It says a single transaction generates almost 300kg of CO2. Surely not. 95g of e-waste also seems incredible. And 600 kwh of energy per transaction? Really.
Edit: based on a cost of electricity at $0.1/kwh, and assuming bitcoin operators break even and are rational, one transaction costs less than 3kw of energy:
I'm not sure if the article is right or wrong, but the commenter above you was probably getting at this:
You can see how much money a block miner receives for a block of transactions, and given the money they received, and an estimate for the cost of power, you can estimate how much power they might have been willing to expend on it
Going off the guy's link, I guess it's 24 cents to get into the next block, and a block has about 500,000 transactions, so whoever mines that block gets $125,000. Assuming 4 cents per kWh, the presence of only one miner, and no other operation costs, he'd still be breaking even if he expended (1 kwH/$0.04)*$125,000 =~ 2,500 kWh per block
(and by the same napkin math, that's 6 kWh per transaction)
What's weird is TFA seems to be using a similar methodology (but looking at total bitcoin mining revenue instead of an individual block), and yet they came out with a number 100x as large. I'm not sure why there's such a big discrepancy.
If 625 kWh per transaction is accurate, then 300kg CO2 is plausible depending on the grid. Many electric grids emit 500g CO2 per kWh or more. Others are much cleaner depending on the production mix.
An average block has something like 2500 transactions in it. It means that there is about 1-2 transactions per second. Bitcoin network is running at 100 million TH/s. Modern mining hardware does 10 GH/Joule = 10^10 H/J, so 100 million TH = 10^8 * 10^12 H = 10^20 H is 10^20/10^10 = 10^10 Joules. 1 kWh is 3.6 * 10^6 joules, so 10^10 Joules is something like 3 * 10^3 kWh, so 3 MWh. One ton of coal produces something like 2 MWh. So yeah, assuming some of the electricity is not coal, the numbers do add up.
They're missing that the reward has fallen below the cost of non-renewable energy, such that the only profitable way to mine Bitcoin now is with renewables. The only way to profitably mine Bitcoin with any country's electric grid would be if someone else is paying the electric bill for you.
> Electricity is probably a lot cheaper in China.
Specifically, miners in China are famous for colocating with overprovisioned excess hydroelectric power that is not transportable elsewhere via the grid.
Why not tax or make all energy more expensive? That way all wasteful usage will be curtailed and only the valuable use cases will be left after a while. If we do what you proposed it sounds like we should start taxing other behavior on the internet based on its usefulness to society and electricity usage.
We definitely should tax all dirty energy, and the shifting price landscape will do a lot to fix the environmental issues we're facing.
That said, it's not enough - because the market isn't some NP-complete-problem-solving magic oracle. It's just a greedy optimization algorithm. It's very prone to falling into bad local optima. We know that for a fact, that's the basis of most regulations around markets. Left unattended, the market would happily prioritize mining Bitcoin over producing food, as running Bitcoins in circles is more profitable than selling grain - up until there's an actual shortage of food and the market self-destructs.
Energy on it's own is not dirty or clean. You cannot test the wires in the wall to say yep, this energy is clean.
You can of course tax the energy producers, but that does not prevent fraud on it's own - see oil tankers converting gas pollutants to water and causing even more harm.
You purchase electricity with clean production guarantees.
That doesn't necessarily mean the electricity you use comes from that, or any, clean source, but that clean sources are used to contribute to grid supply equally.
If that's not actually happening then we can call that fraud, but that's a separate issue.
See the way bitcoin works is anyone who wants to run a node on the network can just start without asking anyone for anything, or even letting anyone know they are starting.
There is no door you can bang on to stop new users from joining. There is no server you can bring down to prevent people from joining.
> It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
This kind of comparison is flawed: Tesla was made for efficient mileage from electricity, but Bitcoin never aimed at transactions that require little electricity. You could compare an electric kettle to a smartphone and say that electric kettles are really bad because you could talk on the phone for 50 years instead of boiling water for some tea. ( If you don't believe me or don't get it, I don't have time to try to convince you, sorry. )
> Edit: You would end up burning even more if you tried to stop it.
Based on the above and other properties of bitcoin, it would not be cost free at all to try and stop it. I am convinced that the costs related to attempts to stop bitcoin would be much higher than the costs required to leave it be.
> We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Yeah I'd too appreciate if the debate here was more than yeah just tax it bro, they gotta cash out bro
Also the critical thinkers seem to never have even checked the source of this 600KWh / transaction claim.
If you actually cared to check [0] you would see that this claim is coming from estimating mining revenue and then sending 60% of that revenue to mining costs.
That calculation is actually:
Mining revenue(in USD) * 0.6 / 0.05 / amount of transactions = KWh per transaction
This seems completely outrageous to me. I had seen similar numbers thrown around casually in the past but still found it hard to believe to be true, (despite being pretty bearish on Bitcoin myself). This seems to provide some pretty detailed evidence, analysis and validation directly addressing criticisms. It seems pretty thorough.
Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Is Bitcoin figuratively, and almost literally, a tire fire?
(Edit2: I interpreted your use of "outrageous" to mean surprising or unbelievable. If instead you meant inciting to outrage, then I agree, it is.)
My opinion is that if you find this outrageous then you don't understand the core principles of Bitcoin. The difficulty of mining a block on the network goes up with the amount of mining being done to maintain a constant block mining rate.
There are massive bitcoin mining warehouses in China, and for each one that opens all of them are less effective at mining, but still consume the same amount of energy.
So, yeah, it's pretty much a tire fire.
Edit: to add to this, many industries can use technology to produce more value with less energy. Bitcoin is fundamentally unable to do this for the same reasons I mentioned above. When bitcoin specific mining hardware first came out, it briefly gave an advantage to the first people to have it, but then the advances were completely neglected when they became widespread.
Proof of stake sort of solves this. In theory those with the most money can spend the most on mining equipment and get the biggest payout. Proof of stake short circuits this and just gives the biggest payout to the ones with the most money.
Wasteful compared to what though? How much energy, human capital, and resources are consumed by the banking industry?
If (and big if) bitcoin is able to replace a significant fraction of the banking industry it will be extremely efficient in comparison. Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
There’s no indication I’m aware of that Bitcoin is removing any labor or equipment from the banking system. So far all I’ve seen is traditional banking layering crypto on top.
it's cheaper to transfer Bitcoin and immediately convert to fiat than to do a wire transfer from overseas. Then you're using the home banking system like ACH in the US and SEPA in Europe
Wires cost me $50+ because of intermediary banks, even if I don't pay anything at my own bank, someone is getting a big cut.
Don’t companies like TransferWise already do international payments electronically without the need for a blockchain? I definitely support lowering the amount of human labor required for payments, but I don’t see the need for many coal plants worth of computers randomly hashing a bunch of junk over and over again when a normal efficient server can do it.
Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human, so it seems like the human labor in the banking system is a regulatory issue, not a technical one.
Sure, but why do I need a blockchain for that? Can’t the service trusted by the government to enforce KYC regulation also run a normal commodity server to process transactions, without burning the earth?
It is only cheaper today because the price of those traditional transfers are set artificially high. Make no mistake if banks had real competition for inter-bank transfers you’d see the price drop to near zero.
There's nothing fundamental about this state of affairs. We're simply early in the adoption curve: the network of services around fiat is larger than the one around cryptocurrency, so to use cryptocurrency effectively you have to connect with fiat.
The infrastructure required for functional cryptocurrency usage in society is far smaller than for traditional money, so with enough adoption to supersede fiat, there would be efficiency gains.
Remember, we used to need the phone network to connect to the internet. 30 years later, the trend is reversed and it's telephone that we layer on top of the internet.
I don't think any modern currency is really using Gold these days. The cost of creating dollars is basically the cost of the Fed signing a few papers. A lot of modern currency is fully virtual.
So I don't think "mining gold" is an appropriate analogy.
EDIT: Case in point: how much did it cost for Visa + Bank to increase a credit-card from $500 credit limit to $2000 credit limit? $1500 of credit appeared out of thin air.
I think your Edit example actually points to the root of the issue with these comparisons.
The first credit limit increase "from scratch" costs hundreds of billions of dollars in creating a system of legal compliance, accounting, communication, internal and external risk management, executive compensation, regulatory oversight, credit ratings, cybersecurity, salaries of millions of workers, building public trust in the credit system, writing and passing legislation, even Fed responsibility of building and maintaining a fiat currency.
The second credit limit increase once this system exists is essentially free.
To what extent do these costs need to be accounted for in creating an accurately comparable 'per transaction' metric? By replacing much of the logic with 'just math', Bitcoin has the potential for a much higher theoretical efficiency than the current banking system. Whether market penetration will ever reach the current banking systems levels - and function without replicating these same structures - is certainly highly debatable and for many of the above items implausible.
Bitcoin transactions in isolation are also essentially free - it's the maintenance of the system which keeps it secure and trustworthy that is expensive.
This is a good relevant question. Both are easily verified, impossible to duplicate, convenient value density, and (!) production correlates to increase of total world economic value.
As such, the question is interesting: how much energy required to produce one new ounce of gold? vs one bitcoin?
Since gold bullion isn't legal currency anywhere, I'm not sure it's the most relevant comparison.
From the US Mint's financial statement [1]:
2017 cost $13.5 million dollars in "Communications, utilities, and misc charges", which presumably is the bucket that electricity bills falls under. There's no breakdown of overhead between currency coinage production and bullion/numismatic production, but the manufacturing obligation suggests that currency is roughly ⅕ of their total costs, which suggests that we might ascribe about $3 million in utility cost to produce coinage. The coins themselves were worth about $870 million, which suggests about 250 kJ (or 0.07 kWh) per $1 of coinage if we assume the Mint pays $0.05/kWh. I'm not including the energy cost of metal production itself, because I don't want to spend the time to track down that information.
As others have commented, per-transaction is a very misleading metric. Hashing difficulty is based on the number of other miners and time between blocks, not based on the number of transactions.
With something like lightning network, a single Bitcoin transaction can facilitate millions of 'lightning' transactions.
I like cost of electricity. While Chinese plants are subsidizing the BTC network right now, we can estimate the cost of "unsubsidized" BTC in the future based off of electricity costs today.
That supervision probably will have a cost of some kind.
> You can hire watchtowers nodes for a fee and design the revocation transaction in such a way that the watchtowers will also receive their service fee when you get funds of the other party as a penalty.
So we're adding many, many more middlemen to the picture. Not only do we have to pay for the final transaction (which requires a large amount of electricity to be "mined" into the blockchain), we have to hire watchtowers to ensure that our Lightning Network transactions remain correct even if our counterparty tries to screw with our transaction history. (Remember: the full transaction history in the Lightning network is off-chain).
It should be possible to build watchtowers into the protocol itself. A lightning node could elect some number of random nodes as watchtowers at bootup, similar to how many clients now elect random channels.
Being a watchtower is extremely low cost, it only requires a small amount of memory. Every full lightning node is watching the blockchain anyway so it is easy to watch for some extra transaction ids with a certain prefix. Transaction IDs are sufficiently long that only part of the txn ID (half) needs to be shared with the watchtower. The tower can only decrypt and send the revocation txn once the malicious txn is broadcast, and the watchtower reward can be built in to the revocation txn.
> watchtower reward can be built in to the revocation txn.
How much will watchtower rewards cost?
The economics aren't fully studied. But I'd expect a good watchtower would be proportional to the amount of the transaction. That is, if you wanted to protect a 100 BTC transaction, you'd want to spend more on the watchtower reward than if you wanted to protect a 1 BTC transaction.
Hypothetically, if you spend too little, the watchtower + your opponent can collude to effectively steal some of your money. (Ex: the Watchtower could be paid by your opponent to NOT send the revocation message).
The reward can still be low because you can choose many watchtowers. If you have a high value channel, you could choose for example hundreds of watchtowers. Only the first one to broadcast the revocation would get the reward.
The reward only has to be high enough for it to be worthwhile for other nodes to spend a small amount of memory storing your txn.
It's true, I believe the low probability of getting the reward is the greatest flaw with the watchtower reward scheme. Not just if you have many watchtowers, but the likelihood of a peer attempting a channel breach in the first place esp. when watchtowers are in place would be extremely low since that peer is almost certainly assured to lose money.
There are some services currently providing watchtower for a flat fee instead, and the going rate is low (1 satoshi / txn watched) =~ $ 0.00008
> Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
This idea has been around the corner for a while now. How likely is it really, how long will it take, and what will adoption look like? Until it happens and is popular, it seems fair to discuss how much a Bitcoin transaction actually costs...
Too bad lightning network requires bitcoin at the on and off ramps to function. Those transactions alone would kill bitcoins pathetic transaction rate if the ecosystem ever took off.
I mean, the article lays out the energy costs of competing transaction processors. But if Bitcoin is just a clearinghouse for large-scale reconciliation, then... who is the audience exactly? Large banks that have to operate using real money under actual governmental regulation have no use for Bitcoin's naive guarantees, which pretend that the court system and human ambiguity don't exist.
Bitcoin physically cannot scale to replace any substantial portion of the financial industry. That is a primary design feature of proof of work systems.
It's this wasteful at this level of scaling. That only gets worse.
It's not just the banking industry that trustless cryptocurrencies can do without, but also the whole infrastructure necessary to maintain the value and trust in fiat money.
This encompasses a very large part of the responsibilities of the political system, army, secret service, ...
Those cost centers can't be ignored if the goal is an honest comparison between the energy efficiency of bitcoin vs. fiat.
That's not an accurate statement, since the pollution costs of Bitcoin are an externality not being paid by the people using it. It's more like Bitcoin users are dumping costs on the unconsenting public to avoid the "tyranny" of AML/KYC banking regulations.
That's great, but you could argue that AML/KYC has pollution costs of a different nature in regards to personal liberty. Whether or not they do me suggesting that is about as baseless as suggesting bitcoin has huge negative externalities.
Without explicit evidence of a market failure it's probably fine to assume that negative externalities are factored into sticker price of goods as the opportunity cost of product X eventually must take into account those externalities as applied to everyone.
Those don't sound like theft. KYC is supposed to make it easier to trace money, ostensibly if used in crime. But doing this before any crime has occurred seems like a violation of the 4th amendment, and probably only passed constitutional muster at the time because the laws force a nongovernmental entity to infringe on your rights.
The problem with KYC and banking laws are that you can prevent anyone from conducting business for any reason. They've not seen abuse per se but people have been caught up in them with no recourse. Their application in reality may see them ruled unconstitutional.
Bitcoin, then, is just a correction in the other direction. Because face it: large financial institutions still facilitate money laundering, just not for small people.
Alright, that vein of arguments are the biggest cop-out ever. It's like trying to say the 4th amendment doesn't apply to houses because no one forces me to have a house.
The constitution recognizes the inherent right to be secure in your personage and effects. This should include your financial information.
I think it odd that people accept the abrogation of their rights w.r.t. driving. Yes, the government can definitely tax you for road use, but imagine having to carry an ID around that proved you paid your income tax, and that you were required to be IDable at almost all times to be sure you were not committing tax evasion.
Cost of running this public tamper-proof database is $4B + Personnel + Amortizing cost of ASIC Forms, Say $6B
Where does the money come from? This Database isn't selling any service to Enterprise or Government or Public to get revenue. So, the $6B money has to come from Bitcoin holders or new suckers.
Every year it has to get $6B new money just to maintain the current value of Bitcoin.
Darkweb, murderers, VCs and drugpeddlers can help run this network of "decentralized futuristic currency" or whatever buzzcrapwords people use for Bitcoin ...
A bitcoin miner is in essence a kind of inside-out electrical meter: It measures, with remarkable precision, how many electrons (bundled as SHA256 operations) you burn to support the network finding a block, rather than how many you bought, assuming you even bought them at all.
The question is not how many you burned, which is what the mining algo answers with such precision, but how much you paid for them in the first place, which it can offer no insight into.
Some possible shortcuts to paying retail prices for electron mining fuel:
1. You're a large business power customer and pay vastly discounted rates on a contract basis.
2. You're stealing some or all of your power, either by pirate wiring or by paying some official to look the other way, or a little of both.
3. Your mining operation is a pork barrel project with funding secured from your local government's (either clueless or remarkably pragmatic) business development office. Sometimes there may be a legitimate exit plan for this, like repurposing the new datacenter facility you built, after wringing every mining penny from it possible, to host cloud services or as the core of some government-sponsored technology park.
4. You may have been mining quite along time and now have enough early coin held back from the $100 days to slowly sell off into the retail market at 80x profit, or borrow against. It may even be that this reserve of held back coin is partly responsible for the thin liquidity in the market, and consequent bubbled-up price.
5. You publicly, or covertly own or have an interest in one or more of the mining pools and public exchanges, and retain a share some of the Tx and conversion fees which helps subsidize the mining costs.
6. Same as above but for mining rig manufacturers and fabs. Mine on newly manufactured chips for a few days or a week before shipping (for 'testing' purposes ofc) and you get to stay ahead of the difficulty curve as well as get free subsidy from your own customers.
I'm afraid that the moment you chose to use the word "wasteful" it became a philosophical discussion and they don't typically have final words at all.
The stripped down reason you see it as wasteful is that you have some set of beliefs about what is "right" and "meaningful" (many of which, I'll take liberty to say, most likely likely NOT consciously thought out) and since the core technical principle behind Bitcoin is simple enough, it's easy for you to see it does something that seemingly does not contribute to the fulfillment of what you consider "meaningful" (i.e. performing tons of computation that essentially compute nothing "meaningful").
Technical principles behind markets, industries or your own existence are not simple enough, so you cannot see through them and decide at a glance that they are "wasteful". And since you generally avoid falling into philosophical discussions (rightfully so), this is good enough for you. This doesn't mean that they achieve something that will turn out "obviously meaningful" to you (I'm cynical enough to assume they actually not), it's all just too complicated to tell at a glance.
If this is all too abstract, I'm saying that Bitcoin is actually doing something, and this something is much more complicated than the technical principle you can easily see behind it. You should take this into consideration when thinking about what this giant CO₂ emitting machine actually is. It is not a machine for computing hashes, as it might seem from a purely technical perspective.
The world is. There is no engineering reason why it’s so expensive to move numbers around in a bank.
In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
Dude. That $2 trillion is all of finance. Finance is a hell of a lot more than preventing double spends (which don’t exist outside of bitcoin). On a per transaction and even global domestic product basis, the cost of our financial system is tiny. By comparison the cost of bitcoins financial system by any metric is astronomical.
Read the report, it's 2 trillion of revenue for payments only, not all of finance. That report doesn't cover trading, derivatives, mortgages, etc... 1 trillion of payments revenue comes from credit lines, about 1 trillion is fees moving money around.
Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions.
There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either.
So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
I don't know. My bank "double spent" a hundred bucks the other day, that took them half a month to return.
There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks.
I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
Thankfully many types of fraud can be reversed in our modern financial system. With bitcoin, virtually any form of fraud leaves you completely fucked with absolutely no recourse.
Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
You're discounting the costs of maintaining system which allows fiat to keep it's value: 20% of the value of human productivity is spent maintaining the financial system.
Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
Yes they absolutely do. Someone buys something from you and then they reverse the payment. They go on and buy something else with the same money. Reversible payments are a huge issue for online merchants.
Oh, does it? Does it accomplish all the speculation, all the drama going on? All the drug deals made with Bitcoin, all the kids that became rich out of nothing because they played with some obscure technology 10 years ago? I'm pretty sure you don't know everything Bitcoin accomplished (or maybe still does). Neither do I, nor anyone.
To be clear: if you ask my opinion on technical side of Bitcoin, I wouldn't be really praising it. But, as I said already, Bitcoin is not a technical thing. It is a very complicated sociocultural phenomena that definitely did achieve something. And you need to consider everything X is, to apply words such as "wasteful" to X.
Again, if this seems too abstract: if you are living in the USA, you are consuming twice more energy (per capita) than Japanese people, having lower life expectancy (both are far from the ends of the spectrum, BTW). So, the existence of USA citizens is wasteful.
Now, doesn't stripping down all the nuance of living different lives in different countries seem a bit outrageous to you? It surely does seem so to me.
Bitcoin is absolutely wasteful to the vast majority of the population on earth. It provides no benefit to them, and makes their energy bill (and video card bill) go up.
LOL. Sure, but that is only being done because bitcoin gobbled up all the electricity that could have been used doing useful things like running data centers, smelting aluminum, air conditioning homes, etc.
Bitcoin is a drain on the electrical system. You are basically arguing that it is okay to litter because it will create jobs and spawn new anti-litter technology.
I'll shutdown my bitcoin mining operation if you shutdown your AC. I find 21c living to be incredibly wasteful and a luxury only offered to those blessed to be born in the first world.
Please turn off your computer. You're wasting watts shaming first world folk. Go convince the 3rd world to stop burning trash and making babies. Oh, right - they'll stop by themselves when they reach your level of wealth.
That electricity could not always have been used to smelt aluminium or whatever else you suggest. Some of that power is hydro based and cannot travel a significant distance. You can move bitcoin mining equipment closer to power sources much more easily than you can move an aluminium furnace and supporting infrastructure.
Tons are mining alt coins with them. These stories never include the rather sizable market for alt-coins, almost all of which use the same energy-sucking design that bitcoin does.
I’ve never seen an article like this for the entire crypto space as a whole but I imagine it is much, much worse.
No, energy expenditure for bitcoin mining is larger than that of all altcoins combined. Despite the considerable technical innovations of some altcoins, bitcoin remains king in this world for now.
The energy consumption of the next closest altcoin is almost an order of magnitude less even with ASICs. After that, you'll find the security model of almost every altcoin to be total garbage (low energy consumption).
But the same could be applied to almost any consumer product. My kids want to buy these crappy plastic toys at the supermarket, wastefully packaged and shipped from China, of no-use to anyone yet energy is expended to design, make and ship them internationally. And this is just one consumer product from China. Have you seen Alibaba offerings of late?
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful?
The carbon estimate seems very poor.
> Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining.
The reason many miners are in China is that they can access cheap off-grid renewable sources of energy there, such as excess hydroelectric, so using an on-grid CO2 estimate doesn't work.
I love when bitcoin promoters claim that bitcoins massive waste of energy is okay cause “it’s totally renewable”.
Setting aside the non-trivial ecological damage caused by dams.... all that renewable energy could have been used to power something that actually adds value to society. Instead it is getting flushed down the toilet solving useless math problems so that a relative handful of people can milk a larger set of rubes for all their money. Oh, and enable criminals to continue their criminal behavior....
> all that renewable energy could have been used to power something that actually adds value to society.
If the miners are using excess production, then by definition, that power could not have been used for anything else; otherwise, some consumer in the grid would have used it!
It's written in the page that they're Carbon Emission Footprint are totally biased and flawed:
> The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid
I don't own any Bitcoin and never have, and am not especially fond of it.
> Setting aside the non-trivial ecological damage caused by dams..
I don't think anyone is claiming that the dams were built to mine Bitcoins. The power generation was provisioned to power towns, but it is generating more electricity than the towns can use or profitably transport away.
> all that renewable energy could have been used to power something that actually adds value to society.
There is a market to buy the energy. If anyone wanted it for basically any other purpose, the price would increase and the miners would presumably go anywhere else in the world with overprovisioned renewable energy, so that their profit can be preserved. Mining doesn't have many requirements: it doesn't even need to be on-grid. It's created an arbitrage market for cheap electricity, and people will search out the cheapest electricity in the world to use for it. By definition, the cheapest electricity will be the least wanted.
> Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Its not the final word, but it is something to vigilantly monitor in case the following changes:
Most bitcoin energy use is from mining, and that mining uses renewable energy or energy waste byproducts. Source: my experience with mining companies that don't publicly disclose how they do this profitably.
So for now, try to corroborate it yourself. I would say that 70-80% of bitcoin mining is not a wasteful use of energy and that merely estimating the energy numbers doesn't tell you anything about the source. What I mean by "not wasteful" means that it isn't pulling away from another use of energy that was ever going to happen.
This wasted energy is usually in the form of byproducts around other power facilities that cannot be economically converted and transported to residential and commercial areas. This is where bitcoin mining shines: Bitcoin mining does not need a robust internet connection and does not need to occur in residential or commercial areas. A computer with a satellite connection can submit hashes to the bitcoin network, and pools further make it practical to have lower latency, because they merely pay out based on your contribution to the pool.
So miners that use energy waste byproducts (converting those byproducts to electricity at the source and taking transformers there) often times are doing a favor to the power company or whoever is there.
What to monitor: if nation states start competing over power of this network, they may disregard the economic feasibility of doing so, and then it will be incredibly wasteful uses of electricity.
I've thought of a good way to put this perspective.
The block reward is 12.5 BTC (and fees are neglible), which is $100000. There's a new block every ~15 minutes, which means 35000 blocks per year. ($100000 * 35000 / 73 TWH) = $0.048/KWH. So miners spend at most $0.05 per KWH on electricity. Assuming they spend 60% on electricity, they spend ~$0.03 per KWH, so not an outrageous price.
The problem is BTC grew too big too fast. The block reward is very large, but once it drops to the magnitude of fees ($2000 / block), we'll probably see a decrease in the energy usage to the (perceived?) value of decentralized payment system.
Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
> The assumptions underlying this energy consumption estimate can be found here [1]. Criticism and potential validation of the estimate is discussed here [2].
FWIW, [2] doesn't seem to offer substantive criticism at all. It mentions a couple independent verifications of the numbers in [1], with one complaint (from a very biased party) whose claims are not sourced.
This pretty much lines up with what I've seen in all Bitcoin energy use debaters: the evangelists insist the numbers are all wrong, but never really provide any evidence to that point.
Bitcoin is artificially limited in capacity by people like Adam Back and his company Blockstream.
The number of transactions is a simple limit set by whoever controls the Bitcoin GitHub Repo, thats it. Bitcoin Cash is much closer to the "Bitcoin" described by the inventor Satoshi Nakamoto.
Bitcoin is an ongoing environmental disaster, profiting off of subsidized coal power in China and elsewhere in the world. Millions of people die every year from air pollution.
But on the other side, hey blockchains are so cool they can do the same work as banks but six orders of magnitude less efficiently.
Doesn’t work that way. Bitcoin’s block reward system is designed so that the systems energy consumption costs are basically some percentage of the price of bitcoin. The higher the price, the more energy used. Drop the price of energy, and all rational miners will just buy more hardware. Why? If they don’t, their competitors will and the odds of them getting block rewards will go down.
Here is the proposition: let's make an inherently deflationary currency suitable for black market transactions that will become even more polluting with every transaction.
CryptoKidz: I'm in!
But haters gonna hate, and downvoterz gonna downvote. what evs
Per transaction is intentionally a bit misleading, as the amount of power usage is proportional to how-much-power the block-reward can buy regardless of there being 1 or 1 million transactions.
Not to mention, a single transaction can power an infinite amount of (wash) transactions thanks to 2nd layer stuff like the lightning network. So it'd be similarly misleading to try quote in terms of that.
So the correct unit would be power usage, per block or time unit.
The bitcoin network has a limited number of transactions per second that it can process (Limited by block size). Last time I checked the network was basically at the limit so per transaction is not an insane way of looking at it.
I get what you mean, if you decide not to make a transaction, the energy still gets spent but the more you use bitcoin the more valuable it becomes which incentivizes miners to keep mining. Also someone elses transaction will just slot in to fill the gap left since there is a very limited amount of space for transactions which is always fully utilized.
Not exactly. Second layer transactions sit on top, so the hard max of 4200 "settlements"[1] in a block does not necessarily mean 4200 transactions.
With enough people using the second layer network, each "settlement" could mean finalising hundreds of transactions for thousands of people. This second layer network acts like a caching layer, and consolidates many transactions into a single transaction (put into very simple terms).
I have similar feelings, but if you apply this attitude uniformly it's nearly impossible to participate in the economy at all, since it's mostly riding on fossil fuels in one way or another.
At least with bitcoin you could theoretically throw up a pile of solar panels and directly convert that clean electricity into money.
I'm not "smart enough" to calculate that acurately, but if the "cost per transaction" is high enough to get a couple of articles written about it, I won't participate into that.
Depends on the hardware, mining difficulty, block reward. Right now? Something like 0.15 per kw/h is the break-even point, and if you're not getting below 0.10 you won't get the cost of your hardware back fast enough
In other words, you should mine if you're in China where you can get those rates
Pays zero what? They have to buy the hardware so I assume you mean electricity, pretty sure bribing allows them to operate, it doesn't cover electricity costs.
pays zero electricity costs, yes. A couple grand a year can buy you all the electricity you want. tens or hundreds or of grand per year, or millions. A couple grand is a lot in terms of China salaries.
you'll never find a systematic article on it, but these aren't the first or the last incidents.
they also pay much lower hardware costs than the US does, because it all happens off the books. Chinese mining farms with internal hardware/super cheap power are nothing new.
china doesn't and never has played fairly in terms of hardware or power costs. crypto as a whole has been embraced because it's a good system to move value past chinese capital controls, you just are getting your beak wet as that money moves.
just like those 2 million dollar houses in vancouver or whatever. Sure, it's great to be trading in that current, or providing property management services, or to be holding the asset as it's pumped up by that money moving under the chinese capital controls!
The financial sector is 20% of global GDP. Bitcoin is much less than 20% of world carbon emissions.
Further, fiduciary duty of corporations to maximize shareholder profit has led to almost every environmentally harmful exploit of externalities. I'd argue that the stock market is fundamentally responsible for 99% of all pollution.
Financial sector does not produce 20% of carbon emissions. They are maybe 0.1%. The act of trading on exchanges is significantly more efficient than the act of trading on blockchain. Because there really is no need for an untrusted ledger when there is the USG certifying that the NYSE and NASDAQ will not execute erroneous trades.
Bitcoin does not eliminate the idea of fiduciary duty. Bitcoin holders still expect bitcoin loanees to trade and operate in their financial interest.
for processing/validating transactions? couple hundred MWH. How much do you think the Nasdaq/NYSE mainframes really eat?
bitcoin numbers don't include the off-chain stuff either, lol.
Bitcoin energy is literally expended on a massive, inefficient mainframe that processes a couple hundred transactions a second. That's all - everything else is additional to that.
No, what is the cost of the system which enables the USG to reliably prevent the execution of erroneous trades?
Tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges, etc.
Obviously the purely digital systems consumes more compute, but I think you're discounting many of the true costs of the existing system.
The system doesn't just enable the USG to reliably prevent the execution of erroneous trades.
If you think that tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges are there just to prevent erroneous trades...
It seems that you are discounting a vast amount of things that the system does besides preventing the execution of erroneous trade.
Yes, I am being superlative. However the traditional system would not function without all those parts - bitcoin effectively accomplishes many of these functions with compute alone, while traditional stock market uses compute for a much more limited scope. I simply want to point out this vast discrepancy in scope of comparison.
We're talking about just keeping track of who owns what amounts of a commodity. That part is using terawatt hours per year! I am very doubtful that the "keeping track of who owns what amounts" part of the stock market is anywhere near that.
Determining who has the rights to make changes to what data, auditing changes, auditing ever-changing access control rights, systematically changing these rules to adapt to technological advancements, etc. is the function which Bitcoin accomplishes that you are discounting from your perceived cost of the traditional stock market.
Wow that's really noble of you, have you considered logging off permanently and living in a tent in the woods? You realize none of the world's problems ever get solved if you bury your head in the sand and ignore things right? I mean we could all go back and start living in caves again, that would certainly solve the climate crisis wouldn't it?
Same here but I left because of the high transaction costs and low anonymity. I prefer privacy coins. Only problem is not many people use the smaller market cap coins for buying/selling stuff.
To put this in perspective, Bitcoin's 73.12 TWh annual energy consumption is enough to power over 10 million electric cars each driving 100 km (61 miles) daily, every day of the year.
If only governments and corporations did not insist on limiting people's freedom to trade freely and anonymously we wouldn't need that. Just make trading and privacy fundamental human rights like air breathing is and huge amount of energy will be saved.
C'mon, it's 21-st century, we need electronic cash we can send to a person we don't know instantly with a press of a button without revealing ourselves. We could use more traditional banking if only anonymous accounts were legal and banks were banking secrecy was guaranteed.
I've never bought anything illegal (but some weed perhaps) yet I feel very uncomfortable every time I have to share my personal details with any party.
I also want anonymous P/O boxes.
I just bloody don't want any party to track me nor tell me what I am and what I am not allowed to buy (unless it's a weapon of mass destruction or a human slave and there are other ways to bust people selling these).
Don’t worry it won’t be suddenly outlawed but all the governments will gradually outlaw it as it directly threatens their power. I hope somebody manages to release a conscious AI before they manage to completely outlaw it, otherwise it will be very hard to fight against tyrannical governments.
First: it absolutely is being outlawed, slowly but surely. The US is not yet fully there (although: try to buy a 1M USD house cash and see what happens), but most EU countries are fully there.
Second: Try and wire a large sum to your brother who happens to currently be stationed in disreputable country X or Y, and see what happens. Or mail him a box full of cash. See what happens.
Already, businesses in the UK that accept cash payments worth over €10,000 must register with HMRC as a "high-value dealer". In France, it is illegal to perform a cash transaction over €1,000 (yes, one thousand). And the same is true in Italy.
In the US, if the cops notice you have large amounts of cash in your car during a "routine traffic stop", they will take it from you on the basis that you must be a drug dealer.
1. Calculate total mining revenues, across all miners in the Bitcoin network.
2. Estimate that, on average, miners spend 60% of their revenues on electricity. (I believe the origin of this number are the calculations in this paper [0]).
3. Find out how much miners pay per kWh on average.
4. Convert the costs into a consumption.
There is some discussion of the origin of the assumptions, and some criticism and validation here [1] and here [2] respectively.
The Bitcoin network has a fixed transaction capacity that has no relation to the amount of power expended to mine bitcoin.
The amount of power used is proportional to the value of the reward for successfully mining a new block, which happens about every 10 minutes (12.5 BTC or about $100k).
If the value of BTC goes up miners will increase their spend and more power will be consumed per block mined, and if the value goes down so to will the power used.
Regardless of the power used for mining, there is a fixed transaction capacity in the network.
Power used can also be a function of energy costs. It costs go down by half, miners will be incentivized to increase mining capacity (else their competition will) and as a result presumably energy consumption will double.
Or $68/transaction supposedly if electricity cost at 11 cents per KwH is used. Actual transaction fees run around $0.20 for on-chain which implies either math is wrong or per block reward is sufficient still (total blocks I believe are fixed with increasing difficulty).
Does this analysis take into account secondary network transactions? For example wire transfers are relatively expensive to process still, but are often used to settle huge volumes of things like ACH payments, nightly sweeps etc.
Transaction costs are currently being socialized across all holders. The block reward is sold to pay the power bill creating downward pressure on price for everyone.
Not even then, and that won't be for a while. Even though about 85% of all BTC have been mined, the process gets exponentially slower the closer you get to the final blocks.
After the last BTC is mined, miners will still presumably be able to profit from block transaction fees. That might help power a little bit since they'll worry more about being efficient with which transactions go into a block.
This does not seem to include transactions on the Bitcoin Lightning network which are transaction that are handled offchain so they are not included in blocks. I don't have the exact number of lightning transaction ocurring but it is the Bitcoin Core developers' plan that the scaling to thousand of transactions per second will and should take place on the lightning network (this is where they differ from their competitor Bitcoin Cash which is aiming for bigger blocks and onchain scaling). Bitcoin is still a technology in its infancy ten years after being started.
The market cap of Bitcoin is above 120bn USD, less than Apple and Facebook but more than Netflix. But that is still only about 0.1 to 1 % of its potential. So, big but in its infancy.
Besides it being completely different in other ways, the market cap is not value. You couldn't realize a tiny fraction of that without tanking the market cap.
The opposite also applies: You couldn't buy up a large proportion of Bitcoins without the price skyrocketing. Prices are determined at the margin, what the marginal seller (probably miners) will sell for and what the marginal buyer will buy for. They are the best measure of "fair value".
462 comments
[ 4.1 ms ] story [ 376 ms ] threadEdit: based on a cost of electricity at $0.1/kwh, and assuming bitcoin operators break even and are rational, one transaction costs less than 3kw of energy:
https://bitcoinfees.info
If it cost 600kwh, we would assume a transaction would cost at least $60.
Electricity is probably a lot cheaper in China. If it was half as much we would be looking at under 6kwh of electricity at the most.
You can see how much money a block miner receives for a block of transactions, and given the money they received, and an estimate for the cost of power, you can estimate how much power they might have been willing to expend on it
Going off the guy's link, I guess it's 24 cents to get into the next block, and a block has about 500,000 transactions, so whoever mines that block gets $125,000. Assuming 4 cents per kWh, the presence of only one miner, and no other operation costs, he'd still be breaking even if he expended (1 kwH/$0.04)*$125,000 =~ 2,500 kWh per block
(and by the same napkin math, that's 6 kWh per transaction)
What's weird is TFA seems to be using a similar methodology (but looking at total bitcoin mining revenue instead of an individual block), and yet they came out with a number 100x as large. I'm not sure why there's such a big discrepancy.
See: www.electricitymap.org
> Electricity is probably a lot cheaper in China.
Specifically, miners in China are famous for colocating with overprovisioned excess hydroelectric power that is not transportable elsewhere via the grid.
Jaw dropping.
Converted to Telsa Model S miles as per https://en.m.wikipedia.org/wiki/Tesla_Model_S
Comes out to about 2000 miles or 3200 kilometers for one Bitcoin transaction.
Astounding.
I have some rather left-leaning friends, vegans and all, who recently mentioned they were going to take a punt on Bitcoin.
Might have to show them this.
You cannot stop bitcoin.
Edit: You would end up burning even more if you tried to stop it.
You have to tax the clean coins too, otherwise buyers will just exchange dirtycoin for cleancoin before cashing out.
That said, it's not enough - because the market isn't some NP-complete-problem-solving magic oracle. It's just a greedy optimization algorithm. It's very prone to falling into bad local optima. We know that for a fact, that's the basis of most regulations around markets. Left unattended, the market would happily prioritize mining Bitcoin over producing food, as running Bitcoins in circles is more profitable than selling grain - up until there's an actual shortage of food and the market self-destructs.
You can of course tax the energy producers, but that does not prevent fraud on it's own - see oil tankers converting gas pollutants to water and causing even more harm.
Yes. "Clean/dirty energy" is a shorthand for clean/dirty energy sources.
> You can of course tax the energy producers, but that does not prevent fraud on it's own
Sure. Taxing emissions is a necessary but not sufficient component of a sane energy policy.
So how do you make sure you are not getting dirty energy ?
You purchase electricity with clean production guarantees.
That doesn't necessarily mean the electricity you use comes from that, or any, clean source, but that clean sources are used to contribute to grid supply equally.
If that's not actually happening then we can call that fraud, but that's a separate issue.
Are you claiming you were not aware of this?
In the spirit of Hacker News, would you mind expanding on why you believe that to be the case?
We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
> You cannot stop bitcoin.
See the way bitcoin works is anyone who wants to run a node on the network can just start without asking anyone for anything, or even letting anyone know they are starting. There is no door you can bang on to stop new users from joining. There is no server you can bring down to prevent people from joining.
> It does not really matter if it's 2 miles or 2 million miles per bitcoin transaction.
This kind of comparison is flawed: Tesla was made for efficient mileage from electricity, but Bitcoin never aimed at transactions that require little electricity. You could compare an electric kettle to a smartphone and say that electric kettles are really bad because you could talk on the phone for 50 years instead of boiling water for some tea. ( If you don't believe me or don't get it, I don't have time to try to convince you, sorry. )
> Edit: You would end up burning even more if you tried to stop it.
Based on the above and other properties of bitcoin, it would not be cost free at all to try and stop it. I am convinced that the costs related to attempts to stop bitcoin would be much higher than the costs required to leave it be.
> We’re generally concerned with comments being progressively more detailed as the discussion gets progressively more decisive.
Yeah I'd too appreciate if the debate here was more than yeah just tax it bro, they gotta cash out bro
If you actually cared to check [0] you would see that this claim is coming from estimating mining revenue and then sending 60% of that revenue to mining costs. That calculation is actually:
Mining revenue(in USD) * 0.6 / 0.05 / amount of transactions = KWh per transaction
Embarassing!
[0](https://digiconomist.net/bitcoin-energy-consumption#assumpti...)
Is there any more to discuss on the topic of Bitcoin being outrageously wasteful? Or is this pretty much the final word?
Is Bitcoin figuratively, and almost literally, a tire fire?
My opinion is that if you find this outrageous then you don't understand the core principles of Bitcoin. The difficulty of mining a block on the network goes up with the amount of mining being done to maintain a constant block mining rate.
There are massive bitcoin mining warehouses in China, and for each one that opens all of them are less effective at mining, but still consume the same amount of energy.
So, yeah, it's pretty much a tire fire.
Edit: to add to this, many industries can use technology to produce more value with less energy. Bitcoin is fundamentally unable to do this for the same reasons I mentioned above. When bitcoin specific mining hardware first came out, it briefly gave an advantage to the first people to have it, but then the advances were completely neglected when they became widespread.
If (and big if) bitcoin is able to replace a significant fraction of the banking industry it will be extremely efficient in comparison. Per-transaction measures isn't the right metric since the Bitcoin blockchain can still be successful as a reconciliation backbone without being used for small everyday purchases.
Wires cost me $50+ because of intermediary banks, even if I don't pay anything at my own bank, someone is getting a big cut.
Every bitcoin exchange I’ve used required me to physically write something on paper and show it to a human, so it seems like the human labor in the banking system is a regulatory issue, not a technical one.
I'm curious - what did you have to write? Is it just part of proof of identity, or something more?
The infrastructure required for functional cryptocurrency usage in society is far smaller than for traditional money, so with enough adoption to supersede fiat, there would be efficiency gains.
Remember, we used to need the phone network to connect to the internet. 30 years later, the trend is reversed and it's telephone that we layer on top of the internet.
The article actually answers this to some degree. See the following graphic: https://i.imgur.com/8TdKevG.png
So I don't think "mining gold" is an appropriate analogy.
EDIT: Case in point: how much did it cost for Visa + Bank to increase a credit-card from $500 credit limit to $2000 credit limit? $1500 of credit appeared out of thin air.
The first credit limit increase "from scratch" costs hundreds of billions of dollars in creating a system of legal compliance, accounting, communication, internal and external risk management, executive compensation, regulatory oversight, credit ratings, cybersecurity, salaries of millions of workers, building public trust in the credit system, writing and passing legislation, even Fed responsibility of building and maintaining a fiat currency.
The second credit limit increase once this system exists is essentially free.
To what extent do these costs need to be accounted for in creating an accurately comparable 'per transaction' metric? By replacing much of the logic with 'just math', Bitcoin has the potential for a much higher theoretical efficiency than the current banking system. Whether market penetration will ever reach the current banking systems levels - and function without replicating these same structures - is certainly highly debatable and for many of the above items implausible.
Bitcoin transactions in isolation are also essentially free - it's the maintenance of the system which keeps it secure and trustworthy that is expensive.
As such, the question is interesting: how much energy required to produce one new ounce of gold? vs one bitcoin?
From the US Mint's financial statement [1]:
2017 cost $13.5 million dollars in "Communications, utilities, and misc charges", which presumably is the bucket that electricity bills falls under. There's no breakdown of overhead between currency coinage production and bullion/numismatic production, but the manufacturing obligation suggests that currency is roughly ⅕ of their total costs, which suggests that we might ascribe about $3 million in utility cost to produce coinage. The coins themselves were worth about $870 million, which suggests about 250 kJ (or 0.07 kWh) per $1 of coinage if we assume the Mint pays $0.05/kWh. I'm not including the energy cost of metal production itself, because I don't want to spend the time to track down that information.
[1] https://www.treasury.gov/about/budget-performance/CJ19/23.%2...
Neither is Bitcoin, so it should be a perfectly valid comparison?
With something like lightning network, a single Bitcoin transaction can facilitate millions of 'lightning' transactions.
Can you name a better metric that we can measure?
--------
With regard to the Lightning Network, it seems that it requires a bit of supervision to be secure. https://themoneymongers.com/lightning-network-watchtowers/
That supervision probably will have a cost of some kind.
> You can hire watchtowers nodes for a fee and design the revocation transaction in such a way that the watchtowers will also receive their service fee when you get funds of the other party as a penalty.
So we're adding many, many more middlemen to the picture. Not only do we have to pay for the final transaction (which requires a large amount of electricity to be "mined" into the blockchain), we have to hire watchtowers to ensure that our Lightning Network transactions remain correct even if our counterparty tries to screw with our transaction history. (Remember: the full transaction history in the Lightning network is off-chain).
Being a watchtower is extremely low cost, it only requires a small amount of memory. Every full lightning node is watching the blockchain anyway so it is easy to watch for some extra transaction ids with a certain prefix. Transaction IDs are sufficiently long that only part of the txn ID (half) needs to be shared with the watchtower. The tower can only decrypt and send the revocation txn once the malicious txn is broadcast, and the watchtower reward can be built in to the revocation txn.
How much will watchtower rewards cost?
The economics aren't fully studied. But I'd expect a good watchtower would be proportional to the amount of the transaction. That is, if you wanted to protect a 100 BTC transaction, you'd want to spend more on the watchtower reward than if you wanted to protect a 1 BTC transaction.
Hypothetically, if you spend too little, the watchtower + your opponent can collude to effectively steal some of your money. (Ex: the Watchtower could be paid by your opponent to NOT send the revocation message).
The reward only has to be high enough for it to be worthwhile for other nodes to spend a small amount of memory storing your txn.
In the case of 100x watchtowers watching one transaction, each watchtower only has a 1% chance of actually getting the reward.
There are some services currently providing watchtower for a flat fee instead, and the going rate is low (1 satoshi / txn watched) =~ $ 0.00008
This idea has been around the corner for a while now. How likely is it really, how long will it take, and what will adoption look like? Until it happens and is popular, it seems fair to discuss how much a Bitcoin transaction actually costs...
According to the article, bitcoin consumes about the same amount of electrical energy as Austria, a nation of 8,857,960.
According to Bureau of Labor Statistics, ~8.6 million people are employed in "Financial activities" in the US.
BLS: https://www.bls.gov/emp/tables/employment-by-major-industry-...
It's this wasteful at this level of scaling. That only gets worse.
This encompasses a very large part of the responsibilities of the political system, army, secret service, ...
Those cost centers can't be ignored if the goal is an honest comparison between the energy efficiency of bitcoin vs. fiat.
Without explicit evidence of a market failure it's probably fine to assume that negative externalities are factored into sticker price of goods as the opportunity cost of product X eventually must take into account those externalities as applied to everyone.
The problem with KYC and banking laws are that you can prevent anyone from conducting business for any reason. They've not seen abuse per se but people have been caught up in them with no recourse. Their application in reality may see them ruled unconstitutional.
Bitcoin, then, is just a correction in the other direction. Because face it: large financial institutions still facilitate money laundering, just not for small people.
No one forces you to have a bank account, just like no one forces you to have a driver's license - which also involves giving up some rights, btw.
The constitution recognizes the inherent right to be secure in your personage and effects. This should include your financial information.
I think it odd that people accept the abrogation of their rights w.r.t. driving. Yes, the government can definitely tax you for road use, but imagine having to carry an ID around that proved you paid your income tax, and that you were required to be IDable at almost all times to be sure you were not committing tax evasion.
Cost of running this public tamper-proof database is $4B + Personnel + Amortizing cost of ASIC Forms, Say $6B
Where does the money come from? This Database isn't selling any service to Enterprise or Government or Public to get revenue. So, the $6B money has to come from Bitcoin holders or new suckers.
Every year it has to get $6B new money just to maintain the current value of Bitcoin.
The question is not how many you burned, which is what the mining algo answers with such precision, but how much you paid for them in the first place, which it can offer no insight into.
Some possible shortcuts to paying retail prices for electron mining fuel:
1. You're a large business power customer and pay vastly discounted rates on a contract basis.
2. You're stealing some or all of your power, either by pirate wiring or by paying some official to look the other way, or a little of both.
3. Your mining operation is a pork barrel project with funding secured from your local government's (either clueless or remarkably pragmatic) business development office. Sometimes there may be a legitimate exit plan for this, like repurposing the new datacenter facility you built, after wringing every mining penny from it possible, to host cloud services or as the core of some government-sponsored technology park.
4. You may have been mining quite along time and now have enough early coin held back from the $100 days to slowly sell off into the retail market at 80x profit, or borrow against. It may even be that this reserve of held back coin is partly responsible for the thin liquidity in the market, and consequent bubbled-up price.
5. You publicly, or covertly own or have an interest in one or more of the mining pools and public exchanges, and retain a share some of the Tx and conversion fees which helps subsidize the mining costs.
6. Same as above but for mining rig manufacturers and fabs. Mine on newly manufactured chips for a few days or a week before shipping (for 'testing' purposes ofc) and you get to stay ahead of the difficulty curve as well as get free subsidy from your own customers.
The stripped down reason you see it as wasteful is that you have some set of beliefs about what is "right" and "meaningful" (many of which, I'll take liberty to say, most likely likely NOT consciously thought out) and since the core technical principle behind Bitcoin is simple enough, it's easy for you to see it does something that seemingly does not contribute to the fulfillment of what you consider "meaningful" (i.e. performing tons of computation that essentially compute nothing "meaningful").
Technical principles behind markets, industries or your own existence are not simple enough, so you cannot see through them and decide at a glance that they are "wasteful". And since you generally avoid falling into philosophical discussions (rightfully so), this is good enough for you. This doesn't mean that they achieve something that will turn out "obviously meaningful" to you (I'm cynical enough to assume they actually not), it's all just too complicated to tell at a glance.
If this is all too abstract, I'm saying that Bitcoin is actually doing something, and this something is much more complicated than the technical principle you can easily see behind it. You should take this into consideration when thinking about what this giant CO₂ emitting machine actually is. It is not a machine for computing hashes, as it might seem from a purely technical perspective.
PoW utilizes the honest indicator of un-forgeable expense to mitigate this class of risks.
https://www.mckinsey.com/~/media/mckinsey/industries/financi...
In comparison the search engine market is 170 billion. If a google sized company or decentralized network could reduce the 2 trillion global spend on payments to 170b, that would be fantastic regardless of how much it spends on preventing double spends.
Bitcoin is just one settlement layer. There is no reason for my day to day transactions to settle there. My day to day payments can be settlement on a chain with much higher throughput and faster finality and different security assumptions.
There is also no reason why I can't lend my funds to 100m user credit cards directly without a middleman through software either.
So whats the cost comparison of moving $100,000 out of China into the the US via bitcoin vs the traditional banking system?
There was some error with the debit card system where it wouldn't accept my card, then when the cashier rebooted the device, it informed me that my account balance was insufficient. Sure enough, checking my balance I see that somehow the first try "stuck" into the system as a 'pre-authorization' -- inexplicably unusable money. The bank just shrugged, it would fix itself in two weeks.
I stopped paying with plastic. Fear the day the ATM fails to produce the bills yet drains my account.
Which makes bitcoin an even bigger joke because on a per transaction basis (one that includes miner subsidies) bitcoin costs several orders of magnitude more and cannot even deliver the same basic features that mainstream fiat offers.
Saying that you can transact fiat cheaply is a silly comparison: bitcoin can be transacted for free as well. It is flawed to compare the fractional expense of maintaining the entire system for Bitcoin against any value but the fractional cost of maintaining the entire financial sector: comparing against the cost to consumer without accounting for the system maintenance costs is fallacious.
It's not like it is free to have a system like that!
To be clear: if you ask my opinion on technical side of Bitcoin, I wouldn't be really praising it. But, as I said already, Bitcoin is not a technical thing. It is a very complicated sociocultural phenomena that definitely did achieve something. And you need to consider everything X is, to apply words such as "wasteful" to X.
Again, if this seems too abstract: if you are living in the USA, you are consuming twice more energy (per capita) than Japanese people, having lower life expectancy (both are far from the ends of the spectrum, BTW). So, the existence of USA citizens is wasteful.
Now, doesn't stripping down all the nuance of living different lives in different countries seem a bit outrageous to you? It surely does seem so to me.
Bitcoin is a drain on the electrical system. You are basically arguing that it is okay to litter because it will create jobs and spawn new anti-litter technology.
Doesn’t work that way, sorry.
This type of argument goes nowhere fast.
I’ve never seen an article like this for the entire crypto space as a whole but I imagine it is much, much worse.
The carbon estimate seems very poor.
> Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining.
The reason many miners are in China is that they can access cheap off-grid renewable sources of energy there, such as excess hydroelectric, so using an on-grid CO2 estimate doesn't work.
Setting aside the non-trivial ecological damage caused by dams.... all that renewable energy could have been used to power something that actually adds value to society. Instead it is getting flushed down the toilet solving useless math problems so that a relative handful of people can milk a larger set of rubes for all their money. Oh, and enable criminals to continue their criminal behavior....
If the miners are using excess production, then by definition, that power could not have been used for anything else; otherwise, some consumer in the grid would have used it!
> The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid
You just need to read.
> Setting aside the non-trivial ecological damage caused by dams..
I don't think anyone is claiming that the dams were built to mine Bitcoins. The power generation was provisioned to power towns, but it is generating more electricity than the towns can use or profitably transport away.
> all that renewable energy could have been used to power something that actually adds value to society.
There is a market to buy the energy. If anyone wanted it for basically any other purpose, the price would increase and the miners would presumably go anywhere else in the world with overprovisioned renewable energy, so that their profit can be preserved. Mining doesn't have many requirements: it doesn't even need to be on-grid. It's created an arbitrage market for cheap electricity, and people will search out the cheapest electricity in the world to use for it. By definition, the cheapest electricity will be the least wanted.
Its not the final word, but it is something to vigilantly monitor in case the following changes:
Most bitcoin energy use is from mining, and that mining uses renewable energy or energy waste byproducts. Source: my experience with mining companies that don't publicly disclose how they do this profitably.
So for now, try to corroborate it yourself. I would say that 70-80% of bitcoin mining is not a wasteful use of energy and that merely estimating the energy numbers doesn't tell you anything about the source. What I mean by "not wasteful" means that it isn't pulling away from another use of energy that was ever going to happen.
This wasted energy is usually in the form of byproducts around other power facilities that cannot be economically converted and transported to residential and commercial areas. This is where bitcoin mining shines: Bitcoin mining does not need a robust internet connection and does not need to occur in residential or commercial areas. A computer with a satellite connection can submit hashes to the bitcoin network, and pools further make it practical to have lower latency, because they merely pay out based on your contribution to the pool.
So miners that use energy waste byproducts (converting those byproducts to electricity at the source and taking transformers there) often times are doing a favor to the power company or whoever is there.
What to monitor: if nation states start competing over power of this network, they may disregard the economic feasibility of doing so, and then it will be incredibly wasteful uses of electricity.
The block reward is 12.5 BTC (and fees are neglible), which is $100000. There's a new block every ~15 minutes, which means 35000 blocks per year. ($100000 * 35000 / 73 TWH) = $0.048/KWH. So miners spend at most $0.05 per KWH on electricity. Assuming they spend 60% on electricity, they spend ~$0.03 per KWH, so not an outrageous price.
The problem is BTC grew too big too fast. The block reward is very large, but once it drops to the magnitude of fees ($2000 / block), we'll probably see a decrease in the energy usage to the (perceived?) value of decentralized payment system.
Also, this shows the need for governments to drastically increase taxes on carbon producing forms of electricity.
Which will disproportionately hurt the poor.
> The assumptions underlying this energy consumption estimate can be found here [1]. Criticism and potential validation of the estimate is discussed here [2].
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
This pretty much lines up with what I've seen in all Bitcoin energy use debaters: the evangelists insist the numbers are all wrong, but never really provide any evidence to that point.
The number of transactions is a simple limit set by whoever controls the Bitcoin GitHub Repo, thats it. Bitcoin Cash is much closer to the "Bitcoin" described by the inventor Satoshi Nakamoto.
But on the other side, hey blockchains are so cool they can do the same work as banks but six orders of magnitude less efficiently.
Otherwise, we could also argue that iPhones are a humanitarian disaster.
CryptoKidz: I'm in!
But haters gonna hate, and downvoterz gonna downvote. what evs
Not to mention, a single transaction can power an infinite amount of (wash) transactions thanks to 2nd layer stuff like the lightning network. So it'd be similarly misleading to try quote in terms of that.
So the correct unit would be power usage, per block or time unit.
If each block takes 10 minutes, and the miner network indeed draws 73 TWh each year, then that works out to ~1.4 GWh per block.
I get what you mean, if you decide not to make a transaction, the energy still gets spent but the more you use bitcoin the more valuable it becomes which incentivizes miners to keep mining. Also someone elses transaction will just slot in to fill the gap left since there is a very limited amount of space for transactions which is always fully utilized.
https://jochen-hoenicke.de/queue/#0,24h
With enough people using the second layer network, each "settlement" could mean finalising hundreds of transactions for thousands of people. This second layer network acts like a caching layer, and consolidates many transactions into a single transaction (put into very simple terms).
[1] Combinations of inputs and outputs.
"Getting rich" at cost of the environment (extremely high resource consumption)? No thanks, I'd rather leave that world for future generations.
At least with bitcoin you could theoretically throw up a pile of solar panels and directly convert that clean electricity into money.
example: if you aren't getting X Mh/s @ $Y kw/h, it isn't profitable?
I'm more worried about humanity having a future.
In other words, you should mine if you're in China where you can get those rates
https://www.theguardian.com/world/2019/jul/12/chinese-police...
http://www.scmp.com/news/china/society/article/2143758/chine...
https://www.ccn.com/chinese-police-seize-600-bitcoin-mining-...
http://www.scmp.com/news/china/society/article/2108486/four-...
https://kyc360.com/article/bitcoin-causes-electricity-crisis...
you'll never find a systematic article on it, but these aren't the first or the last incidents.
they also pay much lower hardware costs than the US does, because it all happens off the books. Chinese mining farms with internal hardware/super cheap power are nothing new.
china doesn't and never has played fairly in terms of hardware or power costs. crypto as a whole has been embraced because it's a good system to move value past chinese capital controls, you just are getting your beak wet as that money moves.
just like those 2 million dollar houses in vancouver or whatever. Sure, it's great to be trading in that current, or providing property management services, or to be holding the asset as it's pumped up by that money moving under the chinese capital controls!
Greed creates waste in all venues.
Further, fiduciary duty of corporations to maximize shareholder profit has led to almost every environmentally harmful exploit of externalities. I'd argue that the stock market is fundamentally responsible for 99% of all pollution.
Bitcoin does not eliminate the idea of fiduciary duty. Bitcoin holders still expect bitcoin loanees to trade and operate in their financial interest.
What is the emission cost of the system which enables this functionality?
bitcoin numbers don't include the off-chain stuff either, lol.
Bitcoin energy is literally expended on a massive, inefficient mainframe that processes a couple hundred transactions a second. That's all - everything else is additional to that.
Tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges, etc.
Obviously the purely digital systems consumes more compute, but I think you're discounting many of the true costs of the existing system.
If you think that tens to hundreds of thousands of highly paid bureaucrats, accountants, risk managers, regulators, legislators, clerks, lawyers, law enforcement, judges are there just to prevent erroneous trades...
It seems that you are discounting a vast amount of things that the system does besides preventing the execution of erroneous trade.
We're talking about just keeping track of who owns what amounts of a commodity. That part is using terawatt hours per year! I am very doubtful that the "keeping track of who owns what amounts" part of the stock market is anywhere near that.
Determining who has the rights to make changes to what data, auditing changes, auditing ever-changing access control rights, systematically changing these rules to adapt to technological advancements, etc. is the function which Bitcoin accomplishes that you are discounting from your perceived cost of the traditional stock market.
I've never bought anything illegal (but some weed perhaps) yet I feel very uncomfortable every time I have to share my personal details with any party.
I also want anonymous P/O boxes.
I just bloody don't want any party to track me nor tell me what I am and what I am not allowed to buy (unless it's a weapon of mass destruction or a human slave and there are other ways to bust people selling these).
https://www.theguardian.com/world/2016/nov/08/india-withdraw...
First: it absolutely is being outlawed, slowly but surely. The US is not yet fully there (although: try to buy a 1M USD house cash and see what happens), but most EU countries are fully there.
Second: Try and wire a large sum to your brother who happens to currently be stationed in disreputable country X or Y, and see what happens. Or mail him a box full of cash. See what happens.
In the US, if the cops notice you have large amounts of cash in your car during a "routine traffic stop", they will take it from you on the basis that you must be a drug dealer.
One thing is clear, no matter how far blockchain technology progresses, proof-of-work will never reach the efficiency of a trusted intermediary.
1. Calculate total mining revenues, across all miners in the Bitcoin network.
2. Estimate that, on average, miners spend 60% of their revenues on electricity. (I believe the origin of this number are the calculations in this paper [0]).
3. Find out how much miners pay per kWh on average.
4. Convert the costs into a consumption.
There is some discussion of the origin of the assumptions, and some criticism and validation here [1] and here [2] respectively.
[0] https://www.cell.com/joule/fulltext/S2542-4351(18)30177-6
Specifically, see the calculations using Antminer S9 in Table 2.
[1] https://digiconomist.net/bitcoin-energy-consumption#assumpti...
[2] https://digiconomist.net/bitcoin-energy-consumption#validati...
The amount of power used is proportional to the value of the reward for successfully mining a new block, which happens about every 10 minutes (12.5 BTC or about $100k).
If the value of BTC goes up miners will increase their spend and more power will be consumed per block mined, and if the value goes down so to will the power used.
Regardless of the power used for mining, there is a fixed transaction capacity in the network.
Does this analysis take into account secondary network transactions? For example wire transfers are relatively expensive to process still, but are often used to settle huge volumes of things like ACH payments, nightly sweeps etc.
After the last BTC is mined, miners will still presumably be able to profit from block transaction fees. That might help power a little bit since they'll worry more about being efficient with which transactions go into a block.
Meanwhile Apple introduced the first version of the iPhone, completely transforming the mobile landscape.
Meanwhile, Uber and lyft upended the taxi market completely.
Meanwhile, we have private companies sending payloads to the space station
Meanwhile, electric cars are increasingly becoming mainstream.
In what possible way can you claim bitcoin is “in its infancy”?
A complete and utter waste of resources, which at best fills a gap while the actual problem remains unsolved.