
Concerns about Bitcoin's energy use are overblown - w-ll
https://www.bloomberg.com/view/articles/2017-12-07/bitcoin-is-greener-than-its-critics-think
======
ajross
> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has.
> Data centers, for example, have gotten a lot better.

That's bad analysis. Bitcoin energy usage is bounded very closely by the value
of the coins mined at whatever the most efficient method is at the time. That
is, it's worth it to spend electricity mining as long as the coins are worth a
little bit more than the energy input.

So bitcoin growth has absolutely nothing to do with hardware efficiencies, and
is entirely a function of the outrageously inflated growth bubble it is
experiencing.

Basically: cleaner energy and more efficient computing hardware won't save us
from this monster. But thankfully the coming crash will.

~~~
nlperguiy
The amount of energy used on heating and cooling is several magnitudes larger
than whole mining for bitcoin.

It's not a monster, it just sounds ridiculously big, but Internet uses more.
Airplanes use magnitudes more, even cow farts are much bigger than CO2
footprint of Bitcoin.

~~~
arcticfox
> even cow farts are much bigger than CO2 footprint of Bitcoin.

It sounds like you're trying to joke about "cow farts" but they're a well-
known massive source of pollution, I don't think it's a flattering comparison

> but Internet uses more

So the most important innovation of this century, used by billions of people
daily, uses more energy than a financial network doing only ~400,000
transactions per day?

If Bitcoin were to replace the entire financial sector, sure, it would be
worth the energy expenditure. But as it is, there are solutions thousands of
times more efficient for all of the problems Bitcoin tries to solve.

~~~
jstanley
> there are solutions thousands of times more efficient for all of the
> problems Bitcoin tries to solve.

No there aren't. Just because you don't agree with the validity of some of the
problems bitcoin tries to solve doesn't mean it's not trying to solve them.

I don't actually know what you have in mind, but if you name some of the more
efficient alternatives to bitcoin, I'll tell you which problems they're
failing to solve.

~~~
arcticfox
What property does Bitcoin have that _doesn 't_ have a more efficient
solution?

Between proof-of-stake solutions and the traditional financial system, as far
as I know Bitcoin doesn't solve anything more efficiently, from transaction
processing rate to distributed consensus.

~~~
kang
Proof-of-stake has many problems like nothing-at-stake problem etc.

------
wz1000
> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has.
> Data centers, for example, have gotten a lot better. Not long ago, the
> Department of Energy was predicting that their electricity use would double
> every five years, and Google was getting slammed for consuming enough to
> power 200,0000 homes. In recent years, though, the centers’ total
> electricity use has flattened even as their number has kept growing. As it
> turned out, better cooling and power management technology improved
> efficiency. Bitcoin miners are no less motivated by profit, so it stands to
> reason that they will seek to become more efficient and employ the cheapest
> energy available, which generally means hydroelectric plants and other
> renewable sources.

This is just flat out wrong and shows the author has no idea what she is
talking about. The rate of BTC production is fixed, so "efficiency" has no
impact on the dollar cost of electricity it is using.

If a BTC can sell for $X, it is profitable for the network to spend any amount
upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs)
mining bitcoin.

At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a
day and still remain profitable.

Furthermore, comparing Bitcoin to physical currency is disingenuous even if
you completely discount the (gargantuan)scale difference. You would get rid of
that energy consumption even if could get everyone to switch to electronic
(fiat) money instead of paper currency, and presumably have it be much greener
than having them switch to bitcoin.

~~~
Klathmon
But just because it's profitable doesn't mean it can't be _more_ profitable
right?

If I'm going to set up a mining operation, wouldn't it make financial sense to
set it up near a hydroelectric plant where my electric cost is 1/10th of what
it is in my home in PA? Any cost reduction is an increase in profit, so
there's still motivation to reduce costs, a pretty large one.

~~~
wz1000
As long as there is a non trivial profit margin, more miners will keep
entering the game until the the margin shrinks to a small enough figure that
nobody else wants to start mining.

~~~
Klathmon
Wouldn't that drive the remainder of players to find cheaper and cheaper
energy, proving the authors point? Since getting cheaper power means you can
hold out that much longer than everyone else since you make that much more
profit.

~~~
wz1000
Even if they find cheaper energy, they will still spend $27 million on it a
day. They will just consume more electricity.

~~~
Klathmon
But consuming more electricity would produce more bitcoin.

The 2 are pretty much linked for each "generation" of miner.

So in order to continue spending $27 million per day at the cheaper
electricity rate, they would need to buy more miners, which would produce more
bitcoin, which means more profit.

So their whole incentive is based around the price of electricity, and the
cheaper they can get it for, the more money they are going to make.

~~~
wz1000
> But consuming more electricity would produce more bitcoin.

No, Bitcoin is produced at a fixed rate. If more power goes into mining,
difficulty increases to compensate.

~~~
Klathmon
Globally yes, but locally, that's not true at all.

If I have 2x as much hashpower as I did yesterday, i'll get roughly 2x as much
bitcoin as a reward (which over time will go down as the global hashrate goes
up).

In other words I'll get a larger percentage of global bitcoin production,
which is fixed.

~~~
changchuming
You're talking about imperfections in the market. I.e. You having a cheaper
source of power than everyone else which allows you to mine the same amount of
bitcoins at lower costs and thus higher profits. Thus, some of the $27 million
is not used on electricity and becomes profits instead. In reality, how likely
is this scenario in which you have a persistent cheaper source of energy which
other miners cannot access?

~~~
Klathmon
Pretty realistic.

One of the largest US mining operations are said to be located in Seattle
where there is dirt cheap hydroelectric. So are many of the Chinese
operations.

It's not as mich of a zero sum game as it might seem, it's more of a race to
the bottom.

If your competitors are running on cheaper electric, you'd better find some
cheaper electric or they are going to increase the difficulty to the point
that it's not profitable for you.

------
cwyers
TL;DR Bitcoin uses over 75% of the energy used to mint and print all the fiat
money in the world for about a percentage point of the transaction volume, but
it's okay!

~~~
colemannugent
Now factor in all the costs of moving bills to and from ATMs, banks, and
businesses and see how the numbers stack up.

While we're at it, factor in the cost of robberies where the robbers take
cash, as Bitcoin eliminates those costs as well.

~~~
cwyers
Add in all the costs of the Bitcoin infrastructure to Bitcoin's usage, too -
exchanges and so on. And then you still have an instrument so unstable that
you can't actually buy anything with it; Steam discontinued BTC purchasing
recently because the system is unusable for retail. So you still need that
fiat money infrastructure to, you know, pay for anything.

------
GhostVII
Stopped reading once they tried to say Bitcoin is green because it uses less
energy than modern money production. Bitcoin handles many orders of magnitude
fewer transactions that pretty much every other monetary system - the fact
that the energy usage is even comparable shows how much energy Bitcoin truly
uses.

~~~
aquadrop
On the other hand bitcoin doesn't need to be reprinted every few years and
same coins can be reused millions of times, especially if transaction rate
goes higher in the future. I still don't know if that comparison is something
to care about.

~~~
roywiggins
Transacting with bitcoin requires mining. Mining is what validates blocks of
transactions. Mining does create coins, but that's sort of a side-effect.
Eventually the mining reward will go away, but the energy costs of transacting
will remain.

------
apendleton
> Bitcoin miners are no less motivated by profit, so it stands to reason that
> they will seek to become more efficient and employ the cheapest energy
> available, which generally means hydroelectric plants and other renewable
> sources

My sense was that this was only the case in countries that have effective
environmental regulation, and that coal was cheaper in countries where you
could legally operate super-dirty plants. Is this no longer the case?

~~~
eberkund
Well China is no longer allowing energy plants to sell power to miners which
is probably a majority portion of the problem you are referring to.

~~~
lightbyte
How does a plant know the person it is selling power to is using it to mine?

~~~
derefr
Usually, when a regulator imposes a constraint, it's up to the constrained
party to (figure out how to) gather the intelligence required to follow the
constraint.

It may turn out that there are other regulations (e.g. privacy regulations)
preventing a company from gathering that information about individuals,
though. At which point the power company would probably have to stop selling
to individuals altogether (i.e. provide no residential power service any more,
just private commercial/industrial service to other companies, because
companies have a lot fewer privacy protections so it's easy enough to figure
out whether they're mining.)

------
StringyBob
So, something I've never quite understood: I believe the computational effort
(and energy cost) to mine a coin keeps going up - by design. *

If there is a sudden insta-crash in bitcoin value, is there a point where
miners just won't bother anymore?

If the mining energy cost is higher than the value of the bitcoin mined,
doesn't it become un-economical and the whole block-chain seizes up? 'Someone
will invent a more efficient method' doesn't seem a reasonable justification.
If a major crash occurs would the route out be a fork to a variant where
mining is reset to be easier/cheaper?

*edit - aha I see the mining difficulty can go up or down over time: [https://en.bitcoin.it/wiki/Difficulty](https://en.bitcoin.it/wiki/Difficulty)

edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for
mining a block will halve over time, but not necessarily the difficulty or
value of the bitcoin. [https://www.coindesk.com/making-sense-bitcoins-
halving/](https://www.coindesk.com/making-sense-bitcoins-halving/)

~~~
mikeash
As you note, the difficulty adjusts based on the amount of computational power
being used.

However, there's a really fun corner case failure mode. The difficulty is
supposed to adjust about once every two weeks to make for a roughly 10 minute
interval between blocks. If more power is added to the network such that the
interval is, say, 9 minutes, then when the next adjustment hits, the
difficulty will be bumped up by 11%.

But! That "every two weeks" thing is based on the block interval. The actual
adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that
works out to two weeks. If they're mined faster, the network adjusts faster.
If they're mined slower, the network adjusts slower.

When the changes in hash rate are slow, this is fine. But what happens if
there's a sudden massive change in the hash rate? Like, what happens if the
hash rate somehow changes by a factor of a thousand in a brief period?

If it goes _up_ by a factor of a thousand, then the network will start mining
blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block
interval will hit and the difficulty will also go up by a factor of 1000, then
everything continues as usual. No problem.

The problem is if the hash rate goes _down_ by a factor of a thousand. Then
the network will start mining blocks roughly once a week. The difficulty will
readjust to bring that back down to 10 minutes... eventually. But the interval
to the next readjustment is measured in blocks! Let's say you're halfway
through the adjustment period when this crash happens, so you have 1008 blocks
to go before the next adjustment. That would have taken about a week, but now
it will take about twenty years! Unless you can get the hash rate back up
substantially, the network will be in extreme slow mode for a long time.

~~~
undersuit
In event of a massive exodus of hashing power like the 1000x reduction
couldn't a fork be proposed to change the difficulty?

~~~
mikeash
I would think so. Getting enough buy-in for such a thing could be challenging.

------
brndnmtthws
Let's also acknowledge that the "sky is falling" proclamations around Bitcoin
mining energy use are based on numbers that aren't even _close_ to accurate.
Current network hash rate is about 12EH/s, and an Antminer S9 does about
14TH/s at 1372W. Thus,

    
    
        (12000000THs / 14THs) * 1372W = 1,176,000,000W
    

Which is about 1.176GW. The article cites 8.27TW, which is off by several
orders of magnitude.

QED.

Edit: numbers maybe not so far off after all, as it appears to say
8.27TWh/year now.

~~~
tedivm
Those Antminer numbers don't actually take into account cooling, other than
the fan on the system. Those are the "at the wall" numbers. Since these
machines dump their heat into the datacenter presumably if you're running any
significant number of them you'll need a cooling system.

You're also operating under the assumption that every miner is already using
these systems, which I don't believe is the case. Lots of people are likely
running older systems, and as the price of bitcoin gets higher older less
efficient machines become more profitable to turn back on.

I think reading the original source of their power consumption numbers will
give a much better insight to where those numbers came from-
[http://blog.zorinaq.com/bitcoin-electricity-
consumption/](http://blog.zorinaq.com/bitcoin-electricity-consumption/)

~~~
brndnmtthws
Even if you double the estimate, it's significantly less than the BS numbers
being tossed around. By a lot.

~~~
tedivm
Okay, here's the real issue with your comment. You have your units all wrong.
You're measuring "watt seconds" instead of "watt hours". Lets fix our units
here -

(12000000 (TH per second s) / 14 (TH per second)) * 1372W = 1,176,000,000W/s

Now we need to convert seconds to hours (60 * 60)-

1,176,000,000W/s * 60 * 60 = 4,233,600,000,000W/h

That is roughly 4.23 terawatt hours. Take into account cooling and the fact
that not everyone is using the same efficient miner from your example and the
numbers look pretty damn accurate to me.

~~~
brndnmtthws
Watts is an instantaneous measurement, so I don't think that's right. If a
lightbulb uses 100W and it's running for 1h, it consumes 100Wh of energy.

~~~
tedivm
Exactly my point. When you take a 100w bulb and run it for an hour you get
100Wh of energy. If you run a 100W bulb for 1 second then you have 100W/s of
energy used.

During your calculations above you use the "terra hashes per second" number-
as you said, "14TH/s at 1372W". The device runs at 1372W, and it also
calculates hashes at 14TH/s. You can use the same formula you did to calculate
the 10Wh for the lightbulb- if you leave the device running for 1h it will
consume 1372W/h of electricity (or 1372 Watts * 1 hour).

If you want to convert the W/h unit to W/d you can multiple the "hour" unit by
"24" (since there are 24 hours in a day). To convert in the other direction
you do the opposite (divide the day by the number of hours in it). Converting
from Wh to Watt seconds is similar.

You're not the first person to be confused by this, and wikipedia has a whole
section devoted to explaining it[1].

[1]
[https://en.wikipedia.org/wiki/Watt#Difference_between_watts....](https://en.wikipedia.org/wiki/Watt#Difference_between_watts.2C_watt-
hours_and_watts_per_hour)

~~~
brndnmtthws
I just noticed the article now says "terawatt-hours _per year_ ", which is
more realistic. I can't tell if they amended it, or if I misread.

------
abalone
Opinion piece written by "a blockchain engineer at... a financial technology
company in San Francisco."

The premise is simply that Bitcoin uses less energy than physical cash
production. Obviously this implies that Bitcoin will replace cash. If it
doesn't -- if say the primary use case for Bitcoin remains currency
speculation -- then the argument falls apart.

------
tanto
The author sounds like a story teller with no idea what he is talking about.
With the current transaction costs bitcoin doesn't even have a real world
usage for the common man anymore.

~~~
Frogolocalypse
There are lot of people that can't understand the use-case of bitcoin, and
can't understand why it has value if it doesn't meet theirs, yes.

~~~
tanto
As you replied to my comment and you indicate that I don't understand it
please elaborate. What is the use-case of bitcoin for the common man? Please
only count the ones where using classical monetary systems (cash, credit card,
etc.) are worse.

~~~
Frogolocalypse
Decentralized censorship and inflation resistant savings account.

------
gfodor
All these articles seem to imply that bitcoin transactions "cost" energy. My
understanding: mining costs energy, the transactions are a side effect of the
energy. More transactions does not necessarily mean more energy consumption.
What causes higher energy consumption is higher USD/BTC price which drives
further investment in mining and increases mining difficulty. Transaction
volume may or may not be correlated to USD/BTC, but it seems extremely
disingenuous to take the total miner energy consumption and divide it by the #
of transactions to put an energy cost per transaction, as if that were a
thing.

~~~
The_Double
My understanding is that Bitcoin would fail if the energy costs would be low,
the huge costs are what protects it from an adversary acquiring >50% of the
"voting rights" on what transactions are valid.

At some point the mining rewards will stop, and transaction fees will be the
only reward. The price will be driven by demand, but will need to be kept
high.

------
paulgb
As a thought experiment, if you took out the mining rewards tomorrow and had
only transaction costs, the energy put into each block would be much lower and
be a function of the value actually provided in each transaction. Plus the
value of existing Bitcoin would go up because of even more scarcity.

I'm not saying Bitcoin should do that, but as proof-by-construction that a
more green coin with the same properties could exist.

------
roberttod
But how much energy will it use when scaled to the throughput of physical
currency?

Probably still not as bad but Bitcoin is still far less efficient than
credit/debit transactions at that scale. There are some great crypto
alternatives that would use magnitudes less power also.

~~~
infogulch
Bitcoin as it is currently envisioned _cannot_ scale to the throughput of
either cards or cash of any major economy, let alone all of them combined.

There are data limits on bitcoin that make it literally impossible, and even
given big technical changes that significantly lift limits it would still not
even be close. Bitcoin would have to go through an enormous transformation to
be able to scale to that many transactions.

------
aussieguy1234
It's using alot of energy now because of miners mining coins. There is a
finite supply of Bitcoins, how much energy will the network use once there are
no more coins to mine?

------
pinarello
Replace cash and coins? It has moved in completely other area in the last few
years. Sad that all those good goals set in the beginning were crushed with
it's success

------
BLanen
Man... The author has no idea how any of this works.

Other comments explain it well but damn.

------
partycoder
If the dollar can be grossly overvalued for decades, so can bitcoin.

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

At least the bitcoin blockchain can be audited, unlike the US Federal Reserve,
an institution accountable to no one.

