically determine this to be likely by just comparing the reward per kW spent and noticing that it has become less than the cost per kW of non-renewable energy.
The "blockchain is bad for the environment" argument has been shown to be grossly uninformed and overstated. It is pretty much all based on one source that has been thoroughly discredited. See this article for more information:
The energy bill is being paid by the users and holders of the currency. It’s an expense that will make bitcoin lose against its more energy-efficient competition.
Since many people including me compare bitcoin to gold in terms of it as an investment that is not based on any real-world usage, how does the environmental impact of mining bitcoin compare to the environmental impact of the total amount of gold mined from the earth that is only used for investment purposes?
Is that a real question? If so, I don't know the answer (I can guess that gold is better per value, worse in total). But phrasing it like this makes it sound like that would be a good excuse to pursue crypto anyway.
It is a good reason to pursue it anyways. Its environmental impacts compared to actual mining of the earth is little. And we can't just say that energy usage by humanity in Kilowatt hour is inherently evil. Why not power the mining equipment using nuclear power? Humanity in my opinion won't use energy at some status quo into the future. I predict we will use more and more as we venture into the solar system, and we may see energy as following some sort of Moore's law into the future in terms of cost and local environmental impact. Wouldn't that change the situation?
Since the point of PoW is to consume your limited resource exclusively for it to avoid anyone from cheating the race, you can try to come up with a way to waste money in a fair way without environmental impacts.
Bitcoin is currently estimated to be responsible for ~0.21%, more than either Hong Kong or Iraq use [1]. Criticisms of Bitcoin have been around as long as the hype - cryptocurrencies were never going to save the world.
Actually, cryptocurrency mining serves an environmentally-friendly function in energy markets because it absorbs excess capacity in the geographic regions where mining is done (i.e. where electricity is cheap) and allows it to be “exported” rather than go to waste. Interesting stuff.
Did you know that some governments subsidize energy prices to make it easier for their populace to pay the bills and to encourage businesses to come to their country?
If cryptocurrency mining goes to countries with subsidized energy and they become part of maxing out that country's energy output, the country may be forced to create new energy sources to provide to the population (aka, higher environmental impact + cost). This push may be partially blamed by the cryptocurrency servers.
In other words, not all cryptocurrency mining servers as utilizing just the extra capacity casually created by a city/state.
I dont think we have any real evidence that cryptocurrencies are predominantly using polluting methods of power generation. The entire argument falls over if it is all renewable energy.
This is decidedly not true. Electricity transmission has substantial losses over long distances. Check out this article for more information about how the crypto mining industry uses electricity.
Energy is a product on the market. Whoever wants to pay for it is free to do it, what’s your problem?
Besides you seem to be missing one important fact about energy - it is very expensive to store much of it, which is why many bitcoin farms use up available excessive energy because that way it makes them more profitable and the grid more stable.
> Energy is a product on the market. Whoever wants to pay for it is free to do it, what’s your problem?
Carbon output, on a global scale, which is already hard enough to keep under control. We don't need yet another massive source of energy use, particularly one that gives us virtually nothing in return.
As far as I know, large bitcoin-mining setups usually include their own solar farms (or other energy production facilities), as it is cheaper to generate your own electricity than buying it from the grid.
There is simply no comparison. The banking system is many many, many orders of magnitude more efficient and to suggest otherwise is frustratingly disingenuous.
No it isn’t, banking system is idiotically expensive using much more raw energy but also is open for corruption, is run by greedy bankers that governments have to bail out all the time for taxpayers money, etc, etc. current financial system is many orders of magnitude more expensive and dangerous.
Suggesting otherwise is not just disingenuous - it is malicious.
Estimated energy consumption - 46TWh [0]. Average transaction rate seems lower than 4/s at all times so let's use 4 [1]. That makes 126M/year.
Visa process 111B transactions per year [2] and mastercard 65B [3] for a total of 176B.
If those transactions alone were as energy expensive, then that would account for about 64,000 TWh.
Global energy consumption (all kinds) is about 110,000 TWh
For traditional banking to be more expensive in energy per transaction, it would seem to need to account for more than about 60% of all energy used if all banking were only these card payment services and nothing else.
Appreciate any checking of figures or calculations, though unless there's something very wrong the rough outcome should be the same given that I've only included a slice of transactions.
per Transaction calculations are completely flawed. If transaction cost was the primary goal - bitcoin would have been a centralized mysql database. Decentralized and secure ownership of your assets that doesn’t involve trust, politics and military is what important in bitcoin.
And by the way with payment channels all your numbers are irrelevant anyway because your assumption of 4 tx/sec goes out the window. Try again with 4 trillion tx/sec. And keep in mind that there is no upper limit.
> By what measure do you want to back up the claim that the current system is far more energy intensive? I'm trying to find one and honestly struggling.
how much damage financial and environmental have politicians and military have caused over the last 5 thousand years? yep, take that into account in your calculations.
You made a very specific claim which you seem reluctant to back up so we can leave that there. If you want to discuss in good faith, please try not to shift the goalposts so much. For example, your reply suggests that with crypto there would have been no military or political actions that were environmentally damaging.
i don't see a lot of good faith in your arguments if you keep sticking to 4tx/sec and measuring bitcoin costs in per-transaction terms.
i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.
> i don't see a lot of good faith in your arguments if you keep sticking to 4tx/sec and measuring bitcoin costs in per-transaction terms.
edit - I haven't, and my last comment contained nothing to do with per-transaction figures.
I've asked what basis you made your initial claim on, and provided several options where I've looked - transaction rate as currently happens with bitcoin, market cap and daily volume of transactions. None look even vaguely reasonable - so again, what was your initial claim calculated on? What measure were you using and where did you get your numbers? Have you actually tried to work it out?
> i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.
We have current use, how does that actually compare to the current banking system you were saying uses more energy?
This is by far the least productive HN thread I've ever been on. The article just isn't related to a raw energy calculation, as that is not impacted by where the energy comes from.
edit - noted. Avoid crypto threads on HN as they're like discussing things on reddit.
you're technically right that the article i linked isn't making the same calculation as you made. I'm not sure why you saw it as a rebuff or some kind of argument for/against. I linked it because i'd imagine that a big concern about blockchain energy usage is the environmental impact.
> banking system is idiotically expensive using much more raw energy
It uses much more raw energy because it services the financial needs of most of the planet. Bitcoin dubiously services the needs of a handful. This is so obvious that I suspect you're not arguing in good faith.
Yeah, way to miss the point. Bitcoin is money where security is expressed in terms of energy. Banking system uses energy and military to achieve the same job. Do i really need to elaborate further?
No goalposts have moved. Banking system involves politics and military in securing your finances. It is therefore many orders of magnitude more expensive than bitcoin even if you normalize by market cap of transaction volume or pick your own metric.
Politics and the military are the foundation of all society. Those things won't go away because of cryptocurrency, so repeatedly bringing them up doesn't help your point at all.
> just an artifact of infancy of our civilization.
Just an artifact of all of human history.
>those things will become irrelevant to financial system based on bitcoin
I don't think there is any point in further discussion; we are simply living in two different realities. The military and the military industrial complex are not going anywhere, certainly not because of cryptocurrency, the notion is laughably absurd.
> Banking system involves politics and military in securing your finances
I'm not a fan of the current implementation of cryptocurrencies but you have a point here. Plenty of wars and armed takeovers have been driven by the prospect of accessing financial systems and therefore plenty of resources are spent to prevent that from happening.
only for somebody not willing to think about how much damage corrupt (and not corrupt too) politicians and military have inflicted upon this world during short history of human civilization. financial and environmental.
if there's a chance to exclude them from the equation on security of financial system - it's a no brainer.
> My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.
Seriously?
By the way, the negative environmental impacts will be significantly reduced after ITER is ready.
Why is it a tautology, and why would it be ignoring the fact? I am not. I am only stating that it will be less of an issue, because well, it will be... that is, if everything turns out to be working as ITER "predicted". Isn't this correct? We are aiming for "cheaper" and "greener" electricity, some even call it "infinite electricity".
I just feel like it's a bit ridiculous to downplay the environmental impacts of bitcoin mining by saying "it'll be fine when we have fusion!" because we don't have fusion today, and it's likely to be a very long time before fusion is commercially available.
Also, your initial comment said:
>By the way, the negative environmental impacts will be significantly reduced after ITER is ready.
ITER is not a commercial reactor. Even after it's construction is completed (expected to be, what, 2025?), we still have a long way to go before you can use fusion power to mine bitcoin.
Meanwhile, climate change is happening now. We need to be reducing emissions now.
> downplay the environmental impacts of bitcoin mining
I didn't, I just said it won't be an issue when ITER is ready, which it probably will, and in our lifetime. We don't need to have it available to us, it would be enough for those miners to use it and the impact would be significantly reduced. I am not saying that it isn't a problem right now, because it is, but it won't always be the case so there is a long-term solution in the happening, which is good to know.
I am not saying we shouldn't reduce emission and whatnot right now, of course we should.
you've got it wrong mate. Bitcoin just reinforces the existing incentive to capture and utilize energy as efficiently as possible. The reality is closer to Bitcoin leading the push toward renewable energy than it is to Bitcoin destroying the environment. Your thinking is regressive
I feel that people aren't talking about the environment enough when it comes to bitcoin (and many other topics). More in-depth research and knowledge on the matter (like this article, thank you for sharing) might be better known among those who spend more time reading about crypto, but most of the time environmental concerns are left out of the conversation.
Problematic topics are usually omitted from discussions when they are complex or not obvious and in the forefront. The conversation goes elsewhere, and we turn our heads to follow it.
From this article:
> As with many dubious claims, it shouldn’t come as a surprise that much of it is underpinned by a single, leisurely researched source: Digiconomist.
> In fact you’d be hard pressed to find many articles in the press pushing the environmentalist, anti-PoW narrative that do not link back to that one source. But hey, can you really blame them in today’s sound bite media environment? Research is hard and time consuming.
The author's POV is a little different in that he is addressing anti-bitcoin alarmists - but, underlying this is the argument that research and shared knowledge on the topic is scarce. This is the kind of content I want to see more of.
I'm happy this comment sparked some discussion here.
it'd be great if more people would read this link... but, since that's not where we're at on this forum here's the synopsis:
"""
The Takeaways
* Contrary to what you’ve heard in the media, bitcoin mining is not an environmental disaster. In fact, it is one of the cleanest billion-dollar industries on the planet.
* The combined total bitcoin mining network draws less power than global gaming consoles running 4 hours per day.
* Bitcoin mining is mainly powered on renewable energy, at levels more than four times higher than the global average (>77.6% vs ~18.2%).
* Every year, enough hydro power is wasted in Yunnan and Sichuan alone to power the Bitcoin mining network many times over.
* Bitcoin miners are highly mobile and can therefore serve as cornerstone demand for low-cost stranded renewables.
* By increasing profitability and lowering reliance on subsidies, bitcoin mining can positively contribute to the development and scaling of renewable energy projects wherever conditions are the most favourable.
But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.
Of the 203 comments (at the time I am posting this), there are only two uses of the word "environment". One of these is about the "regulatory environment".
Let's say Bitcoin, Ethereum, or another coin achieves an economic value & level of efficiency that makes mining an accessible investment for low-income people. Instead of server farms in Iceland, mining would be done by millions of people around the world. Some of the energy used for this would be renewable - but plenty of this is going to be coming from coal. In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)
My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.
I'm not here with an answer. There are many problems that I think crypto can solve and I'm glad it is something on the horizon.
But we need to talk about the environment.