No, but the way we measure value is so flawed that it can seem that way.
Consider how we define poverty.
Suppose we discover an as-yet unknown group of people who have been using traditional farming methods to sustain themselves in the same area for thousands of years.
How would you classify them economically? Are they in "abject poverty", the same as a group whose traditional means of sustenance have been destroyed and who rely on international aid? What distinction do we make?
As a very low but presumably stable level of income of course. Almost certainly would be abject poverty if they still had a small population after thousands of years along with presumambly genetic issues from isolation and a population size small enough to not be detected. That classification would be vwey correct despite having first world romanticized "sustainable farming" and "traditional means of sustance". They would still certainly lack things like modern medicine let alone other tools like "iron farm implements" that they would have very poor ability to purchase.
I suppose the value judgment is between "very low but presumably stable income with small positive net worth" versus "very high but extremely unstable with massively negative net worth."
Maybe any of the established global banking and payment providers that allow me to pay for things online significantly quicker and with much lower fees than Bitcoin, without the huge cost to the environment?
Really? I think bitcoin is a way of accelerating externalities and the byproduct is an arbitrary transfer of wealth obfuscated with the cover of decentralization and value. Mining does not accelerate the development of renewable energy but rather an exploitation of idle resources.
Cool. I've got all this toxic industrial waste. I was going to just dump it into a lake. Bitcoin will turn that into pure cold cash, with no byproduct? Awesome.
I believe the value of cryptocurrency is to neuter governments' abilities to inflate or devalue currency with the push of a button, and to improve our ability to transact freely with one another.
I absolutely agree with you that money needs limitations, such as hard rules on supply increases. A money supply that is uncontrolled in such a way that you can make more or less whenever you personally feel like it regardless of the other users' intentions won't be useful for very long.
I personally think of cryptocurrency like a constitution but for money - whereas before whoever had the biggest guns could decree How It Is Now, the guns will be powerless to what is written down. In this way, it removes power of a select few to control the supply of money for their benefit.
I don't know how this ends. Is it a net negative to the human experience? Anarchy? The select few who got into bitcoin early wielding all the power now? Taxation falling to the wayside and a deterioration of quality of life? Each of these is somewhat possible, but as someone who has 2nd hand experience of what a country can do when it has free reign to issue whole new currencies and remove old ones or devalue the existing one into oblivion, I don't really care.
> I believe the value of cryptocurrency is to neuter governments' abilities to inflate or devalue currency with the push of a button
Central banking is necessary function of government. If government saw their ability to do it being actually "neutered" then it would get shut right down.
I am not saying that it can't be mismanaged by a state, but you do not have anything better than state fiat money.
> personally think of cryptocurrency like a constitution but for money
>I am not saying that it can't be mismanaged by a state, but you do not have anything better than state fiat money.
I agree with this! At the moment I don't see many things that are better yet. I hope to see an obvious winner someday.
EDIT: For the record, I hold no Bitcoin. While it has a lot of potential value in creating Freedom To Transact, I'm not convinced the current price per unit is anything but a Pump and Dump. If Bitcoin is a Constitution of Money, it's a pretty fucked up one.
I think that's a great goal to have (I'm pro anarchy and for the dismantlement of all governments) but I don't like spending all this energy just for it.
Besides, government will stop all of this before we get to anarchy, if we want anarchy (or even moving in that direction, instead of the opposite as we're doing now) we need to get there politically.
Any government can say at any time: "Everyone holding cryptocurrency is a terrorist and will be persecuted" and use their monopoly on violence to enforce it.
Incidentally, that's the reason I never invested in BTC (and missed out on this generation inequality wealth transfer).
I have come to believe that this part of the value is absolutely enormous. It takes control of the money supply out of government's hands - which on balance, I believe is probably a bad thing in a democratic country.
On the other hand, it's incredibly powerful / valuable if it's allowed to exist, and I think the cat is already out of that bag.
> It takes control of the money supply out of government's hands - which on balance, I believe is probably a bad thing in a democratic country.
Of course, no country, democratic or otherwise, will allow this to happen. The idea that you can have monetary policy exist outside of government control is a bit ludicrous. Government does still control the guns after all, and they can make anything they want illegal, as the US has done with gold in the past.
That is a popular narrative partially owing to some very ugly zombie tropes and the archaic understanding of wealth as shinies to be grabbed - but it simply isn't true. We had it already with various (bi)metallic standards and they had documented worse problems.
Fiat currency has yet to cause wars of conquest to prevent deflationary lock up that proceeded to crash the economy through inflation after causing untold personal suffering /on success/. The maligned federal reserve already takes care of the "try to hyperinflate our ways directly out of problems to get reelected".
If anything it could have the more "neutral" role of financial network independence but it still suffers the flaw of interchange chokepoint control putting them back to square one.
It’s amazing that the popular narrative is that the average person will somehow benefit if we switch to a currency that is majority owned by a small handful of early adopters.
I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person. Early adopters and Bitcoin whales would love it because they hold the vast majority of Bitcoin. They want nothing more than to see everyone else forced to buy it from them at ever increasing prices if they want to join the Bitcoin economy.
The average person loses in this scenario, though.
Just get in at the ground floor and then promote it to everyone you know. They’ll invest, which makes money for you, and they’ll tell friends, who will invest...
A lot of the early adopters have either permanently lost their coins or sold it local maximums, very few people would have hold on to it that long. And you can argue that if they had that kind of strong belief, they should receive some rewards for it.
It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
> A lot of the early adopters have either permanently lost their coins or sold it
If the balance of a Bitcoin economy relies on the assumption that certain people have lost their money, something is seriously wrong.
Regardless, a hypothetical Bitcoin economy would require much further buy-in from here, making current holders the early adopters.
> It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
The VC analogy isn’t good at all. VCs invest to fund the creation of something. What did early Bitcoin investors fund? More mining and more hype?
From another angle: Imagine if PayPal created a new payment system that used shares of PayPal as the currency. Anyone who wants to use the tool must buy some shares of PayPal, because that’s the currency. And oh by the way, most of those shares are owned by PayPal founders and early adopters, who will gladly sell them at a massive gain.
Is Bitcoin supposed to be a speculative investment? Or a stable currency for a new economy? We can’t just pick and choose from either definition as convenient for the argument.
It was considered worthless at the time so many weren't careful with it. People are going to be a lot more careful when their coins are priced at 44k+.
Bitcoiners bring up inflation as if our only two options for investment are cash under the mattress or buying Bitcoin.
I keep my investments in companies and assets like most other investors. The economic stimulus might devalue the <1% of USD cash I keep around for transactions, but my actual investments will likely benefit from the stimulus. As a bonus, I get to operate in an economy that has been buffered against the effects of COVID.
It’s amazing that Bitcoin proponents only ever want to talk about the USD (or other local currency) value of their Bitcoin, yet they want us to ignore the fact that Bitcoin isn’t the only option for investing cash.
There is no alternative for the monetization of an asset. Gold was the same. Some people believed in it, many didn't, and as it monetized over time those that believed in it early benefited most.
The same is the case with anything valuable that might become money, including the USD, if you consider that it was originally distributed in a manner that was pegged to gold and that gold was monetized in the same way as described above. The idea that you could materialize a money in any other way is unsupported by history.
If the underpinnings of an economy accrue value purely to speculators while devaluing (in BTC-relative terms) actual assets and value creation, it has a major incentive problem.
What’s the one and only thing Bitcoiners want you to do with Bitcoin? Buy. That’s it. Any other use, including spending, is actively discouraged.
1) Not a currency, 2) Debateable that it's value at all, and 3) "controlled by a select few people" is a remarkably paranoid/conspiracy way to frame that central banking is a necessary function of government.
1) I can use it to transfer monetary value, which is good enough for me,
2) the market puts it's current value at 45k$,
3) doesn't change the fact that central planning has created a very fragile economy.
That is not a "risk" in the sense of adverse outcomes. Anyone can throw bitcoins in a wallet and forget about them for 10 years. There is no risk of adverse outcome involved in doing so, and people should not be rewarded it.
> I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person.
Don't confuse the cause and effect. If there's massive inflation and bitcoin becomes highly relevant, you're losing if you hold USD, no matter what! The arrogant central bankers are the cause. Nobody is cheering for that. Bitcoin is just a hedge.
If you're afraid of stagflation and you want to park your money in something that holds value, what should you buy? Precious metals, which have been manipulated for decades? Property, in the context of yet another housing bubble?
the early adopters don't control the network. they are just actors on it. Even the richest btc holder can't freeze your wallet or prohibit you from spending/trading/sharing it.
I'm not convinced that your average tax paying American will benefit from this - if anything the difficulty in taxing wealth and loss of ability to print/control money granted to Americans by American guns could lead to a noticeable decrease in quality of life for them.
That being said, there is a tremendous demand from people in many countries to defend their wealth from less stable environments that seek to control their ability to freely transact/store wealth.
No idea how it ends, or even if these cryptos deliver on their potential. Any idiot can see there are many roadblocks, and I personally think that Bitcoin's price is wildly manipulated (and most likely a ponzi).
However, as someone who has 2nd hand experience with poorly run govs stripping peoples' wealth for political reasons, I'm very excited by these possibilities in spite of some of the negatives.
For the record I have no Bitcoin, but I do run a node for another crypto I find interesting.
Taking neither side, but just thinking of my parents - neither of who are anything 'tech' or anything 'finance'. Completely normal in most regards.
For them, someone actively controlling the supply of money is probably a good thing. Anything they have is pretty safe in a bank and somewhat covered by the government. Their taxes pay for police, sewage, the bins to be taken away, their roads to be repaired.
I love the idea that people are seeking to do incredible things in the crypto space, but all too often it seems to be lumped in with people's desire to transfer money across borders (again, useless for the everyperson) or avoid taxes - which if we all did would probably be a big negative. Assuming the government didn't step in pretty quickly, because what government wants to lose control?
As soon as you start talking about cryptocurrency with oversight to protect my mum and dad, where people aren't just trying to get rich quickly and make sure taxes are paid - people seem to dial out pretty quickly.
> As soon as you start talking about cryptocurrency with oversight to protect my mum and dad, where people aren't just trying to get rich quickly and make sure taxes are paid - people seem to dial out pretty quickly.
There is literally no role for the key feature of blockchain - decentralised ledger, proof of work-backed transactions - in this case. You might as well use a trusted, regulated party with a database. You know, like Visa do.
The "incredible things" are also pointless things. That also burn energy like there's no tomorrow. Double meaning intended.
>The economics professor believes bitcoin is "not a unit of account," is "not a scalable means of payment," and is "not a stable store of value." Instead, he argues, it is a pump and dump scheme, where fear of missing out leads retail investors to speculate on an ever-increasing bubble.
"The value of Bitcoin is negative if we applied a carbon tax to it" (paraphrased).
Can't this be said about literally anything?
Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.
But that is absolutely not the point, and it is not a nitpick. The real argument is that Bitcoin has negative value if you include externalities, and that is not the case for most assets.
The cost of releasing carbon into the atmosphere is there whether or not you price it into the market by use of a tax. Value is not limited to monetary value.
Carbon taxes also wouldn't make Bitcoin worthless. You can easily imagine Bitcoin mines powered by solar. Many already are, in order to capitalize on the cheap energy. The article posted in the OP is specious.
The point is that Bitcoin isn't inherently carbon positive. It's carbon positivity depends on the power source used to mine it and carbon neutral power becomes cheaper and more available every day.
But is it better to see your crypto devalued by some big dump? Would probably be easy for a nation state to do this if it wanted to..
All this independence from states seems totally overrated to me. They can tax your crypto. They can participate in the crypto market.. many possibilities.
People have been making some variation of this claim since bitcoin was $0.01.
There haven't yet been any successful attempts at destroying it, which I think is what you're implying. Not to say it can't happen, but then if we prepared for every single possible scenario we'd all be quite exhausted.
Bitcoin exists for just over a decade now. Give governments and financial regulatory bodies some time to catch up and they will destroy it, maybe creating their own cryptocurrencies in process.
I guess the reason it didn't happen is that there is no need for it. Probably they laughing their ass off by profiting from it. Not sure how it works in the US but e.g. in Germany you have to pay taxes on crypto earnings. Sure you can just hold forever but what does it help you then?
If a nation-state dumps crypto then they no longer have it. If crypto was overvalued to begin with they can just buy it back later, cheaper. If it was fairly valued and they crashed it unfairly, they just lost a whole lot of crypto and don't get to play in that market anymore. Same way that speculators get flushed out of the stock market: eventually you run out of money and lose the right to play unless you start making a series of good calls.
This feedback mechanism doesn't exist when money can be created out of thin air. Then, if you run out of money, you just print more.
I think his point is that the externalities outweigh the actual benefits, so bitcoin is only valuable so long as a bunch of people who've never heard of it continue to be the ones who end up with the environmental liabilities.
First, your re-wording is doing much more than paraphrasing. There is legitimate science involved in calculating environmental impact that goes much further than just whatever tax governments implement to disincentivize using carbon.
Second, this definitely cannot be said about anything. There are plenty of products and industries that produce positive economic value _even with_ the environmental impact added.
Not at all. Lots of businesses make money by turning materials and/or labor into products. Other businesses make money solving problems for people or other businesses. However, crypto (and most of the rest of the financial sector) burn shit tons of energy, materials, time, and human effort generating wealth; wealth expressed in either bitcoin that doesn't really exist, or money that also doesn't really exist. The only real product they consistently produce is said wealth, yes, and also huge amounts of human suffering when their given business goes sideways and tanks the economy. With that in mind, maybe we ought to add said carbon taxes. I'm extremely pro killing off businesses that do nothing but generate profit on a spreadsheet for some overpaid stuffed suit and contribute nothing to humanity, nothing to the economy, solve no problems, and in general just cause the economic equivalent of "wind drag."
Mind you, my definition of "contributing" here is purposely overbroad. Coca-cola, despite producing literal sugar water, is contributing, even if that contribution is literally just sugar water that slowly kills you. It made something you can hold in your hands that people want, even if it's horrible. Hell even tobacco companies fit this definition. In my mind, financial corps and bitcoin companies are below those: using the finite entropy of the universe and the limited resources of our world to do exactly nothing.
Crypto mining produces a service, which is maintaining a ledger of payments that works in a certain way.
This specific problem — settling transactions — is an industry amounting to billions. Think of BTC like a MasterCard or Visa competitor, albeit a unique one.
This 'service' doesn't need to exist. It didn't solve a problem that wasn't already solved, we've had ledgers since the Bronze age, and probably before that. That's not to say that the blockchain itself isn't useful, of course it is for numerous applications, including even financial ones. However, Bitcoin as it stands today is functionally useless apart from being something that our system has decided has value, because.... waves hands.
If bitcoin went away tomorrow, a bunch of financial companies would have a lot of problems, a few big holders would be out money, and that's it. For every other human, it's Thursday.
Conversely, if gasoline didn't exist tomorrow, society would collapse.
But that doesn't seem to square with your GP post in my mind. If cigarettes went away, the world will keep moving just fine. They don't need to exist.
But you posit that people choosing cigarettes provides some value, despite the negative effects. Why is there no value than in people being able to chose a money/investment vehicle they believe to be to their benefit?
> Why is there no value than in people being able to chose a money/investment vehicle they believe to be to their benefit?
Because the only thing generated is fake money on a spreadsheet. There is no product, there is only consumption of resources to generate nothing.
For all of what's involved here, you could just pull the same amount of money out of thin air, deposit it in their IRA, and nothing changes, apart from way, WAY less energy consumption.
You're right that BTC has no commodity utility outside of "being money." But I think society needs money, as much as it needs an energy source.
Gold is one object that's served the money function in the past. It has properties (fungibility, durability, scarcity, etc.) that money needs. But it's "dumb" and cumbersome, as physical objects are.
Building digital objects that serve the money function is important. One solution is the centralized ACH/banking system. But this has drawbacks --- poor scarcity, high political exposure, etc. I view BTC as simply building a competitor. You get better money properties, at the cost of more energy, etc.
Is it worth it? I don't know. But that partly depends on how the future produces energy.
(Not saying I agree with the article) But that doesn't change how you do the calculus. Every good or service has some positive value to people roughly measured by price people are willing to pay for it and negative value measured roughly by the total value of the resources needed to produce. In most businesses or as an individual this is all you care about. But in addition goods and services can also have positive and negative externalities. Universal trash collection has the positive externality of reducing disease. And basically every consumer good has a negative externality of producing (some) trash.
As a whole people we should include these externalities in the value prop of services despite the fact that businesses and individuals don't because it's a cost we collectively pay.
Trash is my biggest pet-peeve example of this. As an individual I have very little power to control the amount of trash I produce because goods I buy come with so much stupid packaging that I can't give back or recycle and there is no incentive for the people in the position to affect change to do anything about it because they don't bear the cost.
In a similar fashion carbon taxes help to capture the negative externalities of energy use. And if the article is true then collecting that tax would make it so that bitcoin mining is (right now) unprofitable. This is to be expected since such a collection would be sudden increase in the cost of mining when the market has pushed margins thin. The market would adjust, transaction fees would go up, and miners would find non-carbon producing energy sources and we'd probably reach a new equilibrium that is profitable for everyone involved again.
We've decided to solve that problem by consuming very nearly the entire residential power consumption of Canada, a country of 38 million people.
We've done this with a network that can process 400k transactions per day (at $20/transaction in fees), as compared to visa, which does 150 million per day.
> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.
How do you justify this, given that inflation is so low? (at least in the EU it's been oscillating between 0 and 2% for a very long time)
Is this what people are so tired of? 1% inflation? I'm just trying to understand whether you're parroting "libertarian" talking points, or whether you know something I don't.
People thought all the QE during the financial crisis would cause inflation. It has and it hasn't. It has because you just need to look at how asset prices (stocks, houses, etc.) have increased. It hasn't because conveniently many governments don't include asset prices in their calculations of inflation. So although food prices for example haven't shot up and officially rates of inflation have remained low, asset prices have shot up.
Is there a specific estimate/study that you'd wanna suggest to me? I've heard these claims but I've never taken the time to read the research myself, and I'm feeling like it now :-)
> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.
Inflation serves a purpose. The cash is devalued not on a whim, but to prevent collapse. Bitcoin indeed prevents that. Fortunately it's just a fringe market. Lets hope it stays that way.
> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.
I bet they like it much more when the value of digital currency jumps up and down when a South African guy feels like tweeting.
It does not seems very different than other trades made illegal/wrong because they make people rich at huge community costs: like destroying the nature and the planet. I am thinking about Ivory trade, or rare animals, or furs etc etc...
But people are too busy to get rich to thing about the consequences.
The environmental impact of Bitcoin, given it's current electricity usage is magnitudes less than what countries do with that same amount of electricity.
You can make any number seem small if you compare it to something arbitrarily larger.
That doesn’t make the original point invalid, though. Bitcoin’s energy usage is absolutely significant. In a world where we’re chasing a couple percent efficiency improvements here and there, it’s ridiculous that people are promoting a currency that literally incentivized people to perform wasteful computing operations on the scale of a medium sized country.
There is an inherent bias in looking at paperclips like that. I'm sure that if you spend some time in the paperclip community you will find that they value their individuality; each paperclip has slightly different characteristics (one might be bent a few arcseconds more than the next one).
I don't think you appreciate the use of gold. For one, every chip is using it. Would we better off without semiconductors in exchange for a few less mercury ponds?
I wonder if gold being useful in semiconductor design influenced the Greeks in adopting it as a currency. Maybe they just used it because it was portable, fungible, and scarce?
Nouriel Roubini has a well known hate for Bitcoin, which probably originates from the fact that it escapes his alleged "expertise": he hasn't foreseen its popularity, and rise in value. Now he hates it, because this past mistake threatens his status as financial guru, "Dr Doom".
EDIT: I wouldn't take anything he says about it seriously, he's basically clueless on the topic.
EDIT2: In free markets value of something, e.g. Bitcoin is not decided by some panel of experts, like professor Roubini, but by people buying and selling it. If people want to pay $45k for a Bitcoin then that's it's true value. Roubini's claims that "fundamental value of Bitcoin is zero" is riddiculous. Bitcoins are collectibles, same as, say, baseball cards, and baseball cards can go for some insane prices despite having zero practial usefullness.
He says that bitcoin has "no intrinsic value" and he's wrong about that, because value of something is not decided by financial experts, but by people willing to pay for it (even if those people are criminals looking for new ways to launder their money).
He has also been predicting that "Bitcoin bubble will burst" for the past few years, and he's been wrong about it so far.
So yes, I would say he is clueless when it comes to Bitcoin.
Bitcoin doesn't have a government and armies defending it.
If tomorrow your government wakes up and make "dangerous cryptocurrencies" illegal because "criminals use them" they can do that.
The reason Bitcoin value is skyrocketing is mainly speculation. People buy because they want to get rich and quit their crappy job.
There is literally nothing that can't be replicated tomorrow and have the same technological characteristics of Bitcoin. Actually, other cryptocurrencies are even better.
At some point, governments will have their digital cryptocurrencies to track you even better than with the current system.
Also, deflationary money is the best thing that can happen to environment. It's time to stop destroying savings in order to accelerate pointless consumption (and production).
It's just basic economics as renewables are the most profitable. Most of mining happens in China because the regime has overinvested in hydroelectricity and there's lots of unused capacity available.
Here's a hot take: Bitcoin subsidizes clean energy development. Miners buy cheap energy; clean energy infrastructure gets profitable return. Cost of development and manufacturing lowers further because of scale; pollution and externalities reduced; humanity wins. Bitcoin saves humanity?
Yes. China gets more of its energy from renewables than the US does. It is their fastest growing energy sector, and is a stated concern for economic and military security purposes.
Bitcoin is, however, consuming some of that new energy generation with a new consumption: Doing useless calculations to mine Bitcoin.
Bitcoin increases energy demand which also drives an increase in supply. We can’t take old power plants offline if the new hydro power is taken up by new mining operations.
It’s silly that we’re going to such lengths to try to respin Bitcoin’s absurd energy inefficiency.
The Bitcoin network is literally designed to incentivize, with payment, bringing new energy-inefficient operations online to “mine”.
The efficiency of the network gets worse and worse all the time, all while processing the same limited number of transactions.
Worse yet, Bitcoiners seem to like it this way. Proposals to increase block size have not been welcomed, and they go to great lengths to discourage switching to other protocols with better energy efficiency (because it would harm their investment).
The entire system revolves around inefficiency, and unfortunately we pay for that inefficiency with energy consumption.
> Worse yet, Bitcoiners seem to like it this way. Proposals to increase block size have not been welcomed, and they go to great lengths to discourage switching to other protocols with better energy efficiency (because it would harm their investment).
That's exactly why the Bitcoin Cash fork happened.
That's exactly how "Proof of Work" consensus algorithm works: hasking a single block has to waste enough electricity to make forking the blockchain too costly.
There is already massive demand for energy, and massive investments in reducing the cost of energy, especially green energy. Scaling benefits come from order of magnitude increases in demand, not single digit percentage increases in demand.
At this point you’re just tossing out unrelated statements without even trying to tie them back to an argument.
Yes, the Earth is bombarded with a lot of sunlight. So what? Doesn’t change the fact that Bitcoin is consuming existing electricity infrastructure that we could be using for something else.
A waterfall power-plant produces energy 24/7 whether the townspeople are awake or not.
They consume energy in the form of electricity during the day. At night, they have no need for it shut off the turbines. This is unused and uncaptured energy that could have been put to use. The potential energy is "wasted" because the infrastructure is underutilized, the energy could not be preserved. This is starting to change as battery technology improves and makes it economically feasible to store energy. Otherwise, energy consuming applications could consume this supply, providing return to the townspeople's investment.
The amount of sunlight reaching the earth is 1.365 kilo watts per square meter [0]. Fossil fuels are stored solar energy; wind, hydroelectric and of course solar is derived from sunlight. Nuclear doesn't have this limit.
Electical power is fungible and an increase in demand for any power increases the profitability of all existing sources of power including coal, reducing the rate at which fossil-fuel power sources will be replaced.
The idea that consuming more power is good for the environment is not supported by the evidence. Or any evidence.
Electricity product from a coal plant vs a solar farm is the same, but its costs are not.
The cost per kwh from a coal plant has not changed in 10 years. Solar has seen massive reductions and is cheaper than coal. Consuming more solar power is gives more profit to the solar power industry. I'm ok with that.
This is delusion. Solar power is 1.7% of the world's electricity.
Increasing electricity consumption will increase all forms of electricity production.
I believe you don't even think about what you're saying. You start with the premise - "More energy consumed is naturally good" - and then invent an argument around it by throwing words together haphazardly.
Solar, wind and geothermal are the cheapest energy you can find, and their cost continues to fall.
Miners are therefore incentivized to increase profit by buying cheap renewable energy.
Renewable energy industry increases revenue and can continue to invest in R&D, infrastructure, distribution, etc. of said energy production. Costs go down for producing new units of renewable energy as a result of industry maturation.
One problem with "waste of energy" argument is that it assumes Bitcoin the network provides no value. People compare it to centralized, closed systems and say, "See how inefficient that is?".
But what they're not calculating is the cost and suffering caused by maintaining the underlying system (fiat currency, petrodollars, geopolitics). Calculate for me the economic and human damage done if the US falls into hyperinflation and obliterates the world's reserve currency. It won't just be 350m people suffering, it will be billions.
Decentralized, permissionless, censorship resistant systems suddenly seem very valuable to me.
Yeah of course, my electricity comes from renewable sources but my neighbor's electricity comes from fossil fuels... I can feel it in my gut. I'm a good person as evidenced by how much money I was able to accumulate so my electricity could only come from a good place like everything else in my wonderful life. I'm not making this up, my spiritual advisor told me so multiple times... Also I donated a bunch of money to Greta Thunberg... So much positive energy in my life. Only positive energy.
I also read somewhere that the majority of the bitcoin "engine" was located close to renewable power sources that did not otherwise have good markets to sell their power.
Whether that's actually true or not, the possibility that bitcoin could find the low cost renewable sweet spots throughout the worlds power grid and make use of them is interesting and helps to address the efficiency criticism.
I think I'm still overall anti-bitcoin but I am questioning my assumptions.
I've seen this comment before, and honestly I think it's cheap. This article is about a clear, real problem with the current implementation of Bitcoin, namely that it requires enormous amounts of energy. I am not "anti-Bitcoin", I am anti a payment and financial storage protocol that requires gargantuan amounts of energy.
So if you have a problem or comment on the article in question, please make it, we're all ears. But responding to valid criticisms of Bitcoin with hand-wavy "oh HN is so anti-Bitcoin" is not discussion, it's tribalism.
Valid criticism is one thing, but this wave of criticism ignores so many basic facts about Bitcoin mining and energy generation/transportation/storage it's unbelievable. It also ignores the benefits, handwaving them away as if they didn't exist at all (it's all nice and easy for the firstworlders they can't even imagine there's a world without reliable banks, but there is!) while offering no alternative. Why would people use Bitcoin if there was a better alternative, isn't one of the arguments that it costs so much? Try to find out how much does it cost to transfer money to Ghana or Congo by other means and how reliable it is...
To be 100% clear, I believe your comment is exactly the type of valid counterargument I'm talking about, i.e. you bring up unique issues that Bitcoin solves, and point out that other monetary systems have high costs as well. Those are things one can have an honest debate about.
That is very different than the "HN is so anti-Bitcoin bringing up decade old strawmen" comment I responded to. Perhaps most obviously by the fact that there are many in the crypto community itself that believe the energy usage of BTC is a real problem and are attempting to come up with viable alternatives like proof of stake.
It's just a divisive topic and people repeat the same things over and over again about those (including versions of what you've said here). It's been the same for many years already.
I think these mindless copy-paste criticisms don't even deserve a thoughtful reply. They are the reason there's tribalism in Bitcoin - it's just an efficient way to cope with (endless) ignorance and trolls.
Maybe? I'm sitting on the sidelines very comfortably hoping a bunch of people don't get hurt. I feel as if the bulls are ignoring the fundamentals and limitations of Bitcoin.
I agree with Bitcoin being neither money nor commodity - nor anything else, really. To me Bitcoin is Gamestop on a grander scale, a bunch of people deciding something has value that really has none (or in the case of Gamestop very little). I don't regret "missing" the hype in either case, preferring investments that make sense based on the fundamentals (assets, cashflow, profits, etc) instead of bets on pure speculation.
I do, of course, want to be "right" about Bitcoin (who doesn't like being right?) but it's far more of a curiosity for me than anything else.
What is the strawman here? I've had bitcoin since 2012, and this wasn't as much of a pressing issue back then. Perhaps blindly, I then believed it had the potential to serve as a global, decentralized, stateless currency. I still want those things, but bitcoin transaction fees have gotten too high for it to make sense as a currency for the majority of real-world transactions. There's no solution there. And as a store of value it poses a real threat to the planet. There are better technologies now; the only real advantage bitcoin has , is wider acceptance by people and institutions as a payment mechanism, due to its longer history. But, with the transaction fees being what they are, and the potential for innovation with Ethereum and other more sophisticated cryptocurrencies, that's bound to change over the next few years.
I honestly don't understand how people can continue to defend it. The only explanation I can think of is that the masses who showed up to the party late don't care if it's gotten out of hand and is now in danger of trashing the place or setting the building on fire. They just made the trip out there.
I'm very conflicted about this. On one hand, I have a little bit of Bitcoin and am happy about some of the gains I've gotten (not life changing in any sense, but more than I expected). On the other hand I hesitated for a long time to buy any because I knew of the large environmental impact that its energy use has (yes, I really did avoid buying Bitcoin for a long time because I roughly knew of the environmental/energy costs). It's hard to reconcile these two positions in my mind, and part of me feels like this is a "tragedy of the commons" situation where it's fine if I have some because everyone else has some as well and I won't impact anything by _not_ having some.
Curious what HNers think about this - is it bad to have Bitcoin in light of how bad the environmental impact is, especially with analysis about the taxes/cost/impact like this? Or is not participating really not reducing the impact of this in any meaningful way so you're kind of only losing if you don't?
I'm of the mind that the government shouldn't be regulating how resources are used. It makes sense to me to regulate the manufacturing of resources - for example regulating pollution levels, dumping, etc. - but once you have a resource the market should decide how that resource should be put to use.
If we've decided that we're happy producing X much electricity as a society using nuclear, wind, solar, coal, etc, we shouldn't get caught up on who ends up using that electricity or what they are willing to pay for it.
If we think that the energy we are producing is harmful, we should regulate things at the production level. Ban power production that doesn't meet certain standards, put a cap on the total amount of coal burning per year, etc. And then let the market decide the best use for the energy that remains.
Bitcoin is unique in that anyone with a power outlet and internet connection can plug hardware in and start converting energy to Bitcoin.
Bitcoin mining was a problem in college dorms for a while because students used their “free” electricity and cooling to pay for new video cards. Many landlords had to abandon “utilities included” rents when they were hit with the first $500 electric bill. IT administrators have stories of catching people trying to hide mining equipment in closets or under their desks.
But coiners are trying to get ahead of the narrative by planting articles about how mining is actually powered by hydro dams in Mongolia. Not only is this not true, but it would be quite a problem if the mining had become so massively centralized.
But it is true, about 75% of all electricity used in bitcoin mining is sourced from renewables. And the vast majority of bitcoin mining is large professional farms, not people using free electricity in their dorms. Bitcoin has been dominated by professionals since 2014.
> Curious what HNers think about this - is it bad to have Bitcoin in light of how bad the environmental impact is
Having them actually has no or negligible impact. Unfortunately getting rid of them is a transaction which will incur an unreasonable cost to the environment. The best thing might be to destroy them (the media they're stored on). And no, nobody expects you to do so.
I'd would sell them before they get banned, as they must.
Nano completely solves this. Under 1 second transactions fully confirmed, no mining, no inflation, it's decentralized (and getting more so). All the coins were premined. It uses a block lattice rather than a blockchain, so it is scalable (the main net is doing 185 transactions per second now (1776 tps on the test net). The system to determine voting power (regarding confirming transactions) is basically a liquid democracy where you can delegate your voting power (based on how many coins you own) to a different representative at any time. It leaves Bitcoin in the dust and is an incredibly elegant cryptocurrency that will be the future of microtransactions online as well as an actual usable cryptocurrency. nano.org
I meant to post this in a thread about Bitcoin energy consumption, but it looks like I posted it under the wrong thread. Anyways, Nano is still a better version of Bitcoin.
187 comments
[ 3.5 ms ] story [ 208 ms ] threadConsider how we define poverty.
Suppose we discover an as-yet unknown group of people who have been using traditional farming methods to sustain themselves in the same area for thousands of years.
How would you classify them economically? Are they in "abject poverty", the same as a group whose traditional means of sustenance have been destroyed and who rely on international aid? What distinction do we make?
Or pigeon. Sorry I meant pigeon.
In most countries I know, in-country transfers from bank to bank are free.
You take those generated bitcoins and sell them for cold hard cash
You spend cash
P.S. I own crypto including Bitcoin.
Define "controlled supply of money" with reference to counter-examples of uncontrolled money supply? Money supply needs limits, surely?
I believe the value of cryptocurrency is to neuter governments' abilities to inflate or devalue currency with the push of a button, and to improve our ability to transact freely with one another.
I absolutely agree with you that money needs limitations, such as hard rules on supply increases. A money supply that is uncontrolled in such a way that you can make more or less whenever you personally feel like it regardless of the other users' intentions won't be useful for very long.
I personally think of cryptocurrency like a constitution but for money - whereas before whoever had the biggest guns could decree How It Is Now, the guns will be powerless to what is written down. In this way, it removes power of a select few to control the supply of money for their benefit.
I don't know how this ends. Is it a net negative to the human experience? Anarchy? The select few who got into bitcoin early wielding all the power now? Taxation falling to the wayside and a deterioration of quality of life? Each of these is somewhat possible, but as someone who has 2nd hand experience of what a country can do when it has free reign to issue whole new currencies and remove old ones or devalue the existing one into oblivion, I don't really care.
Let's ride this puppy and annoy some people.
EDIT: some phrasing
Central banking is necessary function of government. If government saw their ability to do it being actually "neutered" then it would get shut right down.
I am not saying that it can't be mismanaged by a state, but you do not have anything better than state fiat money.
> personally think of cryptocurrency like a constitution but for money
(eyeroll)
> Let's ride this puppy and annoy some people.
You ride on. Ride off. Ride far away.
I agree with this! At the moment I don't see many things that are better yet. I hope to see an obvious winner someday.
EDIT: For the record, I hold no Bitcoin. While it has a lot of potential value in creating Freedom To Transact, I'm not convinced the current price per unit is anything but a Pump and Dump. If Bitcoin is a Constitution of Money, it's a pretty fucked up one.
Besides, government will stop all of this before we get to anarchy, if we want anarchy (or even moving in that direction, instead of the opposite as we're doing now) we need to get there politically.
Any government can say at any time: "Everyone holding cryptocurrency is a terrorist and will be persecuted" and use their monopoly on violence to enforce it.
Incidentally, that's the reason I never invested in BTC (and missed out on this generation inequality wealth transfer).
On the other hand, it's incredibly powerful / valuable if it's allowed to exist, and I think the cat is already out of that bag.
Of course, no country, democratic or otherwise, will allow this to happen. The idea that you can have monetary policy exist outside of government control is a bit ludicrous. Government does still control the guns after all, and they can make anything they want illegal, as the US has done with gold in the past.
Fiat currency has yet to cause wars of conquest to prevent deflationary lock up that proceeded to crash the economy through inflation after causing untold personal suffering /on success/. The maligned federal reserve already takes care of the "try to hyperinflate our ways directly out of problems to get reelected".
If anything it could have the more "neutral" role of financial network independence but it still suffers the flaw of interchange chokepoint control putting them back to square one.
I’m not a fan of the current inflationary economic policy, but in no way would a Bitcoin economy be a win for the average person. Early adopters and Bitcoin whales would love it because they hold the vast majority of Bitcoin. They want nothing more than to see everyone else forced to buy it from them at ever increasing prices if they want to join the Bitcoin economy.
The average person loses in this scenario, though.
That doesn't make it an equitable or even workable economic system.
Just get in at the ground floor and then promote it to everyone you know. They’ll invest, which makes money for you, and they’ll tell friends, who will invest...
It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
If the balance of a Bitcoin economy relies on the assumption that certain people have lost their money, something is seriously wrong.
Regardless, a hypothetical Bitcoin economy would require much further buy-in from here, making current holders the early adopters.
> It's like saying by the time a company IPOs, early VCs have benefited the most, while that is true, you could also argue they deserve it because of the risk they took.
The VC analogy isn’t good at all. VCs invest to fund the creation of something. What did early Bitcoin investors fund? More mining and more hype?
From another angle: Imagine if PayPal created a new payment system that used shares of PayPal as the currency. Anyone who wants to use the tool must buy some shares of PayPal, because that’s the currency. And oh by the way, most of those shares are owned by PayPal founders and early adopters, who will gladly sell them at a massive gain.
Is Bitcoin supposed to be a speculative investment? Or a stable currency for a new economy? We can’t just pick and choose from either definition as convenient for the argument.
How do you feel about the government that's about to print 1.9 trillion dollars, therefore devaluing your money?
I keep my investments in companies and assets like most other investors. The economic stimulus might devalue the <1% of USD cash I keep around for transactions, but my actual investments will likely benefit from the stimulus. As a bonus, I get to operate in an economy that has been buffered against the effects of COVID.
It’s amazing that Bitcoin proponents only ever want to talk about the USD (or other local currency) value of their Bitcoin, yet they want us to ignore the fact that Bitcoin isn’t the only option for investing cash.
The same is the case with anything valuable that might become money, including the USD, if you consider that it was originally distributed in a manner that was pegged to gold and that gold was monetized in the same way as described above. The idea that you could materialize a money in any other way is unsupported by history.
they didn't take any risk though, they just "mined bitcoins", which were more abundant then.
What value did they create?
If the underpinnings of an economy accrue value purely to speculators while devaluing (in BTC-relative terms) actual assets and value creation, it has a major incentive problem.
What’s the one and only thing Bitcoiners want you to do with Bitcoin? Buy. That’s it. Any other use, including spending, is actively discouraged.
Visa is not worried.
Don't confuse the cause and effect. If there's massive inflation and bitcoin becomes highly relevant, you're losing if you hold USD, no matter what! The arrogant central bankers are the cause. Nobody is cheering for that. Bitcoin is just a hedge.
If you're afraid of stagflation and you want to park your money in something that holds value, what should you buy? Precious metals, which have been manipulated for decades? Property, in the context of yet another housing bubble?
I'm not convinced that your average tax paying American will benefit from this - if anything the difficulty in taxing wealth and loss of ability to print/control money granted to Americans by American guns could lead to a noticeable decrease in quality of life for them.
That being said, there is a tremendous demand from people in many countries to defend their wealth from less stable environments that seek to control their ability to freely transact/store wealth.
No idea how it ends, or even if these cryptos deliver on their potential. Any idiot can see there are many roadblocks, and I personally think that Bitcoin's price is wildly manipulated (and most likely a ponzi).
However, as someone who has 2nd hand experience with poorly run govs stripping peoples' wealth for political reasons, I'm very excited by these possibilities in spite of some of the negatives.
For the record I have no Bitcoin, but I do run a node for another crypto I find interesting.
For them, someone actively controlling the supply of money is probably a good thing. Anything they have is pretty safe in a bank and somewhat covered by the government. Their taxes pay for police, sewage, the bins to be taken away, their roads to be repaired.
I love the idea that people are seeking to do incredible things in the crypto space, but all too often it seems to be lumped in with people's desire to transfer money across borders (again, useless for the everyperson) or avoid taxes - which if we all did would probably be a big negative. Assuming the government didn't step in pretty quickly, because what government wants to lose control?
As soon as you start talking about cryptocurrency with oversight to protect my mum and dad, where people aren't just trying to get rich quickly and make sure taxes are paid - people seem to dial out pretty quickly.
There is literally no role for the key feature of blockchain - decentralised ledger, proof of work-backed transactions - in this case. You might as well use a trusted, regulated party with a database. You know, like Visa do.
The "incredible things" are also pointless things. That also burn energy like there's no tomorrow. Double meaning intended.
In literally no way is this guy wrong.
Can't this be said about literally anything?
Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.
No. Carbon taxes would not make everything worthless.
I think you already knew what I meant but just wanted to nitpick.
https://en.wikipedia.org/wiki/Pigovian_tax
It's obvious that you can tax anything by some amount to eat up the value.
He means if you tax it according to the amount of unaccounted-by-the-market negative value, it comes out negative.
But the economist in OP is essentially ignoring where bitcoin actually get's it's value from and only focusing on it's electrical consumption.
Bitcoin means different things to different people. But many see it as the single best hedge against modern monetary policy.
All this independence from states seems totally overrated to me. They can tax your crypto. They can participate in the crypto market.. many possibilities.
There haven't yet been any successful attempts at destroying it, which I think is what you're implying. Not to say it can't happen, but then if we prepared for every single possible scenario we'd all be quite exhausted.
This feedback mechanism doesn't exist when money can be created out of thin air. Then, if you run out of money, you just print more.
Second, this definitely cannot be said about anything. There are plenty of products and industries that produce positive economic value _even with_ the environmental impact added.
Not at all. Lots of businesses make money by turning materials and/or labor into products. Other businesses make money solving problems for people or other businesses. However, crypto (and most of the rest of the financial sector) burn shit tons of energy, materials, time, and human effort generating wealth; wealth expressed in either bitcoin that doesn't really exist, or money that also doesn't really exist. The only real product they consistently produce is said wealth, yes, and also huge amounts of human suffering when their given business goes sideways and tanks the economy. With that in mind, maybe we ought to add said carbon taxes. I'm extremely pro killing off businesses that do nothing but generate profit on a spreadsheet for some overpaid stuffed suit and contribute nothing to humanity, nothing to the economy, solve no problems, and in general just cause the economic equivalent of "wind drag."
Mind you, my definition of "contributing" here is purposely overbroad. Coca-cola, despite producing literal sugar water, is contributing, even if that contribution is literally just sugar water that slowly kills you. It made something you can hold in your hands that people want, even if it's horrible. Hell even tobacco companies fit this definition. In my mind, financial corps and bitcoin companies are below those: using the finite entropy of the universe and the limited resources of our world to do exactly nothing.
This specific problem — settling transactions — is an industry amounting to billions. Think of BTC like a MasterCard or Visa competitor, albeit a unique one.
If bitcoin went away tomorrow, a bunch of financial companies would have a lot of problems, a few big holders would be out money, and that's it. For every other human, it's Thursday.
Conversely, if gasoline didn't exist tomorrow, society would collapse.
But you posit that people choosing cigarettes provides some value, despite the negative effects. Why is there no value than in people being able to chose a money/investment vehicle they believe to be to their benefit?
Because the only thing generated is fake money on a spreadsheet. There is no product, there is only consumption of resources to generate nothing.
For all of what's involved here, you could just pull the same amount of money out of thin air, deposit it in their IRA, and nothing changes, apart from way, WAY less energy consumption.
Gold is one object that's served the money function in the past. It has properties (fungibility, durability, scarcity, etc.) that money needs. But it's "dumb" and cumbersome, as physical objects are.
Building digital objects that serve the money function is important. One solution is the centralized ACH/banking system. But this has drawbacks --- poor scarcity, high political exposure, etc. I view BTC as simply building a competitor. You get better money properties, at the cost of more energy, etc.
Is it worth it? I don't know. But that partly depends on how the future produces energy.
As a whole people we should include these externalities in the value prop of services despite the fact that businesses and individuals don't because it's a cost we collectively pay.
Trash is my biggest pet-peeve example of this. As an individual I have very little power to control the amount of trash I produce because goods I buy come with so much stupid packaging that I can't give back or recycle and there is no incentive for the people in the position to affect change to do anything about it because they don't bear the cost.
In a similar fashion carbon taxes help to capture the negative externalities of energy use. And if the article is true then collecting that tax would make it so that bitcoin mining is (right now) unprofitable. This is to be expected since such a collection would be sudden increase in the cost of mining when the market has pushed margins thin. The market would adjust, transaction fees would go up, and miners would find non-carbon producing energy sources and we'd probably reach a new equilibrium that is profitable for everyone involved again.
I'm optimistic that there is a better way to store a ledger as you describe. Perhaps a database?
We've done this with a network that can process 400k transactions per day (at $20/transaction in fees), as compared to visa, which does 150 million per day.
Surely, we can do better?
It's clearly an industry with huge potential if it is economically viable to spend money buying an Argentina's worth of power on it.
How do you justify this, given that inflation is so low? (at least in the EU it's been oscillating between 0 and 2% for a very long time)
https://tradingeconomics.com/euro-area/inflation-cpi
Is this what people are so tired of? 1% inflation? I'm just trying to understand whether you're parroting "libertarian" talking points, or whether you know something I don't.
As another commenter notes, CPI leaves out many of the most major expenses, e.g. housing.
There are estimates as high as 8% annually when you account for everything.
Thanks in advance.
Inflation serves a purpose. The cash is devalued not on a whim, but to prevent collapse. Bitcoin indeed prevents that. Fortunately it's just a fringe market. Lets hope it stays that way.
Tell that to Venezuela.
I bet they like it much more when the value of digital currency jumps up and down when a South African guy feels like tweeting.
Bitcoin is a non-issue.
edit: http://www.withouthotair.com/ I'm basing this argument on calculations from this book.
That doesn’t make the original point invalid, though. Bitcoin’s energy usage is absolutely significant. In a world where we’re chasing a couple percent efficiency improvements here and there, it’s ridiculous that people are promoting a currency that literally incentivized people to perform wasteful computing operations on the scale of a medium sized country.
I'm waiting for a time where programmers will find it completely rational to optimize the fastest functions in their code.
This whole environmental footprint of Bitcoin is absolutely meaningless. It's the most efficient and least destructive waste of energy imagined.
Excepting political comments this is the dumbest thing I've read on HN.
And to offset my energy expenditure I always activate the “ECO” function on my SUV.
I recommend other do the same
As for social/economic systems such as capitalism that's neither here nor there. Apples and oranges so to speak.
That is not a stable state in our reality though, which is why it falls apart at some point.
EDIT: I wouldn't take anything he says about it seriously, he's basically clueless on the topic.
EDIT2: In free markets value of something, e.g. Bitcoin is not decided by some panel of experts, like professor Roubini, but by people buying and selling it. If people want to pay $45k for a Bitcoin then that's it's true value. Roubini's claims that "fundamental value of Bitcoin is zero" is riddiculous. Bitcoins are collectibles, same as, say, baseball cards, and baseball cards can go for some insane prices despite having zero practial usefullness.
“originates from the fact that it escapes his alleged ‘expertise’”
“he’s basically clueless on the topic”
He has also been predicting that "Bitcoin bubble will burst" for the past few years, and he's been wrong about it so far.
So yes, I would say he is clueless when it comes to Bitcoin.
It crashed in 2018, it lost 65% of its value.
If tomorrow your government wakes up and make "dangerous cryptocurrencies" illegal because "criminals use them" they can do that.
The reason Bitcoin value is skyrocketing is mainly speculation. People buy because they want to get rich and quit their crappy job.
There is literally nothing that can't be replicated tomorrow and have the same technological characteristics of Bitcoin. Actually, other cryptocurrencies are even better.
At some point, governments will have their digital cryptocurrencies to track you even better than with the current system.
Also, deflationary money is the best thing that can happen to environment. It's time to stop destroying savings in order to accelerate pointless consumption (and production).
Do you have a cite for this?
There's one study I found (not quite recent though): https://www.cryptoglobe.com/latest/2019/06/74-of-bitcoin-min...
https://www.finextra.com/newsarticle/36672/renewable-energy-...
https://ourworldindata.org/uploads/2020/11/Price-of-electric...
Here's a hot take: Bitcoin subsidizes clean energy development. Miners buy cheap energy; clean energy infrastructure gets profitable return. Cost of development and manufacturing lowers further because of scale; pollution and externalities reduced; humanity wins. Bitcoin saves humanity?
This true in China where most mining happens?
https://en.m.wikipedia.org/wiki/Renewable_energy_in_China
That said, lets take a first principles approach.
- Miners want low cost energy.
- Renewables are the lowest cost energy.
- Miners are not restricted geographically (can mine anywhere cheap energy is, beam bits through satellite internet).
- Cost curves of renewable energy look very promising.
- Social trends and political trends look very promising.
If you believe in efficient markets, then it should be obvious as to what the next 10 years of energy production (and Bitcoin mining) look like.
https://www.aljazeera.com/news/2021/2/8/china-to-build-the-w...
Bitcoin alone isn’t the driver.
Bitcoin is, however, consuming some of that new energy generation with a new consumption: Doing useless calculations to mine Bitcoin.
Bitcoin increases energy demand which also drives an increase in supply. We can’t take old power plants offline if the new hydro power is taken up by new mining operations.
It’s silly that we’re going to such lengths to try to respin Bitcoin’s absurd energy inefficiency.
The Bitcoin network is literally designed to incentivize, with payment, bringing new energy-inefficient operations online to “mine”.
The efficiency of the network gets worse and worse all the time, all while processing the same limited number of transactions.
Worse yet, Bitcoiners seem to like it this way. Proposals to increase block size have not been welcomed, and they go to great lengths to discourage switching to other protocols with better energy efficiency (because it would harm their investment).
The entire system revolves around inefficiency, and unfortunately we pay for that inefficiency with energy consumption.
That's exactly why the Bitcoin Cash fork happened.
Energy on earth is not a finite, limited resource. Fossil fuels are finite, but energy is not.
The earth is bombarded with more potential energy every day then we could ever spend, aka solar energy.
Yes, the Earth is bombarded with a lot of sunlight. So what? Doesn’t change the fact that Bitcoin is consuming existing electricity infrastructure that we could be using for something else.
What problems do you want to throw energy at that is economically viable?
:-o
Is this... a joke? Your claim is that production exists, regardless of demand?
That simply isn't the case.
They consume energy in the form of electricity during the day. At night, they have no need for it shut off the turbines. This is unused and uncaptured energy that could have been put to use. The potential energy is "wasted" because the infrastructure is underutilized, the energy could not be preserved. This is starting to change as battery technology improves and makes it economically feasible to store energy. Otherwise, energy consuming applications could consume this supply, providing return to the townspeople's investment.
https://en.wikipedia.org/wiki/International_Control_Dam
And then most of the rest of the time, cheap, reliable power would get consumed by the grid.
[0] https://en.wikipedia.org/wiki/Sunlight#Total_solar_irradianc...
The idea that consuming more power is good for the environment is not supported by the evidence. Or any evidence.
The cost per kwh from a coal plant has not changed in 10 years. Solar has seen massive reductions and is cheaper than coal. Consuming more solar power is gives more profit to the solar power industry. I'm ok with that.
Increasing electricity consumption will increase all forms of electricity production.
I believe you don't even think about what you're saying. You start with the premise - "More energy consumed is naturally good" - and then invent an argument around it by throwing words together haphazardly.
Miners consume electricity.
Solar, wind and geothermal are the cheapest energy you can find, and their cost continues to fall.
Miners are therefore incentivized to increase profit by buying cheap renewable energy.
Renewable energy industry increases revenue and can continue to invest in R&D, infrastructure, distribution, etc. of said energy production. Costs go down for producing new units of renewable energy as a result of industry maturation.
The more energy we waste the more energy we need, the more profitable cheap energy sources are!
Of course the more profitable wasting energy becomes, the more coal and oil will be burned to make money as well.
But what they're not calculating is the cost and suffering caused by maintaining the underlying system (fiat currency, petrodollars, geopolitics). Calculate for me the economic and human damage done if the US falls into hyperinflation and obliterates the world's reserve currency. It won't just be 350m people suffering, it will be billions.
Decentralized, permissionless, censorship resistant systems suddenly seem very valuable to me.
Whether that's actually true or not, the possibility that bitcoin could find the low cost renewable sweet spots throughout the worlds power grid and make use of them is interesting and helps to address the efficiency criticism.
I think I'm still overall anti-bitcoin but I am questioning my assumptions.
Like humans would have no interest in cheap power if it weren't for bitcoin!
Does the Occam's razor apply here? Are people just salty they didn't buy a few back when they first heard about it, now trying to justify themselves?
So if you have a problem or comment on the article in question, please make it, we're all ears. But responding to valid criticisms of Bitcoin with hand-wavy "oh HN is so anti-Bitcoin" is not discussion, it's tribalism.
That is very different than the "HN is so anti-Bitcoin bringing up decade old strawmen" comment I responded to. Perhaps most obviously by the fact that there are many in the crypto community itself that believe the energy usage of BTC is a real problem and are attempting to come up with viable alternatives like proof of stake.
I love how people who are the most condescending are also usually the most wrong. Have you never heard of Ethereum 2.0?
I agree with Bitcoin being neither money nor commodity - nor anything else, really. To me Bitcoin is Gamestop on a grander scale, a bunch of people deciding something has value that really has none (or in the case of Gamestop very little). I don't regret "missing" the hype in either case, preferring investments that make sense based on the fundamentals (assets, cashflow, profits, etc) instead of bets on pure speculation.
I do, of course, want to be "right" about Bitcoin (who doesn't like being right?) but it's far more of a curiosity for me than anything else.
I honestly don't understand how people can continue to defend it. The only explanation I can think of is that the masses who showed up to the party late don't care if it's gotten out of hand and is now in danger of trashing the place or setting the building on fire. They just made the trip out there.
Curious what HNers think about this - is it bad to have Bitcoin in light of how bad the environmental impact is, especially with analysis about the taxes/cost/impact like this? Or is not participating really not reducing the impact of this in any meaningful way so you're kind of only losing if you don't?
If we've decided that we're happy producing X much electricity as a society using nuclear, wind, solar, coal, etc, we shouldn't get caught up on who ends up using that electricity or what they are willing to pay for it.
If we think that the energy we are producing is harmful, we should regulate things at the production level. Ban power production that doesn't meet certain standards, put a cap on the total amount of coal burning per year, etc. And then let the market decide the best use for the energy that remains.
Bitcoin mining was a problem in college dorms for a while because students used their “free” electricity and cooling to pay for new video cards. Many landlords had to abandon “utilities included” rents when they were hit with the first $500 electric bill. IT administrators have stories of catching people trying to hide mining equipment in closets or under their desks.
But coiners are trying to get ahead of the narrative by planting articles about how mining is actually powered by hydro dams in Mongolia. Not only is this not true, but it would be quite a problem if the mining had become so massively centralized.
https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-...
I personally shy away from investing in Bitcoin in favor of those.
Bitcoin also does not provide any mechanism for "smart contracts" either so it has even less utility in my mind.
Having them actually has no or negligible impact. Unfortunately getting rid of them is a transaction which will incur an unreasonable cost to the environment. The best thing might be to destroy them (the media they're stored on). And no, nobody expects you to do so.
I'd would sell them before they get banned, as they must.