So, this is the next attack vector? Bitcoin is not green?
The energy put into Proof-of-work is what makes the system immutable. People who complain about bitcoin's energy use, don't seem to grasp what makes the bitcoin Blockchain immutable. In order to change the Database, you have to go back and do the "work" which becomes practically impossible after approx. 10 blocks. You take that away and you'll make the system Tamper evident, and not Tamper Proof as it is right now. It's the only secure data base ever invented, and thats because of the energy used to secure it.
I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost? All of these are less important than the only sovereign moneys system in the history of man-kind. So, please, stop complaining about the energy use, i left my violin at home.
Once you tie the benefits of bitcoin to something as tangible as the "benefits" of a weekend in Vegas, people will back off the application as the problem.
If grid energy is renewable, bitcoin is not a problem, and actually helps push increasing energy infrastructure. In the ideal world...
This is the attack vector that works on people who will never read Atlas Shrugged because they read a hit piece in Salon about Ayn Rand. This will keep them out of bitcoin, which I find kinda hilarious.
demand and offer, I wander why the elitist hacker rank "liberal" people don't get it, the difficulty is so high because there is a lot of hash power, the network would be fine with much less, I think around 15% of the current one.
On the logic of banning stuff for power saving, we should ban video games and movies.
Of course the network could operate with less competition. But it is designed to incentivize participation.
The temptation to dominate the network / hash power inevitably produces high energy usage. Again, by design.
I'm not sure that's a liberal standpoint, and admitting the reality of some people associating bitcoin mining with "wasteful" energy usage is not a flaw in logic.
Most of the people on this site are hard left, and not very much into hacking... there are junior developers and wannabe CEOs with MBAs here. You're not going to find cypherpunks on hacker news, generally.
So, anything that fits the hard left agenda is promoted, without regard to its scientific or technical accuracy, even when it's against the startup ethos that created silicon valley in the first place.
Please stop your continuous stream of personal attacks and your rants against the 'left', which besides lowering the general level of discourse is factually incorrect in many ways.
You could use less spite and disdain for your comment i think. You probably already know that convincing yourself that your outgroup is dumb and unqualified is a tribal ego-boosting technique, but a reminder never hurt.
"So, this is the next attack vector? Bitcoin is not green? The energy put into Proof-of-work is what makes the system immutable. People who complain about bitcoin's energy use, don't seem to grasp what makes the bitcoin Blockchain immutable. In order to change the Database, you have to go back > and do the "work" which becomes practically impossible after approx. 10 blocks. You take that away and you'll make the system Tamper evident, and not Tamper Proof as it is right now. It's the only secure data base ever invented, and thats because of the energy used to secure it.
I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost? All of these are less important than the only sovereign moneys system in the history of man-kind. So, please, stop complaining about the energy use, i left my violin at home."
- daggerhashimoto
In addition, if Bitcoin disrupts the banking industry and a portion of wall street, we'd have to subtract their energy consumption.
It's just logically lazy to not consider if the benefits outweigh the costs, and sound immutable finite hard money out of reach of central authorities brings with it enormous benefits.
Energy for gold mines, armourded trucks, petrol moving it all around the world, printing synthetics and chemicals, 24/7 always on ATMS all over the world.
Bitcoin mining allows me to send money to my family halfway across the world, nearly instantly, without a bank.
Most of the quote was someone else's words whose comment was flagged which I thought was odd and I wanted to highlight his main point which I agreed with.
But to your question, I think Bitcoin is and will be persecuted by many powerful entities, wanting to control or kill it.
Money that has a fixed monetary policy is without question a threat to political and banking power in my opinion. Politicians and banks live off of inflationary fiat and debt. Also, fractional reserve banking. [Of course, a nation would benefit collectively from a move off of fiat money, but special interests would suffer]
Both things that Bitcoin is resistant to, which means it protects value these groups are stealing out of the currency (and the economy by 2nd order effects of bad money) and puts it back in the hands of individuals.
I don't think enough people have enough of a persecution complex when it comes to attacks on their money... and the superior alternative that is Bitcoin.
They could also profit extremely by legitimately mining now. Even if you assume they had magnitudes better and cheaper hashing technology, the opportunity cost to them of such an attack would be massive.
1000x the current mining power is 10% of global energy consumption. So they'd be spending 10% of global energy consumption for a year. This is infeasible unless done by a consortium of world governments, and to what end?
> I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost?
We should, though. War destroys the planet. Energy consumption needs to go down across all areas, including entertainment and other things that we consider fun or useful.
Yes. The people who hate bitcoin -- despite all it does for them-- generally are hating it for political reasons.
They may hate sound money, they may worship at the alter of neo-keynsianism and think inflation is necessary (how else will you pay for bombing brown people?)
But they will use the "its anti-environment" claim because that has gotten traction.
We already have a massive global propaganda campaign spreading leftist views of the environment.
When bitcoin defeats these people, I will be very happy.
Bitcoin maximalists are a curious bunch who fail to realize the service Bitcoin offers is functionally identical to other Blockchain coins, and in many cases the newer iterations add improvements and features.. whereas the Bitcoin core team holds the software with ideological constraints prohibiting upgrades to the design, to the detriment of user experience.
Additionally, the majority of Bitcoins were minted prior to 2014 so the incentive is skewed for old users to attempt to psychologically convince new adopters to purchase the "coins" they produced for low capital input by selling for a higher cost.
So, people bring up inefficiencies, scalability issues, problems with energy use, and you claim it's politics, but then immediately start attacking Keynesism, the "left", and elsewhere digging up ghost of Ayn Rand. Do you see the irony?
> In addition, if Bitcoin disrupts the banking industry and a portion of wall street, we'd have to subtract their energy consumption.
Do you seriously think that? The cost of stuff like VISA's server farms or office buildings (and the rest of the financial industry) is probably globally negligible. Not to mention similar institutions would inevitably appear for cryptocurrencies (or already have, like Exchanges, etc.).
What remains is the horrendous cost for a Bitcoin transaction vs. the negligible cost for a 'normal' transaction in most trust-based systems.
Gotta count the energy cost of staff food, transport, facilities, etc. for every VISA employee to really make an accurate comparison. Plus power drain of each of millions of POS systems, cost of maintaining redundant secure backups of records...
Bitcoin requires no other infrastructure than computers. VISA needs a lot of various things to keep it's infrastructure working.
Bitcoin is a waste of power. Mining gold, creating banks, printing money, these aren't wastes of power as the result is always something equivalent to said power. A bitcoin is just a bunch of 1s and 0s that takes 1ms to get, but wastes thousands of hours proving it.
I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost?
FWIW I complain about these things all the time and I just get weird looks.
The cost of bitcoin is not even comparable to Hollywood or sports or any of the things you mentioned. Bitcoin is entirely based on energy and those things are not. You buy a $5 movie ticket and most of that money is going to actors, visual effects artists, and all the other names you see on the credits. You buy $5 worth of bitcoin and you have bought almost $5 worth of electricity.
Gwern estimates folding@home kills about 2 people every year just in the direct cost of air pollution (to say nothing of the effects of climate change.) https://www.gwern.net/Charity-is-not-about-helping Bitcoin is orders of magnitude bigger than folding@home. It's a complete massacre.
> You buy a $5 movie ticket and most of that money is going to actors, visual effects artists, and all the other names you see on the credits. You buy $5 worth of bitcoin and you have bought almost $5 worth of electricity.
So your defense effectively is if I buy $5 of food and eat it, well it is any lost any way so I should buy $5 of bitcoin instead? I am sorry but it is exactly this kind of flawed reasoning which ensures people don't take bitcoin seriously.
I'm sorry I can't understand your comment. I am arguing against bitcoin. The environmental destruction and human loss of life caused by bitcoin is enormous.
People are always quick to point out that this is just what it takes to build a trustless and decentralized currency, which is probably correct, but it's not clear whether such an extreme level of trustlessness is even necessary (if you are not a crypto-libertarian on principle).
The benchmark for Bitcoin are normal financial transactions as they exist today (and work quite well, most of the time). So the question really is: Are you ready to have humanity spend the additional energy consumption of a country (or many countries if Bitcoin were to scale up) to run a system that offers only very limited throughput (relative to established systems) and hasn't even proven yet that it's even a viable alternative to fiat money from an economic perspective? Not to mention the scaling issues that come with such broadcast protocol.
I don't really see the widespread use, at least as envisioned by Bitcoin proponents. If it's just the decentralized aspect and transparency that you want, you can relax your trust assumptions and implement something like a distributed ledger with known identities which doesn't need proof-of-work to prevent sybil attacks (identities which of course would have to be certified in some way, unfortunate).
Oh well, it's still a very cool technology, but I hope for the planet's sake that cryptocurrencies stay in their niche of anonymous transactions for those who actually need it.
Agree. Bitcoin is a fun experiment / proof of concept.
I'd add that I hope we will eventually tackle the energy problem, hopefully without throwing away the good parts of decentralization / distributed ledgers.
It might be optimistic, but I think many early technological revolutions bring learning costs and risk environmental damage.
It's all fun and games until Shor's algorithm, anyway. If Bitcoin is broken-in-the-long-term in one way why not admit it's broken in another, and iterate to a better solution.
It's all about immutability and finite money supply. Huge achievements that are impossible with centralized government fiat.
Here's an articulate presentation on these qualities of Bitcoin that many argue are it's primary function, viewing it as an ideal store of value[0].
Here also is a book by George Gilder on the flaws of fiat currency vs sound money[1], but which also covers a much broader spectrum of economic issues we've face in recent decades, and highlights qualities of Bitcoin (and to a lesser extent gold) that counteract these trends.
They both support the argument that Bitcoin is not primarily useful as a high volume, high speed payment network (though 2nd layer solutions can serve this purpose, as well as a decrease in the rate of price appreciation long term), but rather as a store of value, mainly concerned with locking value away from central banks and governments, and in practice would as you highlight be most useful for higher value lower speed transactions.
The economic argument of sound money is that it promotes low time preference [2] vs inflationary money incentivizing high time preference.
> It's all about immutability and finite money supply.
and why do we care about those?
Finite money supply, I get. I'm not I agree but I get it.
Why exactly do I need an immutable record that I paid some guy 10 bucks for a souvenir shirt at a concert? That I stopped and grabbed a coke at mcdonalds on the way home. That I went and bought some legal weed.
It has nothing to do with recording exactly what each person bought. It’s about making sure that you can’t spend the SAME 10 bucks on a shirt AND some weed, and that you can’t pull the 10 bucks back out of the store owners’ accounts after you run off with the products.
You don't and this is why people that advocate for Bitcoin as store of value criticize the push to prioritize "low fees" above all, and are perfectly fine with these kinds of use cases being priced out of Bitcoin in exchange for security and decentralization of the network, through the ability of more users to run their own node.
Small-value and/or micro transactions are arguably never going to work at least in the way most people think about them, though lightning network may succeed in this area, but it's not the most important aspect. Instead, the existence of a money whose supply cannot be increased at the whim of political expediency is the true value.
Maybe you already know this, but there is a strong debate amongst the Bitcoin "community" of whether to accept higher fees, less transaction throughput, but greater decentralization and security or to worry a lot about fees which are rising, and increase the block size "now" because a lot of these people are upset about fees being too high for small value transactions such as the ones you seem skeptical about.
They would argue the tradeoffs aren't that bad, and also that scaling on chain can be achieved to allow for high throughput and low fees. Many don't think this is possible to even approach the volume of something like Visa so why bother and besides 10 minute block times make retail purchases challenging anyways.
Immutability comes with the territory of irreversible and unforgeable. Why you need immutability gets into the argument of why proof of work is the only way this system can work. The double spend problem, consensus, the decentralized blockchain etc etc which I'm sure you're familiar with but anyways
I encourage you to read the Gilder book, it's not that long and he's well known for seeing innovation trends before many... the value of sound money is pretty profound in my opinion. The fact that not only is Bitcoin scarce but completely explicit in its monetary policy (though there will be lost coins that fudge this a little) provides the best form of money as measuring stick that we've ever had.
TL/DR* You don't for small purchases, that use case is already solved today. Finite money supply serving as superior store of value is the point.
Oh come on. We should be charitable in our discussions. The comment clearly mentions that there are some useful applications, which cover the censorship and collapsing government use-cases. The important thing to recognize is that the large majority of people don't have these use-cases. This means that BTC becomes a niche system rather than supplanting world banking.
It isn't my energy being spent, but it is CO2 that harms our planet. Until we have zero-emissions energy I think it is reasonable to criticize systems as energy-inefficient.
Why are we blaming the individuals who use the energy rather than the individuals who make the energy dirty in the first place. Place the blame where autonomy is.
There is plenty of autonomy to blame when someone chooses to use an absurdly large amount of energy when a trivial amount would solve the same problem.
As I recall, Zimbabwe banned other currencies last time. Why do you think Bitcoin wouldn’t get banned with all the other currencies if the situation repeated? And don’t bother suggesting a Bitcoin ban wouldn’t be enforceable unless you can say why the same excuse wouldn’t also apply to every other currency.
At the current estimated energy consumption, if everyone on Earth performed an average of one transaction per month then Bitcoin would use more electricity than is being generated.
It doesn’t matter that it’s not supposed to be proportional, it’s a simple scaling up from current energy usage and current transaction frequency to the world population.
All that tells us is that bitcoin as it currently exists, and as part of the way it interacts with the real world has a flaw — it doesn’t tell us if that flaw is an oversight in the design or if it’s a gold-rush and/or a price bubble because humans are being irrational.
Why measure it in energy/transaction? The energy is not used for transactions, but for securing the ledger. With second-layer scaling solutions you will have no limit of transactions per block.
Why bother with a second layer when new blockchain designs improve upon the designs of Bitcoin? The ledger is "secured" by about 6 mining pools which might even be controlled by the same people.
Second layer goes completely against Satoshi's primary design in the first sentence of the white paper - which is removing the need for third parties. The lightening network design is a siphoning power grab by Blockstream.
After all, if you look at Bitcoin from a technical perspective the services Bitcoin offers are available in Litecoin, Monoero, etc.
Payment channels and LN don't introduce trusted 3rd parties or counterparty risk.
Payment channels weren't discussed in the whitepaper, but Satoshi discussed and attempted some payment channel designs[1]. He left before coming up with a secure payment channel design. Recent improvements to Bitcoin, including the transaction malleability fix included in the recent segwit upgrade a few months ago, finally make secure payment channels feasible.
>Why bother with a second layer when new blockchain designs improve upon the designs of Bitcoin?
We can argue about how to scale layer one, but layer two always provides scalability benefits that layer one can't provide. So choose your favorite layer one scaling scheme and then use layer two on top of that.
>Second layer goes completely against Satoshi's primary design in the first sentence of the white paper - which is removing the need for third parties.
Satoshi in the whitepaper proposed SPV nodes which introduce semi-trusted third parties for the sake of scalability.
Layer two does not introduce trusted third parties. It, under certain conditions, is less censorship resistant that layer one, but that is why you want a scalable layer one as well so that transactions which need censorship resistance can fall back to layer one. There is no reason to bloat layer one with transactions that layer two can handle. Layer two helps layer one scale.
>The lightening network design is a siphoning power grab by Blockstream.
Even if this is true, and I very strongly doubt it, that shouldn't influence your view on the technology. Either it works or it doesn't.
This is rapidly becoming a thought terminating cliche.
Your claim is nonsensical and you linked to an article from a highly politically slanted site whose author doesn't understand much about how bitcoin works.
Yes, I understand that the left does not like sound money and thins that government should be able to inflate as much as it wants (to pay for all those great programs- like bombing brown people).
But this kind of false claim, that is repeated over and over and over again is just not acceptable.
It's a rejection of science to do so.
Also, the opposition to bitcoin on energy grounds is silly-- most bitcoin is mined by renewable excess energy and the system is more cost / energy efficient than the alternative, in my opinion.
Go to venezuela or zimbabwe and see the suffering of people who don't have sound money. Hell, go to a small american town where people are poor because the government has inflated the money away.
Reject a claim because you don’t like the source. Assert that the initial claim is a rejection of science. But instead of refuting the numbers with your own, you launch into an emotional attack about “the left” bombing brown people and people from developing nations having no access to money.
Why is their claim nonsensical? Just do the math, politics and countries are not relevant. Take the hash rate, transactions per second, and power consumption of any mining rig. The current hash rate is about 11 ExaH/s (; 11 Million TH/s) supporting approximately 3.81 transactions per second. Meaning power to support about 3 ExaH is used, for every transaction. Taking a decent mining GPU youre at about 3MH/J.
To perform this amount of hashing with this example it would take 3TJ. Or for comparison, the energy in about 170 barrels of oil, for one Bitcoin transaction.
The numbers may be a bit off, but they're not off by a factor 100, and my house for sure doesn't even need 1/100th of this to run a day.
To me it seems that you make the mistake of buying into the old dichotomy of 'left' vs. 'right'.
This leads you to believe that every lefty is a communist, rejects 'sound money' and supports a strong centralized government. But that's not the whole picture. I consider myself to be an anarcho syndicalist - which is pretty lefty - and I don't have a problem with Bitcoin. Quite the contrary; I support the replacement of centralized hierarchical structures by distributed democratic structures. Be it financial, political or societal.
'The left' is much more diverse than you might think. Don't let yourself be fooled into thinking that there's only 'left' vs. 'right'.
So, may I suggest that the dislike of decentralized systems correlates more with a preference for authoritarian systems?
Anyway; about the rest of your post:
> [...] like bombing brown people [...]
I think this is uncalled for. It's a strawman deflection and not a very good one at that. Warmongering has been a favorite past time of all sorts of governments, not only leftist ones.
> It's a rejection of science to do so.
How so?
> But this kind of false claim, that is repeated over and over and over again is just not acceptable.
> [...] most bitcoin is mined by renewable excess energy [...]
Do you have any pointers to refute the claim? Can you give me a link to some numbers?
> > [...] most bitcoin is mined by renewable excess energy
>Do you have any pointers to refute the claim? Can you give me a link to some numbers?
The largest cost of cryptocurrency mining is electricity. Electricity energy is the cheapest so naturally many Bitcoin mining operations are built in places that are over producing energy. The cheapest excess power tends to be hydro power, Bitcoin can be viewed as a small subsidy for new hydro electric projects when demand has not caught up to supply.
>Bitcoin mining operations – essentially massive and powerful datacenters - are located internationally, and usually concentrated where the cost of electricity is cheapest. That’s because the cost of electricity can make up 90-95% of total ongoing mining costs. These datacenter mines can be found in numerous countries, from the Republic of Georgia to Iceland, to Malaysia and Venezuela. The largest share of the miners are located in China, close to the border with Tibet where cheap hydropower is relatively abundant. - https://www.forbes.com/sites/peterdetwiler/2016/07/21/mining...
>Haobtc is also operating hydropower mining facilities in Kangding. Eric Mu, Chief Marketing Officer at Haibtc, said it cost a lot to build a hydroelectric plant, but later on it does not have a lot of maintenance costs and can use electricity cheaply. -https://steemit.com/bitcoin/@jycloud9/china-builds-a-hydropo...
Bitcoin miners move to places with very cheap/near free power. They can park the datacenter right next to the power plant so very little is lost in transmission.
Please don't fight what you perceive to be ideological boilerplate with your own—that's not what this site is here for at all. Would you please, instead, read the guidelines and then start commenting civilly and substantively?
Because increasing the number of transactions does not significantly change energy cost.
Bitcoin's daily energy cost will asymptotically approach (price per coin)*(daily miner reward amount).
As block reward decreases, we may see less energy investment in the future.
There is a loose link between number of transactions and price (network effect of more people using Bitcoin increases perceived value), but its probably a fairly small correlation.
I'm hesitant to call that a proof, there are various points in the proof that might not be false, but are certainly non-obvious.
Firstly, it seems to be enough for any alternative consensus to be impossible to maintain, rather than impossible to produce.
Secondly, to make it practically (economically) impossible to maintain an alternative consensus should requires Proof-Of-Resources, not Proof-Of-Work.
Thirdly, there's no reason to assume those resources can't be stakes in the consensus itself.
Finally, if the only way to maintain consensus is by building massive expensive specialised buildings, then congratulations you've just rediscovered a bank.
`If it keeps growing, it'll be so expensive, it can't possibly work.` Also assumes bitcoin as we know it today is fully immutable, but that isn't the case, and neither is energy production, or technology used to run the whole thing.
But you know what gets tricky, rewriting history in bitcoin's blockchain. `You'd almost have to spin up an alternate time line, and those alternate time lines are expensive, and use a lot of energy, it cant possibly work.`
The value in the future of bitcoin may be that it has a long and very public chain... and that alone is probably enough to hold reasonable utility in the future. Just like silver/gold and other scares things provided utility for quite a while. Only now of course, if it gets too expensive, another slightly different public fork will persist (or several of them).
Isn't the immutability of BTC one of the major things that proponents point to? Wasn't this why there was such pushback against increasing block sizes by just 2x? Why should we assume that a community that is so based in political rather than technical ideals will just come up with some unnamed technical solution in the future to improve efficiency?
Just so this isn't forgotten, I think we have to ask _in reference to what exactly?_ Paper money and its supporting electronic banking systems cost energy and money too e.g. delivering cash to banks and other institutions, building and powering banks and ATMs, software costs in building and maintaining electronic payment systems, etc. I think it would be instructive to see how the costs compare.
The problem isn't the energy cost, but the fact that the energy cost is going towards work that has no utilitarian purpose. Ethereum shows a potential way to fix that, and bitcoin can adopt a similar approach once the core problems of the approach are solved.
If it isn't profitable to mine, then people won't mine. Difficulty will fall, which will mean that fewer cycles (and thus, less energy) is needed to find the next block.
The author literally took the "total cost of all energy in the network" and divided it by "total number of transactions". That's not how it works. There is effectively zero incremental cost in terms of energy usage for a transaction.
The point is to measure the system's efficiency and energy usage.
Bitcoin's Proof of Work algorithm using SHA-256 and power hungry ASICs with a bottle neck on 4-7 transactions per second (average, as latency is in 10 minute intervals) or even in the case of the controversial Bitcoin-Cash with 56 transactions per second; what Bitcoin as a service does with the type of infrastructure required for the software to run can be analyzed and defined in terms of cost of operations versus alternative services which offer similar or identical functionality.
"Even as bitcoin flirts with $8,000, the price required for mining to be marginally profitable stands at a jaw-dropping $300,000 to $1.5 million by 2022 based on current growth trends and electricity use, according to Christopher Chapman, an analyst at Citigroup Inc. At that pace, the implied consumption would match that for the whole of Japan over the long haul."
This Citi analyst either doesn't understand Bitcoin or doesn't understand economics: because the protocol has difficulty adjustment and because marginal revenue will always approximate marginal cost, the cost to mine 1 BTC will always approximate its value.
Therefore, projecting the cost of mining is equivalent to predicting the price of Bitcoin. If the cost to mine 1 BTC was $1MM USD (and so $1MM/BTC), that would imply the network value of the Bitcoin ecosystem would be well over the USD M1 supply (tens of trillions, in fact). Bitcoin would have effectively replaced fiat in that world and perhaps all the cost it eliminated would be worth the mining.
In any event, from what he said, I doubt this (equity) analyst understands that he can't project $1MM BTC mining cost without at least $1MM per BTC price.
This assumes rational actors and a unified market. If bitcoin mining let's people get around currency controls the prices my end up significantly different.
It's doubtful that they would diverge significantly, unless the currency controls are so onerous that Bitcoin mining is the only solution to get money out of the base currency. Why would anybody choose to mine at a significant loss? Certainly not at the level the article is implying, with costs of mining approaching $1MM and Bitcoin (presumably) priced far lower.
It's probably worth noting that the 2022 calculation is probably taking into account the fact that the amount of BTC gained per block will probably have halved once or twice by then, which doubles the cost of mining each time. And eventually the amount of BTC per block will go to zero, meaning miners make nothing directly off of the block directly.
The network already has a system in place to combat this issue - fees. So it can technically cost $1MM to mine 1 BTC while the price of BTC is only $8,000, as long as the transactions provide enough fees to offset the costs. In practice I think that's pretty unlikely to work out that well, but that is the intended system either way.
Edit: Reading the article again, it's not clear to me they're actually taking halving into account in their calculation, and I'm also not extremely confident they're not confusing bitcoins and blocks. There are no direct quotes detailing that part of the article, and I wouldn't really expect the person writing the article to know the difference.
And it also occurred to me that something else to take into account is that miners themselves are betting on the price of bitcoin going up. So just because it cost them, say, $200,000 to mine $100,000 worth of bitcoin, if the price of bitcoin eventually doubles from the point that they mined them then they would still break even, though not immediately. So it can make some sense to mine bitcoins at a bit of a loss. I don't think it would make sense to mine at anywhere near the losses they're describing though.
If you expect Bitcoin to increase in value, wouldn’t it be a better idea to just buy bitcoins rather than buy computers and electricity to mine at a (current) loss?
I think the only reason such people would prefer mining is if it’s difficult for them (legally, practically, etc.) to directly buy bitcoins in the area they live or at the scale they desire to invest.
> If you expect Bitcoin to increase in value, wouldn’t it be a better idea to just buy bitcoins rather than buy computers and electricity to mine at a (current) loss?
Estimating how much it will cost you to mine X Bitcoin is not an easy thing to do, especially now that each block almost always has at least an extra Bitcoin worth of fees, with the highest having over 4, meaning the amount of Bitcoin you get per block can vary by approximately an extra 1/3 and this extra value is pretty random.
The power to run the hardware is also constant cost, not a one-time cost like buying a bunch of Bitcoin at market price, so while it's easy to say "Just buy when it's at X value and turn off your hardware", the miner has no way of knowing what that value is, and without knowing the future values of Bitcoin they have no idea if waiting and spending all their current savings on Bitcoin at a low price will actually net them more then just waiting it out and continuing to mine the whole time. It's a crapshoot, but the miners presumably know what they're getting into.
My point was more that it is probably acceptable to risk mining at a bit of a loss if you're confident the value is going to go up, you already invested in the hardware anyway, and you think there's a good chance you may make more then if you had just bought some at what you think will be the lowest price. That said, my example is probably more extreme then would be acceptable.
It's absolutely easy to do. The fact that it's probabilistic doesn't by default make it hard, and in fact, over long time frames, it's much easier to forecasts (expected) costs and profit for BTC miners than in most businesses (say, e.g., Walmart).
Miners have continuous liabilities in USD and so most only hold Bitcoins as long as as is necessary by the protocol (100 blocks). Further, expected fees are easy to estimate over medium-to-long time frames. I basically disagree with everything you've said here and below.
> So it can make some sense to mine bitcoins at a bit of a loss.
As soon as it's more profitable to just buy the bitcoin, the miners will turn off the machines. There's no point spending $1.01 to mine $1 of Bitcoin when you can just buy it at market rates.
> As soon as it's more profitable to just buy the bitcoin, the miners will turn off the machines. There's no point spending $1.01 to mine $1 of Bitcoin when you can just buy it at market rates.
It's not really that simple because mining Bitcoin is a lottery, and the amount of coins a block is worth is not a constant value due to being able to collect a variable amount transaction fees (Which are becoming much higher then they used too).
You can estimate approximately how much it will cost you per Bitcoin, and you can obviously view historical data on how much the mining has cost you, but there's no way to know going in that it's going to cost you $1.01 to mine $1 of Bitcoin, there's too many variables in play.
These arguments also seem to confuse energy consumption with the resulting pollution. I’d give it another 10-20 years at most until the majority of energy is coming from renewable sources, making this a non-issue as far as Bitcoin is concerned
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[ 3.3 ms ] story [ 186 ms ] threadThe energy put into Proof-of-work is what makes the system immutable. People who complain about bitcoin's energy use, don't seem to grasp what makes the bitcoin Blockchain immutable. In order to change the Database, you have to go back and do the "work" which becomes practically impossible after approx. 10 blocks. You take that away and you'll make the system Tamper evident, and not Tamper Proof as it is right now. It's the only secure data base ever invented, and thats because of the energy used to secure it.
I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost? All of these are less important than the only sovereign moneys system in the history of man-kind. So, please, stop complaining about the energy use, i left my violin at home.
If grid energy is renewable, bitcoin is not a problem, and actually helps push increasing energy infrastructure. In the ideal world...
On the logic of banning stuff for power saving, we should ban video games and movies.
The temptation to dominate the network / hash power inevitably produces high energy usage. Again, by design.
I'm not sure that's a liberal standpoint, and admitting the reality of some people associating bitcoin mining with "wasteful" energy usage is not a flaw in logic.
So, anything that fits the hard left agenda is promoted, without regard to its scientific or technical accuracy, even when it's against the startup ethos that created silicon valley in the first place.
1) What Liberal? Who brought that up?
2) You clearly respect/look up to the "Elitist Hacker Rank"
3) You admit they are better than you (in this instance) then say you know better than them. They are dumb because you see something they don't.
4) They think the exact same about you.
5) The irony of a conservative not understanding supply/demand - when calling out liberals is hilarious.
Please don't bring your identity politic bullshit into this. Liberal v Conservative, both sides can do their job without thinking about Government.
I don't see these people complaining how much energy Las Vegas wastes. Or Hollywood. What about professional sports? How much energy does going to war cost? All of these are less important than the only sovereign moneys system in the history of man-kind. So, please, stop complaining about the energy use, i left my violin at home."
- daggerhashimoto
In addition, if Bitcoin disrupts the banking industry and a portion of wall street, we'd have to subtract their energy consumption.
It's just logically lazy to not consider if the benefits outweigh the costs, and sound immutable finite hard money out of reach of central authorities brings with it enormous benefits.
Energy for gold mines, armourded trucks, petrol moving it all around the world, printing synthetics and chemicals, 24/7 always on ATMS all over the world.
Bitcoin mining allows me to send money to my family halfway across the world, nearly instantly, without a bank.
https://news.ycombinator.com/item?id=15665273
But to your question, I think Bitcoin is and will be persecuted by many powerful entities, wanting to control or kill it.
Money that has a fixed monetary policy is without question a threat to political and banking power in my opinion. Politicians and banks live off of inflationary fiat and debt. Also, fractional reserve banking. [Of course, a nation would benefit collectively from a move off of fiat money, but special interests would suffer]
Both things that Bitcoin is resistant to, which means it protects value these groups are stealing out of the currency (and the economy by 2nd order effects of bad money) and puts it back in the hands of individuals.
I don't think enough people have enough of a persecution complex when it comes to attacks on their money... and the superior alternative that is Bitcoin.
I think if some entity devoted 1000x the current mining power, they would catch up in less than a year. Historical hash rates were negligible.
We should, though. War destroys the planet. Energy consumption needs to go down across all areas, including entertainment and other things that we consider fun or useful.
They may hate sound money, they may worship at the alter of neo-keynsianism and think inflation is necessary (how else will you pay for bombing brown people?)
But they will use the "its anti-environment" claim because that has gotten traction.
We already have a massive global propaganda campaign spreading leftist views of the environment.
When bitcoin defeats these people, I will be very happy.
https://www.smartbit.com.au/charts/transaction-fees-per-bloc...
Additionally, the majority of Bitcoins were minted prior to 2014 so the incentive is skewed for old users to attempt to psychologically convince new adopters to purchase the "coins" they produced for low capital input by selling for a higher cost.
Do you seriously think that? The cost of stuff like VISA's server farms or office buildings (and the rest of the financial industry) is probably globally negligible. Not to mention similar institutions would inevitably appear for cryptocurrencies (or already have, like Exchanges, etc.).
What remains is the horrendous cost for a Bitcoin transaction vs. the negligible cost for a 'normal' transaction in most trust-based systems.
Bitcoin requires no other infrastructure than computers. VISA needs a lot of various things to keep it's infrastructure working.
https://www.youtube.com/watch?v=y3dqhixzGVo
Bitcoin is a waste of power. Mining gold, creating banks, printing money, these aren't wastes of power as the result is always something equivalent to said power. A bitcoin is just a bunch of 1s and 0s that takes 1ms to get, but wastes thousands of hours proving it.
FWIW I complain about these things all the time and I just get weird looks.
Gwern estimates folding@home kills about 2 people every year just in the direct cost of air pollution (to say nothing of the effects of climate change.) https://www.gwern.net/Charity-is-not-about-helping Bitcoin is orders of magnitude bigger than folding@home. It's a complete massacre.
So your defense effectively is if I buy $5 of food and eat it, well it is any lost any way so I should buy $5 of bitcoin instead? I am sorry but it is exactly this kind of flawed reasoning which ensures people don't take bitcoin seriously.
The benchmark for Bitcoin are normal financial transactions as they exist today (and work quite well, most of the time). So the question really is: Are you ready to have humanity spend the additional energy consumption of a country (or many countries if Bitcoin were to scale up) to run a system that offers only very limited throughput (relative to established systems) and hasn't even proven yet that it's even a viable alternative to fiat money from an economic perspective? Not to mention the scaling issues that come with such broadcast protocol.
I don't really see the widespread use, at least as envisioned by Bitcoin proponents. If it's just the decentralized aspect and transparency that you want, you can relax your trust assumptions and implement something like a distributed ledger with known identities which doesn't need proof-of-work to prevent sybil attacks (identities which of course would have to be certified in some way, unfortunate).
Oh well, it's still a very cool technology, but I hope for the planet's sake that cryptocurrencies stay in their niche of anonymous transactions for those who actually need it.
I'd add that I hope we will eventually tackle the energy problem, hopefully without throwing away the good parts of decentralization / distributed ledgers.
It might be optimistic, but I think many early technological revolutions bring learning costs and risk environmental damage.
Here's an articulate presentation on these qualities of Bitcoin that many argue are it's primary function, viewing it as an ideal store of value[0].
Here also is a book by George Gilder on the flaws of fiat currency vs sound money[1], but which also covers a much broader spectrum of economic issues we've face in recent decades, and highlights qualities of Bitcoin (and to a lesser extent gold) that counteract these trends.
They both support the argument that Bitcoin is not primarily useful as a high volume, high speed payment network (though 2nd layer solutions can serve this purpose, as well as a decrease in the rate of price appreciation long term), but rather as a store of value, mainly concerned with locking value away from central banks and governments, and in practice would as you highlight be most useful for higher value lower speed transactions.
The economic argument of sound money is that it promotes low time preference [2] vs inflationary money incentivizing high time preference.
[0] https://youtu.be/ukjDCeuNK3Y
[1] "The Scandal of Money - Why Wall Street Recovers but the Economy Never Does"
https://www.amazon.com/Scandal-Money-Street-Recovers-Economy...
[2] https://en.wikipedia.org/wiki/Time_preference
and why do we care about those?
Finite money supply, I get. I'm not I agree but I get it.
Why exactly do I need an immutable record that I paid some guy 10 bucks for a souvenir shirt at a concert? That I stopped and grabbed a coke at mcdonalds on the way home. That I went and bought some legal weed.
Small-value and/or micro transactions are arguably never going to work at least in the way most people think about them, though lightning network may succeed in this area, but it's not the most important aspect. Instead, the existence of a money whose supply cannot be increased at the whim of political expediency is the true value.
Maybe you already know this, but there is a strong debate amongst the Bitcoin "community" of whether to accept higher fees, less transaction throughput, but greater decentralization and security or to worry a lot about fees which are rising, and increase the block size "now" because a lot of these people are upset about fees being too high for small value transactions such as the ones you seem skeptical about.
They would argue the tradeoffs aren't that bad, and also that scaling on chain can be achieved to allow for high throughput and low fees. Many don't think this is possible to even approach the volume of something like Visa so why bother and besides 10 minute block times make retail purchases challenging anyways.
Immutability comes with the territory of irreversible and unforgeable. Why you need immutability gets into the argument of why proof of work is the only way this system can work. The double spend problem, consensus, the decentralized blockchain etc etc which I'm sure you're familiar with but anyways
I encourage you to read the Gilder book, it's not that long and he's well known for seeing innovation trends before many... the value of sound money is pretty profound in my opinion. The fact that not only is Bitcoin scarce but completely explicit in its monetary policy (though there will be lost coins that fudge this a little) provides the best form of money as measuring stick that we've ever had.
TL/DR* You don't for small purchases, that use case is already solved today. Finite money supply serving as superior store of value is the point.
You think venezuelans should be forced to use their local currency?
You think Zimbabwe's people should go thru hyper inflation again? They are about to, and bitcoin is booming there as an alternative.
Sorry, you seem to think you know better than other people what they should value and what they should do.
Bitcoin is completely voluntary, you don't like it, don't participate.
It's also not your energy getting spent.
At the risk of sounding like a libertarian: Other people are not your property.
It isn't my energy being spent, but it is CO2 that harms our planet. Until we have zero-emissions energy I think it is reasonable to criticize systems as energy-inefficient.
All that tells us is that bitcoin as it currently exists, and as part of the way it interacts with the real world has a flaw — it doesn’t tell us if that flaw is an oversight in the design or if it’s a gold-rush and/or a price bubble because humans are being irrational.
One bitcoin transaction already now uses as much energy as your house in 1 week. https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mi...
I'm sorry but I just fail to see how this can work going forward.
Second layer goes completely against Satoshi's primary design in the first sentence of the white paper - which is removing the need for third parties. The lightening network design is a siphoning power grab by Blockstream.
After all, if you look at Bitcoin from a technical perspective the services Bitcoin offers are available in Litecoin, Monoero, etc.
Payment channels weren't discussed in the whitepaper, but Satoshi discussed and attempted some payment channel designs[1]. He left before coming up with a secure payment channel design. Recent improvements to Bitcoin, including the transaction malleability fix included in the recent segwit upgrade a few months ago, finally make secure payment channels feasible.
[1] https://en.bitcoin.it/wiki/Payment_channels#Nakamoto_high-fr...
We can argue about how to scale layer one, but layer two always provides scalability benefits that layer one can't provide. So choose your favorite layer one scaling scheme and then use layer two on top of that.
>Second layer goes completely against Satoshi's primary design in the first sentence of the white paper - which is removing the need for third parties.
Satoshi in the whitepaper proposed SPV nodes which introduce semi-trusted third parties for the sake of scalability.
Layer two does not introduce trusted third parties. It, under certain conditions, is less censorship resistant that layer one, but that is why you want a scalable layer one as well so that transactions which need censorship resistance can fall back to layer one. There is no reason to bloat layer one with transactions that layer two can handle. Layer two helps layer one scale.
>The lightening network design is a siphoning power grab by Blockstream.
Even if this is true, and I very strongly doubt it, that shouldn't influence your view on the technology. Either it works or it doesn't.
Please stop lying.
Your claim is nonsensical and you linked to an article from a highly politically slanted site whose author doesn't understand much about how bitcoin works.
Yes, I understand that the left does not like sound money and thins that government should be able to inflate as much as it wants (to pay for all those great programs- like bombing brown people).
But this kind of false claim, that is repeated over and over and over again is just not acceptable.
It's a rejection of science to do so.
Also, the opposition to bitcoin on energy grounds is silly-- most bitcoin is mined by renewable excess energy and the system is more cost / energy efficient than the alternative, in my opinion.
Go to venezuela or zimbabwe and see the suffering of people who don't have sound money. Hell, go to a small american town where people are poor because the government has inflated the money away.
This is not how to defend bitcoin.
To perform this amount of hashing with this example it would take 3TJ. Or for comparison, the energy in about 170 barrels of oil, for one Bitcoin transaction.
The numbers may be a bit off, but they're not off by a factor 100, and my house for sure doesn't even need 1/100th of this to run a day.
This leads you to believe that every lefty is a communist, rejects 'sound money' and supports a strong centralized government. But that's not the whole picture. I consider myself to be an anarcho syndicalist - which is pretty lefty - and I don't have a problem with Bitcoin. Quite the contrary; I support the replacement of centralized hierarchical structures by distributed democratic structures. Be it financial, political or societal.
'The left' is much more diverse than you might think. Don't let yourself be fooled into thinking that there's only 'left' vs. 'right'.
So, may I suggest that the dislike of decentralized systems correlates more with a preference for authoritarian systems?
Anyway; about the rest of your post:
> [...] like bombing brown people [...]
I think this is uncalled for. It's a strawman deflection and not a very good one at that. Warmongering has been a favorite past time of all sorts of governments, not only leftist ones.
> It's a rejection of science to do so.
How so?
> But this kind of false claim, that is repeated over and over and over again is just not acceptable.
> [...] most bitcoin is mined by renewable excess energy [...]
Do you have any pointers to refute the claim? Can you give me a link to some numbers?
Looking forward to hear from you!
>Do you have any pointers to refute the claim? Can you give me a link to some numbers?
The largest cost of cryptocurrency mining is electricity. Electricity energy is the cheapest so naturally many Bitcoin mining operations are built in places that are over producing energy. The cheapest excess power tends to be hydro power, Bitcoin can be viewed as a small subsidy for new hydro electric projects when demand has not caught up to supply.
>Bitcoin mining operations – essentially massive and powerful datacenters - are located internationally, and usually concentrated where the cost of electricity is cheapest. That’s because the cost of electricity can make up 90-95% of total ongoing mining costs. These datacenter mines can be found in numerous countries, from the Republic of Georgia to Iceland, to Malaysia and Venezuela. The largest share of the miners are located in China, close to the border with Tibet where cheap hydropower is relatively abundant. - https://www.forbes.com/sites/peterdetwiler/2016/07/21/mining...
>Haobtc is also operating hydropower mining facilities in Kangding. Eric Mu, Chief Marketing Officer at Haibtc, said it cost a lot to build a hydroelectric plant, but later on it does not have a lot of maintenance costs and can use electricity cheaply. -https://steemit.com/bitcoin/@jycloud9/china-builds-a-hydropo...
Bitcoin miners move to places with very cheap/near free power. They can park the datacenter right next to the power plant so very little is lost in transmission.
is bitcoin democratic? Isn't a "might makes right" system?
https://news.ycombinator.com/newsguidelines.html
Bitcoin's daily energy cost will asymptotically approach (price per coin)*(daily miner reward amount).
As block reward decreases, we may see less energy investment in the future.
There is a loose link between number of transactions and price (network effect of more people using Bitcoin increases perceived value), but its probably a fairly small correlation.
Firstly, it seems to be enough for any alternative consensus to be impossible to maintain, rather than impossible to produce.
Secondly, to make it practically (economically) impossible to maintain an alternative consensus should requires Proof-Of-Resources, not Proof-Of-Work.
Thirdly, there's no reason to assume those resources can't be stakes in the consensus itself.
Finally, if the only way to maintain consensus is by building massive expensive specialised buildings, then congratulations you've just rediscovered a bank.
`If it keeps growing, it'll be so expensive, it can't possibly work.` Also assumes bitcoin as we know it today is fully immutable, but that isn't the case, and neither is energy production, or technology used to run the whole thing.
But you know what gets tricky, rewriting history in bitcoin's blockchain. `You'd almost have to spin up an alternate time line, and those alternate time lines are expensive, and use a lot of energy, it cant possibly work.`
The value in the future of bitcoin may be that it has a long and very public chain... and that alone is probably enough to hold reasonable utility in the future. Just like silver/gold and other scares things provided utility for quite a while. Only now of course, if it gets too expensive, another slightly different public fork will persist (or several of them).
[1] http://www.truthcoin.info/blog/pow-cheapest/
If it isn't profitable to mine, then people won't mine. Difficulty will fall, which will mean that fewer cycles (and thus, less energy) is needed to find the next block.
The author literally took the "total cost of all energy in the network" and divided it by "total number of transactions". That's not how it works. There is effectively zero incremental cost in terms of energy usage for a transaction.
Bitcoin's Proof of Work algorithm using SHA-256 and power hungry ASICs with a bottle neck on 4-7 transactions per second (average, as latency is in 10 minute intervals) or even in the case of the controversial Bitcoin-Cash with 56 transactions per second; what Bitcoin as a service does with the type of infrastructure required for the software to run can be analyzed and defined in terms of cost of operations versus alternative services which offer similar or identical functionality.
This Citi analyst either doesn't understand Bitcoin or doesn't understand economics: because the protocol has difficulty adjustment and because marginal revenue will always approximate marginal cost, the cost to mine 1 BTC will always approximate its value.
Therefore, projecting the cost of mining is equivalent to predicting the price of Bitcoin. If the cost to mine 1 BTC was $1MM USD (and so $1MM/BTC), that would imply the network value of the Bitcoin ecosystem would be well over the USD M1 supply (tens of trillions, in fact). Bitcoin would have effectively replaced fiat in that world and perhaps all the cost it eliminated would be worth the mining.
In any event, from what he said, I doubt this (equity) analyst understands that he can't project $1MM BTC mining cost without at least $1MM per BTC price.
The network already has a system in place to combat this issue - fees. So it can technically cost $1MM to mine 1 BTC while the price of BTC is only $8,000, as long as the transactions provide enough fees to offset the costs. In practice I think that's pretty unlikely to work out that well, but that is the intended system either way.
Edit: Reading the article again, it's not clear to me they're actually taking halving into account in their calculation, and I'm also not extremely confident they're not confusing bitcoins and blocks. There are no direct quotes detailing that part of the article, and I wouldn't really expect the person writing the article to know the difference.
And it also occurred to me that something else to take into account is that miners themselves are betting on the price of bitcoin going up. So just because it cost them, say, $200,000 to mine $100,000 worth of bitcoin, if the price of bitcoin eventually doubles from the point that they mined them then they would still break even, though not immediately. So it can make some sense to mine bitcoins at a bit of a loss. I don't think it would make sense to mine at anywhere near the losses they're describing though.
I think the only reason such people would prefer mining is if it’s difficult for them (legally, practically, etc.) to directly buy bitcoins in the area they live or at the scale they desire to invest.
Estimating how much it will cost you to mine X Bitcoin is not an easy thing to do, especially now that each block almost always has at least an extra Bitcoin worth of fees, with the highest having over 4, meaning the amount of Bitcoin you get per block can vary by approximately an extra 1/3 and this extra value is pretty random.
The power to run the hardware is also constant cost, not a one-time cost like buying a bunch of Bitcoin at market price, so while it's easy to say "Just buy when it's at X value and turn off your hardware", the miner has no way of knowing what that value is, and without knowing the future values of Bitcoin they have no idea if waiting and spending all their current savings on Bitcoin at a low price will actually net them more then just waiting it out and continuing to mine the whole time. It's a crapshoot, but the miners presumably know what they're getting into.
My point was more that it is probably acceptable to risk mining at a bit of a loss if you're confident the value is going to go up, you already invested in the hardware anyway, and you think there's a good chance you may make more then if you had just bought some at what you think will be the lowest price. That said, my example is probably more extreme then would be acceptable.
Miners have continuous liabilities in USD and so most only hold Bitcoins as long as as is necessary by the protocol (100 blocks). Further, expected fees are easy to estimate over medium-to-long time frames. I basically disagree with everything you've said here and below.
As soon as it's more profitable to just buy the bitcoin, the miners will turn off the machines. There's no point spending $1.01 to mine $1 of Bitcoin when you can just buy it at market rates.
It's not really that simple because mining Bitcoin is a lottery, and the amount of coins a block is worth is not a constant value due to being able to collect a variable amount transaction fees (Which are becoming much higher then they used too).
You can estimate approximately how much it will cost you per Bitcoin, and you can obviously view historical data on how much the mining has cost you, but there's no way to know going in that it's going to cost you $1.01 to mine $1 of Bitcoin, there's too many variables in play.
Furthermore if the EV is zero, you don't take the bet either because lowering your variance is a good thing.
https://techcrunch.com/2017/11/08/chia-network-cryptocurrenc...
previous conversation here: https://news.ycombinator.com/item?id=15655840