
Bitcoin estimated to use 0.5% of the world's electric energy by end of 2018 - e0m
https://www.cell.com/joule/fulltext/S2542-4351(18)30177-6
======
mrb
I provided this statement to some journalists who contacted me to get another
viewpoint on Alex de Vries's paper:

His findings are not completely accurate, but also not completely wrong
either. My own formal well-documented estimate is that Bitcoin used 0.09% of
the world's electricity as of January 11th, 2018
([http://blog.zorinaq.com/bitcoin-electricity-
consumption/](http://blog.zorinaq.com/bitcoin-electricity-consumption/)).
After 4 months of growth I estimate we are around 0.15-0.20% today. Therefore
reaching 0.50% by the end of 2018 is plausible; not likely but plausible. That
said, overall I think Alex de Vries's figures are rather inflated because he
makes two errors. Firstly, his model assumes that manufacturers sell at cost
and make zero profits, which allows miners to spend more on electricity. In
reality we've seen Bitmain, the largest manufacturer, make billions of dollars
over the last few years. No one expects them to make zero profits by the end
of 2018. Secondly, de Vries makes the mistake of assuming that all
cryptocurrency mining chips produced by TSMC on behalf of Bitmain end up in
Bitcoin mining machines. In reality many chips are fabricated for
cryptocurrencies other than Bitcoin. This altcoin sector is rapidly growing.
It wouldn't be unreasonable to assume that Bitcoin mining machines will
represent less than half of Bitmain's sales by the end of 2018.

~~~
hudon
> After 4 months of growth I estimate we are around 0.15-0.20% today.
> Therefore reaching 0.50% by the end of 2018 is plausible; not likely but
> plausible

What model are your forecasts based on? From what I could tell, the featured
paper’s model allows us to forecast future consumption but your research only
presents a current-day lower bound (Jan 2018 in this case). I may be wrong
though

~~~
nneonneo
The deVries estimate of ~2.55GW/26PH/s (mid Mar 2018) tracks closely with
mrb’s lower bound estimate of 1.62GW/16.2PH/s (mid Jan 2018). In just two
months the power consumption and hash rate has risen 60%. Two months later,
mid-May 2018, the hash rate is around 31 PH/s, an increase of 20%.

This is on par with historical increases documented by mrb (325 TH/s in late
Feb 2017 to 640 TH/s in late Jul 2017, an increase of 100% in 5 months). If we
see an average growth of 100% each 4 months, then we will easily surpass 100
PH/s by year-end, which is around 10GW, or around 0.4% of the world energy
production.

~~~
hudon
Thanks for the response and analysis. I think I have qualms with how mrb
exaggerates the difference in their conclusions. He says Alex' numbers are
"rather inflated" and has told me before that Alex makes "fundamentally flawed
assumptions" and has "holes and flaws" in his logic, when really when you look
at the difference in their forecast it's 0.5% versus 0.4%... both numbers
support the general idea that assuming the technology brings no efficiency to
society, Bitcoin is an environmental catastrophe.

~~~
mrb
Alex's BECI model claims Bitcoin _currently_ consumes 7.6 GW. Whereas this
paper is more reasonable and states the _future_ consumption might grow to 7.6
GW by the end of 2018. These are 2 very different statemetns. What I call
"fundamentally flawed" is the BECI claim, not this paper.

~~~
hudon
Oh I see. Thank you for clarifying.

------
7373737373
_PoW isn 't "Proof of Work", it's "proof of money spent". The "work" is only
here to make crypto look sophisticated. We could replace "work" with videos of
miners burning stacks of cash, & crypto would work just the same, without
killing polar bears. Downside: it would look stupid._

[https://twitter.com/Tr0llyTr0llFace/status/99607543853872332...](https://twitter.com/Tr0llyTr0llFace/status/996075438538723329)

~~~
mkirklions
Cryptocurrency and Blockchain is easily the most misunderstood technology
thats existed. I blame ICO youtube videos that propagated the myth that
Blockchain is going to cause a revolution.

Blockchain ONLY exists to decentralize and validate.

This is useful for currencies, voting, timestamps, and maybe a few other
niches.

Centralized applications are cheaper and faster than blockchain. You wouldnt
use blockchain unless you needed the decentralized validation worth paying
for.

Users like OP mentioned doesnt understand what the Work is doing. Most people
who 'know' crypto, have no idea what blockchain is.

The only people worth listening to are ones that spend crypto and have
developed. Everyone else are parroting myth.

~~~
leesec
Decentralized consensus can have far, far more wide reaching applications than
the ones you mentioned, IMO.

Also you're not considering the potential benefits of on-chain
governance/smart contracts.

~~~
mkirklions
Can you explain?

------
enervate
I used to make a joke that the great filter is actually a species inventing
cryptocurrency, but now I'm not sure its a joke

~~~
mkirklions
If people changed to cryptocurrency, it would eliminate the need for
governments to move money around.

That might save money in its own merit.

~~~
Analemma_
"If everyone agreed with me, there'd be no disagreement!"

Most of the things that crypto proponents tout as features (transaction
irreverisibility, lack of inflation, etc.) are in fact bugs, and they just
don't realize it because they don't realize how finance and economics actually
work.

Tapping your watch and wondering "why isn't everyone using crypto already??"
is never going to yield useful results, so you do actually need to address
these issues.

~~~
CyberDildonics
> (transaction irreverisibility, lack of inflation, etc.) are in fact bugs

They weren't bugs for the thousands of years when gold was used.

> they don't realize how finance and economics actually work.

You probably mean the last 40 years of finance and economics, since our modern
monetary system has really only been around since Nixon took the US off the
gold standard after the US over spent due to the Vietnam war and Charles de
Gaulle started to exchange his dollars for the quoted rates of gold.

~~~
true_religion
Transactions with physical currency are reversible, just not easily so. And
solid gold was rarely used as a day to day currency, so you would have an
amalgam which was subject to inflation as the government either changed how
much gold backed it, or phsycially reduced the amount of gold in the coin.

~~~
CyberDildonics
For thousands of years people used actual gold, especially countries moving
money back and forth between them.

Inflation in its current form didn't really exist. The exchange rate for gold
of a country's currency didn't change much, if at all. The dollar went from
$20 per ounce, to $35 per ounce during FDR, then lost the vast majority of its
value, getting us to over $1,300 per ounce that we have now.

Physical money requires the person giving it back physically. Crypto
currencies have a chain of transactions, you can just send the balance back to
one of the addresses it was sent from. There isn't much difference there.

------
maym86
Isn't there an argument that a lot of the mining is done in places where
energy is cheap because it is in abundance and would be unused otherwise? Near
hydroelectric sources?

~~~
foepys
This is absolutely false. A fairy tale told by those who want you to buy their
crypto currencies. Take Wenatchee, a village in Eastern Washington, USA, for
example. Wenatchee has very cheap power because the water dam is very close
nearby.

When crypto currency miners poured into the city, the power grid got
overloaded and the local authorities had to raise prices drastically. The city
finally decided to ban all mining but there are still many rogue miners left,
operating from basements around the city. They let the local population foot
their costs by mining for cheap and leave when prices need to rise to support
the grid.

Mining crypto currencies is morally corrupt and hurts our environment more
than anything ever before without generating any value.

[https://www.politico.com/magazine/story/2018/03/09/bitcoin-m...](https://www.politico.com/magazine/story/2018/03/09/bitcoin-
mining-energy-prices-smalltown-feature-217230)

[https://www.wenatcheeworld.com/news/2018/feb/23/wenatchee-
ba...](https://www.wenatcheeworld.com/news/2018/feb/23/wenatchee-bans-at-home-
bitcoin-mining-for-one-year/)

[https://www.cnbc.com/2018/01/11/wenatchee-washington-and-
the...](https://www.cnbc.com/2018/01/11/wenatchee-washington-and-the-bitcoin-
gold-rush.html)

~~~
CyberDildonics
> Mining crypto currencies is morally corrupt and hurts our environment more
> than anything ever before without generating any value.

Seems like a bold claim. Is running an electric space heater morally corrupt?
Is mining while using the heat morally corrupt?

Do you think crypto currency mining is worse than meat farming, actual raw
material mining and all uses of the combustion engine?

As for value, right or wrong, the markets disagree.

~~~
ddtaylor
Never thought I would live to see a morality argument about how we move our
ions. Not taking a side or poking fun, just in genuine awe.

~~~
Analemma_
Stop being deliberately dense. The act of "moving ions" has huge
externalities, mainly in the form of pollution, and that is obviously the
morality that is being referred to here.

Your comment is like saying you're baffled that shooting someone is immoral
because it's just "moving metal around".

------
nabla9
What a utter waste of energy.

Instead of energy consuming work, you could have a cryptographic lottery.

~~~
kardos
If the waste heat could be harvested and used for another purpose (district
heating? cooking?) that would more or less curtail the waste, yes?

~~~
xyzzyz
If you could do that so easily, you'd already do it in aluminum plants, which
are kinda like bitcoin already -- electricity in, aluminum out. Suffice to
say, it doesn't really happen.

------
logancg
A thought experiment: how much energy _should_ Bitcoin use?

Bitcoin's mkt cap is ~$140B [0]. The world's GDP is ~$127T [1]. If we assume:
1) BTC market cap is representative of its economic output in accounting
terms, or is at least an upper limit 2) Energy use by product should be
proportional to its output

Then at 0.11% of world output, Bitcoin is at least ~5x more energy intensive
per unit of value than the average product.

(This is obviously not wholly accurate. For one, market cap != annual value.
If accounted for, that might make Bitcoin several orders of magnitude less
efficient. And assumption 2 is probably a linear approximation to a highly
nonlinear relationship. But I propose this as a fun thought experiment that
questions the energy-value relationship.)

[0]
[https://coinmarketcap.com/currencies/bitcoin/](https://coinmarketcap.com/currencies/bitcoin/)
[1] [https://www.cia.gov/library/publications/the-world-
factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/geos/xx.html)

~~~
ThrustVectoring
Market cap has completely different units than GDP - dollars versus dollars
per year. Your analysis is pretty much nonsense.

~~~
logancg
Totally agreed. For the thought experiment, make the super liberal assumption
that most value was produced and realized in the past year (or a single year),
and it becomes comparable. Otherwise, the inefficiency is a hard lower limit.
So in the extreme case, the lower bound is 5x inefficiency. If we assumed a
value equivalent to 1-5% of market cap is realized every year, it becomes 100x
to 500x inefficient.

------
Analemma_
Christ, we didn't even need to invent AI before we started getting
paperclipped to death. All it took was direct monetary motivation.

------
tjpaudio
I have hypothesized that long-term, crypto currency will be made illegal to
some degree eventually for one of two reasons or both: 1\. Governments use
fiat currency as a lever for it's monetary policy and cool/heat the economy
and job market. If crypto use becomes widespread enough to weaken this lever,
I could see pushback from governments. 2\. This, environmental concerns.
Crypto has to be the least-green modern technology by ALOT. Once the public
catches on, I think there will be significant push back. This is of course
largely dependent on the population deciding to side with the environment,
which history has shown us has to be a mixed bag.

~~~
ThrustVectoring
More likely is the application of restrictive regulation in order to combat
illegal activity that involves bitcoin. Money laundering, kidnapping,
extortion, and bribery are kind of a big deal.

------
ThrustVectoring
Bitcoin should be made illegal. I don't want the ability to anonymously and
irreversibly pay someone. If I have this ability, then bad actors have an
incentive to try to _force_ me to do so. We've seen this in the wild already -
both kidnappers and computer virus writers have included "send BTC to this
address" as a demand.

Not every ability and option is positive-value to have. Cryptocurrencies are
not only a negative-value option, but also waste vast amounts of electricity
and computer hardware in order to provide it.

~~~
cup-of-tea
Actually Bitcoin isn't anonymous. It is very similar to physical property.

~~~
ThrustVectoring
Having a third participant that you can sue or subpoena is the important part.
Is there a good word for this sort of thing? Facilitated by a third party with
significant assets subject to the legal system? I heavily favor using such
parties for my personal financial affairs - it's not that I trust them more,
but it's that I have more recourse when things go wrong.

~~~
beefalo
Sounds like the definition of escrow

------
rwcarlsen
At human civilization's scale, the energy production/consumption market is not
a zero-sum-game. I would be curious to know how much extra energy production
the crypto-currency world has caused/incentivized to be established (e.g.
increased capacity factors of underutilized hydro-power, etc.). It's not as if
consumption will grow until there is no energy left for anything else. We will
just produce more (which can also be a problem - e.g. CO2 and such).

~~~
mikeash
I don’t think anyone is presenting it as a zero sum game. The concern is
increased pollution. In a way it would be much better if it _were_ a zero sum
game, as that would mean that bitcoin doesn’t increase pollution levels.

------
drexlspivey
What most people that keep repeating the energy consumption meme fail to
realize is that the amount of electricity spent to secure the network is
highly correlated with the block reward. Currently the reward is 12.5
BTC/10mins or close to $100k and it will keep getting halved every 4 years.
Right now the fast rate of adoption drives the price up but in the long run
the price will hit a plateau and the energy consumption will start to decline.

~~~
antris
I guess the point is, in the traditional money system we could create that
$100k with practically zero energy.

~~~
dr_win
No, mining gold is not cheap. And if by "traditional money system" you mean
fiat then I must argue that it is not comparable. Comparing bitcoin to fiat is
like comparing gold to paper.

------
CyberDildonics
He say it takes 2.55 GW now and "potentially 7.67 gigawatts in the future"
because "Economic models tell us that Bitcoin's electricity consumption will
gravitate toward the latter number"

I'm not sure what 'economic model' makes him able to predict that mining will
triple from where it is now.

This would also imply 6.7 Billion dollars per year just to buy the btc that
the miners generate and around 6 million mining rigs running at 1300W.

~~~
nneonneo
On May 15, 2017, global hashrate was 3.6 TH/s. Six months later, on November
15, 2017, global hashrate was 10.3 TH/s (source: blockchain.info). On May 14,
2018, another six months later, global hashrate was 30.1 TH/s, an increase of
just under 3x in each 6-month interval. While past performance cannot
definitively determine future performance, it’s a pretty strong trend.

~~~
CyberDildonics
All of those numbers are the mining following price with a certain amount of
latency.

A prediction in mining going up is a prediction of the price going up.

------
api
If the economic reasoning behind this is correct...

[http://www.truthcoin.info/blog/pow-
cheapest/](http://www.truthcoin.info/blog/pow-cheapest/)

... than fiat must according to the same line of reasoning also consume
resources when it is placed in circulation. That's because if new money $X has
value Y, then players in the economy will spend up to Y in resources to be
first in line to get $X when it is issued.

One way this may occur is via wasteful government spending (proof of waste?)
since the usual path involves the purchase of government debt with newly
issued currency and then its entry into circulation via government spending.
Another mechanism might be complex financial shenanigans to extract small
gains from the cascade of economic transactions (HFT, etc.) that occur as $X
is initially lent by banks.

All these activities consume vast amounts of energy. I'd like to see someone
calculate the energy consumption of the entire fiat currency system including
central banks, the financial industry, and government enforcement for
starters.

Furthermore according to the reasoning put forward in the above essay this
activity must be "useless," or its usefulness would be priced into it and X
more of it would be done where X is the value of its utility. How useful is
high frequency trading? How useful is government spending on weapons we will
never use? These activities are as useless as Bitcoin mining and may be more
harmful in other ways. Warfare kills people.

In other words if the reasoning in the above article is correct then money may
be intrinsically expensive. Gold is issued via gold mining, etc.

Tangent: if this is true then this explains the apparent political and
economic impossibility of small government under current regimes. We need a
monstrous, bloated government to burn the work required to issue money.

------
AceJohnny2
Have we ever had a Ponzi scheme that consumed this much of the world's
resources (relatively speaking)?

And I'm not talking about money going in, just resources used to maintain it.

Tangentially, it's really interesting and fun to read about real historical
bubbles and scams. For example:

[https://en.wikipedia.org/wiki/South_Sea_Company](https://en.wikipedia.org/wiki/South_Sea_Company)

[https://en.wikipedia.org/wiki/Gregor_MacGregor#Poyais_scheme](https://en.wikipedia.org/wiki/Gregor_MacGregor#Poyais_scheme)

~~~
SippinLean
Bitcoin's protocol has no central actor to disproportionately redistribute new
investors' money to old investors, a Ponzi scheme would be impossible.

~~~
jadedhacker
So there's not even a logical organizing principle that would actually benefit
someone, it's just collective insanity. There's still no obvious application
of Bitcoin. This is just slavish alter building to the god of markets.

------
theweb1
that's some good amount of energy consumption by Cryptocurrency alone, hmmm.

