
Bitcoin Miners on Track to Use More Electricity Than All of Argentina - downvote_me
http://fortune.com/2018/01/10/bitcoin-miners-electricity-argentina/
======
AJ007
If we had as of precise data on both energy & resource consumption as we have
on Bitcoin mining we could remove all taxes and create a consumption/VAT tax
based on how much resources and energy something used. That could go a long
way in shifting costs that are socialized back in to their consumers and
producers.

~~~
Retric
Energy taxes are even more regressive than sales taxes. All it would do is
increase the vast wealth subsidy.

~~~
jeremyjh
Data? According to the EPA nearly 2/3rds of electricity is consumed by
businesses and industry.

[https://www.epa.gov/energy/electricity-
customers#commercial](https://www.epa.gov/energy/electricity-
customers#commercial)

~~~
Retric
[http://faculty.georgetown.edu/aml6/pdfs&zips/RegressiveManda...](http://faculty.georgetown.edu/aml6/pdfs&zips/RegressiveMandates.pdf)

Just an example: _The poorest 5 percent of households use 247 gallons of gas
per year, on average. The richest 22 percent, with incomes over ten times
higher, each use about four times as much._

The basic issue is as wealth increases people spend more on services which
have lower energy needs than say food. A cheeseburger takes not just energy to
cook much energy to manufacture. An account on the other hand uses much less
energy per dollar spent.

------
52-6F-62
Relevant:

* "Quebec's hydro surplus to lure companies into data hub initiative"

[https://www.theglobeandmail.com/report-on-
business/industry-...](https://www.theglobeandmail.com/report-on-
business/industry-news/energy-and-resources/quebecs-hydro-surplus-to-draw-in-
data-hubs/article33697929/)

* "Chinese bitcoin miners eye sites in energy-rich Canada"

[https://ca.reuters.com/article/businessNews/idCAKBN1F10BU-
OC...](https://ca.reuters.com/article/businessNews/idCAKBN1F10BU-OCABS)

------
clashmoore
Has there been articles or research done on how much energy is used to coin,
print, distribute, and utilize fiat currencies?

~~~
jcranmer
The Bureau of Printing and Engraving budgeted $14.35 million in FY2017 for
"Communication, utilities, and misc. charges." If we assume that 100% of that
is electricity costs, and that electricity costs 12¢/kWh, then we get
somewhere in the region of 120 million kWh in FY2017 to produce USD. That is
0.1% the annual electricity consumption of Argentina.

~~~
yithump
Just checked the Treasury 2017 budget which is around 3 billion.

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thisisit
My article on this topic:

[https://hackernoon.com/dummies-guide-to-bitcoin-energy-
use-5...](https://hackernoon.com/dummies-guide-to-bitcoin-energy-
use-5f38e91c3253)

------
creshal
Proof of work was a mistake.

~~~
masmullin
I have a hard time understanding proof of stake. I haven't found any
discussions that make sense to me.

Do you have any good easy to understand descriptions of proof of stake you
could recommend to a layman like me?

~~~
lt
In a very simplified way, proof of work is a way to roughly uniformily
distribute the block generation "queue". In a network without identities how
do you prevent someone creating hundreds of accounts to have a hundred times
more chance to be next in line? You give them a hard problem, and now the odds
of you being next in line is proportional to your computing power, which you
can't multiply effortlessly.

Proof of Stake says that instead of distributing the work queue proportionally
to the computing power you demonstrated to have, it does it proportionally to
the amount of currency you have saved. It similarly prevents the attack where
one could create infinite personalities to get in line, with different trade
offs. In particular, beside the energy savings, it can be a much more scalable
model, where you don't have to wait 10min in average for someone to solve the
hard problem and instead you can know right away who are the next people
eligible to generate the next blocks.

~~~
masmullin
> it does it proportionally to the amount of currency you have saved.

Doesn't this have an inherent disincentive to new people joining and using the
network? Sorta like the poor stay poor, the rich get rich?

~~~
greiskul
Not anymore then proof of work has I think. Want to join bitcoin mining? You
need to invest in mining hardware, and have access to cheap electricity.

~~~
masmullin
Do you have to mine for proof of stake, or is simply owning the underlying
asset enough to "generate interest on the investment?"

~~~
lt
For block rewards you'd have to mine. In particular you'd have to have a
server running a node joined in the network ready to generate a block whenever
your number is called.

Not everyone would want to do that, so there's usually a mechanism to indicate
you want to be eligible to do so, depositing your coins or similar.

That's for block rewards - nothing prevents a blockchain currency to be
designed to generate inflation and add interest on everyone's investment -
some do exactly that.

------
nonbel
Something I've been thinking about is that proof of work "coins" are basically
energy credits. When energy is cheap, miners can lower their fees and keep the
same return, leading to more economic activity. When it is expensive, they
need to raise their fees to stay profitable, thus reducing economic activity.

I think this makes sense. Wouldn't it be beneficial if economic activity
scaled with energy availability? It also creates a direct incentive to develop
and utilize the most efficient energy sources possible, without regard for the
politics between various stakeholders (hydro vs oil vs coal vs wind vs solar,
etc).

~~~
jstanley
> miners can lower their fees

This isn't how fees work. Fees are based purely on supply and demand. The
payer sets their fee level when they create the transaction, and it's up to
the miners which transactions they will include. Since there is always an
excess of transactions, the miners typically select transactions to maximise
their payoff.

If miners were to "lower their fees", they'd be accepting low-fee transactions
and excluding high-fee transactions, which makes no sense for anybody. The
miners would be getting less money than they could, and the people paying high
fees don't even get any better service for it.

~~~
BearGoesChirp
When energy becomes cheaper, miners can do more mining, leading to an increase
in blocks. Given that people are only willing to pay so much for a transaction
to complete, there is only so much demand at a certain price point. Once the
supply of blocks increases, you eventually have price points where the demand
no longer matches the supply. At this point a miner would lower their fee
until the demand increases back to supply.

Supply and demand drives prices, but it does so through individual actors
setting prices they are willing to pay/accept (or by algorithms that have been
setup by some human who set up the rules by which it will set prices).

~~~
jstanley
> a miner would lower their fee

They're not "lowering their fee". That's not how it works. They might stop
mining altogether, but it can never cost more to include a transaction than
not to include it, unless including it pushes out another transaction that
pays a higher fee.

~~~
BearGoesChirp
>They're not "lowering their fee".

So a miner will never reduce the cost to include a transaction into their
block, even when they aren't getting enough to fill up the block?

>They might stop mining altogether

Maybe, but any market can experience short term irrationality. Maybe it takes
them a few hours to stop mining in which they lose money. Or maybe stopping
operations costs enough money that the miner won't stop even at a small loss,
at least for some amount of time.

~~~
jstanley
> So a miner will never reduce the cost to include a transaction into their
> block, even when they aren't getting enough to fill up the block?

Sure, if you want to twist the wording like that, they "lower the fee" to the
point where they can fill the blocks. But they're not really "lowering their
fees". They don't even have a concept of the fee level they're "charging".
They can either accept the fees that are available or not.

If they are mining at all then they want to accept the best fees that are
available. There is literally no rationale for them to be mining non-full
blocks when fee-paying transactions are available to put in the blocks. It's
not like it costs more to mine a larger block. The cost to mine a block is
fixed, so you may as well get as much fees as you can find.

~~~
BearGoesChirp
>They can either accept the fees that are available or not.

Couldn't the same be said of a brick and mortar store? They either accept the
offers they are given or they don't. That for some item they only accept
offers of exactly 9.99 (plus tax), rejecting not only lower offers but higher
offers, doesn't change that the interaction can be described in the same
fashion.

All the rest also applies to normal supply and demand. When you do a
production run of some item, the cost tends to be fixed per item. Doing
another run at a different time may cost different, and it is possible for
something extreme to happen (factory accident), but in general the cost of
production of a single run is the same.

I see nothing about this that would void basic economic reasoning, where
things like 'reducing fees' happens in certain conditions.

------
unmango
Soon bitcoins will be replaced by patacones.

------
mylons
does anyone else think that articles like this are fueled self interested
parties who don't have a stake in crypto?

 _if_ crypto is here to stay, wont more efficient mining hardware, potentially
more efficient software, and things like recent advances in solar relax these
fears in reality?

~~~
ggg9990
> does anyone else think that articles like this are fueled self interested
> parties who don't have a stake in crypto?

Journalists aren’t supposed to have a stake in the subject they cover. That’s
the point. Not having a stake in cryptocurrency is “disinterested,” not “self-
interested.”

~~~
Para2016
There are plenty of journalists with conflicts of interest. It's not ethical,
but they do. Financial columnists sometimes don't even admit their conflicts,
it's crazy.

------
cs702
The energy invested in adding transaction blocks to the Bitcoin blockchain
(which requires iterating through nonces until one is found that can partially
reverse a cryptographic hashing algorithm, consuming computing power) is what
makes the blockchain _immutable_.

Consider: Modifying a transaction block from, say, 3 days ago, is practically
impossible, because it would require burning the same amount of energy the
entire network has burned over the past 3 days in an instant, before the
network invests even more energy adding more transaction blocks. Forget about
trying to modify or revert transactions from more than a few days ago.[a]

The energy invested in Bitcoin is _securing_ the transaction history.

There is value in that, no?

[a] Edit: I mean modifying a transaction right now, _without forking_ the
blockchain. Please see maxerickson's comments and my responses below.

~~~
maxerickson
You don't have to match the energy burn, just the hash rate (so efficiency
matters).

You also don't have to do it all at once, you just have to be faster than the
network (If the private blocks are calculated 10% faster it only takes ~10
days to go back in time 1 day). But of course this attack isn't practical,
actually executing it would demonstrate that the public network was a farce.

~~~
cs702
_> You don't have to match the energy burn, just the hash rate (so efficiency
matters)._

Of course, but I don't know how anyone could be a lot more efficient that
current miners, who are in a rat race to increase the efficiency of their
mining operations. They probably think about energy consumption every waking
hour of the day.

 _> You also don't have to do it all at once, you just have to be faster than
the network (If the private blocks are calculated 10% faster it only takes ~10
days to go back in time 1 day)..._

Of course, but by then the Bitcoin network would have invested ~10 more days
of energy into the network, and now instead of being one day behind, one would
be ~10 days behind. One would have a different, forked blockchain far behind
the original one, with no hope of catching up.

If one wants to modify a transaction from a day ago _over time_ , one must
burn at least one day's worth of Bitcoin network energy consumption much
faster than the network, in order to keep up with the network. If one wants to
modify a transaction from a day ago _right now_ , one must burn at least one
day's worth of Bitcoin network energy consumption _in an instant_.

PS. Note that I mean _without forking_. SORRY if that wasn't clear in my
earlier comments!

~~~
maxerickson
Re your PS, there will still be an old and new consensus blockchain no matter
how fast you calculate the replacement.

(that's why it is a "chain", the head depends on all previous values)

~~~
cs702
_> Re your PS, there will still be an old and new consensus blockchain no
matter how fast you calculate the replacement._

Yes, of course. In fact, at any point in time there are always multiple
blockchains, one for every miner burning energy to add a new block.

However, only the longest blockchain (with the greatest proof-of-work) is
valid. As soon as there's a longer valid blockchain, the miners discard their
individual work-in-progress blockchains and switch to the one with the most
proof-of-work.

 _That_ longest blockchain is the Bitcoin blockchain. That is the blockchain
one would have to modify to alter the transaction history in the Bitcoin
network without forking.

FWIW, I don't think we disagree; I feel like we've been talking about slightly
different things until just now.

~~~
maxerickson
We are kind of talking about different things. I'm talking about how at the
protocol level the contents of the longest chain do not matter, it is by rule
the "consensus blockchain".

It naturally flows from there that as long as you can calculate blocks faster
than the network, you can rewrite past transactions, with the speed difference
restricting how far back you can rewrite.

There's no need to do it in an instant and doing it in an instant isn't any
different than doing it more slowly (other than the amount of hidden hash
power revealed).

~~~
cs702
Yes, I agree.

