
Bitcoin is Unsustainable? - ForHackernews
http://motherboard.vice.com/read/bitcoin-is-unsustainable
======
Animats
The mining farm linked in that article is from last year. A more modern one is
shown here.[1] This new one is located in a cold, mountainous part of China
next to an underutilized hydroelectric plant, so they have free cooling and
cheap power. They've been able to avoid cable clutter; their power
distribution uses aluminum busbars, and they seem to have an in-house network
that doesn't require vast numbers of long cables. (The data rate for a Bitcoin
miner is very low; you only need to talk to it when setting a new block
starting point and if it finds a block.)

[1]
[https://bitcointalk.org/index.php?topic=1072474.0;all](https://bitcointalk.org/index.php?topic=1072474.0;all)

~~~
awjr
That link is absolutely fascinating and a very honest account.

------
modeless
How can the author write this entire article without mentioning the real
numbers that matter? The mining reward is currently 3600 bitcoins per day in
block rewards, plus about 20 bitcoins in transaction fees. That means if
miners are rational they will collectively buy about 3620 bitcoins worth of
electricity per day.

3620 bitcoins buy a lot of electricity for sure. But it won't always be like
this! The block reward halves next year, and transaction volumes will probably
increase. _Then_ rational miners will spend perhaps around 1830 bitcoins on
electricity per day, while processing more transactions. Wow, we've more than
doubled the efficiency in a year!

Furthermore, the block reward keeps halving every couple of years until it
goes all the way to 0! At that point, the only thing funding the miners will
be transaction fees, so the full costs of running the network will be borne by
the users, and market forces will decide the appropriate level of resources to
spend on running the Bitcoin network. It could be higher or lower than 215 MW,
depending on how useful Bitcoin becomes to users.

~~~
golergka
> the only thing funding the miners will be transaction fees

How does that work, exactly? I thought that the only reward that the miners
get is the block reward hard-wired in the system. Is there another mechanism
that allows them to negotiate transaction prices with clients and
accept/decline transactions?

~~~
modeless
Bitcoin transactions include an optional fee, chosen by the sender, which is
paid to the miner who mines the block containing that transaction. Miners
choose which transactions go into their blocks. They can accept or decline
transactions at will, and also choose which transactions are processed first.
Rational miners will process higher fee transactions first, and may also set a
fee threshold below which they reject transactions. This mechanism is already
in place and working.

Currently transaction fees are negligible compared to the block reward. Many
miners are willing to process 0 fee transactions because it hardly costs them
anything and promotes use of the network. However this will change over time
as the block reward declines and transaction fees become more important.

------
HappyTypist
The author of this article has a misconception that the marginal cost for
processing a bitcoin transaction is "1.57 American household's yearly
consumption". That's not correct -- the marginal cost is closer to the
electricity spent by your processor in rendering this web page.

It is the upfront cost of getting a partial SHA256 collision and being able to
add transactions to the blockchain that is massive, at least for this level of
transactional volume. Bitcoin becomes more sustainable the more people use it,
as the average TX costs goes down.

Whether other consensus systems like Proof of Stake should replace Proof of
Work is a more interesting question.

~~~
uhwhat
Proof of state only further incentives hording, generally making it
undesirable for economic activity.

------
TheDong
Another dynamic of bitcoin is that mining is not purely motivated by block
rewards; even if there were no rewards at all, people who owned bitcoins would
be incentivized to continue mining in order to secure their own currency
holdings.

For example, if I had 100BTC and I feared that they would halve in value if
the bitcoin network had a successful technological attack, it would be quite
reasonable for me to spend up to half the amount of coins I had in
mining/securing the network, regardless of other profit... and that arms race
also continues even with no money gained from mining due to increasing vested
interest.

I think this dynamic is often lost in people estimating what amount of mining
a rational actor would undertake.

~~~
reddytowns
If you owned stock in Pepsi, and their business looked like it was going to go
under, would you drive down to the plant and help them bottle the stuff?

The rational response in your scenario would be to sell your BTC and diversify
into other assets.

Trying to secure the network yourself suffers from the tragedy of the commons.
There is no real incentive besides altruism to not let others bear the cost of
doing the work and ride on their coattails.

~~~
beaner
You might not, but if Pepsi produced 90% of the demand for drinking bottles,
the bottle makers might. Similarly, bitcoin companies which are not currently
miners but which profit from providing bitcoin-related services might have
incentive to step in. (Coinbase, Circle, BitPay, etc.)

------
facepalm
There seems to be a factual error in this: other than what the article claims
the number of transactions should not change the amount of energy required.

The Mining network mines a block roughly every 10 minutes, no matter how many
transactions there are.

If the amount of transactions rises, the cost in Bitcoin per transaction
rises, not the energy required. The cost in Bitcoin rises because you have to
give the miners an incentive to actually process the transaction (that is,
include it in a mined block). Since the number of transactions per block is
limited, there is a bidding competition.

What increases the energy required is only the mining, which depends on the
value of Bitcoin. The more valuable Bitcoin is, the more miners will be thrown
at it, consuming more energy.

Correct me if I am wrong...

~~~
lhl
There is currently a (ballpark) 7tps limit due to the current 1MB block size
limit although this is currently under the subject of intense
discussion/debate and will likely be solved in the coming months/years by a
combination of increases to the block size (imminent), and the deployments of
technologies like side chains and lightning network (both under development).

------
retrogradeorbit
So what is not covered is how this cost of bitcoin compares to the cost of the
present central-bank full-fiat system. Take into account the London whale, the
libor scandal, forex fixing, comex cartels, all the fees and charges that are
skimmed at every stage and flow into the ridiculous levels of Wall Street/The
City profits. Take all the criminal actions and the fact that it seems the
financial law enforcers are incapable now of bringing financial criminals to
justice. How does the bitcoin cost compare to those costs? I don't know, but
if I was a gambling man I'd bet that bitcoin is orders of magnitude less
expensive. Does anyone have any figures to compare these?

~~~
lhl
Bitcoin will not eliminate most of the market inefficiencies you've listed -
certainly not forex, by definition for example. There are already Bitcoin
derivatives and other financial instruments being built already.

However, the most comprehensive (and perhaps, relevant) analysis I've seen
looks at the costs of printing/minting money and its distribution (banks,
ATMs) is here: [http://www.coindesk.com/author/hass-
mccook/](http://www.coindesk.com/author/hass-mccook/)

It's from mid-2014 now so the mining article is a bit out of date but there's
no reason it couldn't be turned into a spreadsheet to account for current
mining efficiency (and modeled against new developments increased block size
or lightning network, for example).

------
javajosh
The central problem that banks solve is the shared-truth problem, and banks
solve it by being the score-keepers. Alice's bank owes her $100; Bob's bank
owes him $100. If Alice pays Bob $50, Alice's bank owes her $50, and Bob's
owes him $150.

That's all there is to it. The key is that the banks have to agree on the
truth. A check from Alice to Bob is a statement from her saying "I pay Bob
$50", he endorses it, saying, "I accept $50 from Alice" and then the two banks
at some point say "1-2-3 go!" and make the change simultaneously.

Until I understand how Bitcoin does that, I will not believe in it. And don't
give me hand-wavy bullshit. Speak plainly.

EDIT: Yes, downvote me for wanting to understand, you bitcoin bastards.

~~~
geofft
Is there a reason that you find the existing resources on Bitcoin (the
Wikipedia article, the paper, the "how it works" page on bitcoin.org, etc.)
unclear? What parts of them do you find un-plain or handwavy? What have you
read? Do you concur with the purported answer in part and not in part, or do
you disagree completely, or do you not understand it...? Help us help you.

I don't believe that Bitcoin is a _good idea_ , but I certainly believe that
it _works_ for the use case / model of the world it has, and I believed it
just about as soon as I heard of it, because I found the resources clear. I
imagine so have most others, and so us repeating that to you is probably no
different from what you've heard already. If you tell us more about what you
understand and what you don't, what you've read and what you haven't, then we
can give more useful replies.

~~~
javajosh
For one thing, if you have a single global ledger, how do you avoid the
problem that miners can ignore your transactions if they want to? I have other
questions, but none of them matter, really, except this one, because this
implies that the score-keepers become bitcoin miners rather than banks, which
makes bitcoin a non-solution to the banking problem.

If you transfer money, at what point does the transfer "happen"? If you have
to wait for a miner to calculate something during a 10-minute batch of
(global) transactions, doesn't this mean that a) everyone has to wait (at
least) 10 minutes for a transfer to take place and b) that all global
transactions for every 10 minute window have to reach the same place (e.g. the
miner)? Do all miners have to agree on the contents of a block before they
start mining?

Most discussions of Bitcoin seem to get bogged down in details and jargon. I
think the idea is to create a single ledger that monotonically increases in
size, with each block of transactions getting integrated with it by solving a
(mostly) arbitrary math problem involving the value of those transactions. So
I guess my main problem with the system is that it's trivial to alter blocks
_before_ integration. The secondary problem is the "waiting for transfer"
issue. Or perhaps it's enough for a buyer to hand a seller a signed message
saying "I pay you $50" which the seller can a) look at the global ledger to
make sure they have the money, and b) integrate into the ledger at their
leisure. Which implies there's a double-spending possibility in the window
between handing the seller the message and the seller passing the message to
the miners for integration.

~~~
geofft
I'm not sure if your question is based on an assumption about double-entry
accounting. Bitcoin is _not_ double-entry, at least in the sense that there
aren't two separate entries. A transaction transferring $50 from Alice to Bob
is a single thing in the global ledger, signed by Alice's key, transferring it
to Bob. There's no way to sever "Alice spends $50" from "Bob receives $50", so
even if you can cause transactions to be ignored, the whole thing, atomically,
gets ignored. The transfer never happened, and no money is created or
destroyed.

It is certainly possible for someone to modify a block and try to mine it.
There's no required consensus process in advance; you can just try to generate
a block that has the data you want, and find a hash that starts with enough
zeros. (You can't alter a block so that money is spent without the consent of
the money-holder, since each expenditure requires a digital signature. But if,
say, Alice's key has signed both "Transfer this bitcoin to Bob" and "Transfer
this bitcoin to Carol", you can mine either of those.)

The trouble with trying to do that is that mining is slow. The math problem is
timed so that it takes roughly 10 minutes for _someone, somewhere_ to
successfully find an answer. So the CPU time is 10 minutes times the number of
mining nodes on the Bitcoin network. If you, on your own computer, start
trying to mine a block that's different from what everyone else is trying to
mine, you are going to have to be extraordinarily lucky to be able to get the
math problem solved on your own within 10 minutes. The entire rest of the
Bitcoin network is trying to mine a different block, and they'll probably win.

Let's say that you are extraordinarily lucky, or maybe you control like 30% of
the network and you're slightly lucky. What you've accomplished is to make a
fork in the block chain: there are two blocks with the same parent. You can
now send your fork to people, because there's no way to to tell which one was
"real" and which one wasn't. But now you need to keep mining on your fork,
because people will notice if the block chain mysteriously stops updating. You
need to be incorporating everyone else's transactions onto your fork. So not
only do you need to be lucky, you need to be _repeatedly_ lucky, all the time,
so that your mining keeps up with the other fork. This is only feasible if you
actually control 50% of the network.

But still, what have you accomplished? There's no "merge" in Bitcoin. Everyone
sees a single history. If they see two blockchains updating at the same speed,
they know that something is up and it can be resolved by humans; no program is
going to simultaneously trust both histories. So either Alice transferred a
bitcoin to Bob (and thus not to Carol), as she authorized, or she transferred
a bitcoin to Carol (and therefore not to Bob), as she authorized, or the
bitcoin remains with Alice and no transaction happened. The best you can do is
prevent people from spending their money, if you reliably control 50% or more
of the network. You can't cause money to be double-spent.

And yes, it is common to wait 10 minutes or often 60 minutes to wait out an
attacker's luck, at least for large transactions. The official Bitcoin client
calls transactions "unconfirmed" until it sees six blocks mined on top, at
which point it's assumed infeasible for you to have a separate history from
the rest of the network. For smaller transactions, people tend not to wait as
long. But the same thing happens with conventional currency. Most stores don't
check small bills with counterfeit pens. Most credit card readers support
offline transactions, but you get the product immediately. Personal checks can
take up to a month to clear or bounce. If there's something high-value, you
get a cashier's check or you run a credit report on the person. Otherwise you
trade off the risk for convenience.

See the Bitcoin wiki article on confirmation for a bit more discussion about
how long to wait vs. how strong an attacker is:
[https://en.bitcoin.it/wiki/Confirmation](https://en.bitcoin.it/wiki/Confirmation)

Let me know if I understood you correctly and whether that was answering the
question you asked.

~~~
javajosh
_> The best you can do is prevent people from spending their money_

And that's pretty damn good, because if you want to do the most damage to
someone, you cut them off from their money.

So, most of the time these threads are abandoned, but I really do appreciate
your thoughtful responses, and I'd like to continue, because I think I'm
finally able to articulate my concern clearly: the trouble is that there is a
distinct, separate group of miners who can form out-of-band cabals and
cooperate to effectively cut anyone they want off from their money. All it
would take would be for a majority of them to agree to ignore transfers from a
public key, and the ledger would continue along just fine.

So, the root of banking power is currently institutional and legal, and all
bitcoin is doing is giving that control to people with the most compute power.
Bitcoin turns CPUs into the new gold standard (although ASICs function more
like tulips).

On a related note, I'd like to understand on a practical level how people
reach "the miners" and whether or not the miners have incentive to share
transactions with each other once they learn of one, or whether the system
relies on a "neutral" third party clearing house for unintegrated
transactions. Presumably there are lots of endpoints in the world where you
can put transactions, but what guarantee do you have that anyone will bother
integrating yours? Do you push it to lots of endpoints to reduce the chance
that happens (intentionally or by accident)? Or, another way to ask this, is:
how do miners learn of unintegrated transactions?

~~~
geofft
> And that's pretty damn good, because if you want to do the most damage to
> someone, you cut them off from their money.

Hmmmm. So, in order for someone to spend money, they just need _one_
transaction in the blockchain moving the money to someone else. In order to
cut them off, you need to make sure that transaction _never_ gets mined.

Since there are lots of miners, even if you control part of the network,
someone in the rest of the network could mine the transaction. Then you're in
the position of having to refuse that block and maintain a fork. That's
probably tenable if you control like 95% of the mining power. I'm not
convinced that's tenable if you control even 50% of the mining power. If your
victim keeps trying to transfer their money, you'll fairly often find the
other 50% of the network having a block that you refuse to accept, and (I
think) you won't be able to get your fork to reliably win automatically. IF
you keep refusing blocks, it'll involve human intervention on the other 50% of
nodes to consider your history the "real" history, and people will notice that
something strange is happening.

You could, of course, accept the transaction, track their coin, and consider
all money from its recipient tainted. But there are enough large wallets, like
large exchanges and even tumblers (essentially money-launderers) that
obfuscate the relationship between inputs and outputs. You're going to have to
start blacklisting a _lot_ of money if you want that approach to work.

> So, the root of banking power is currently institutional and legal, and all
> bitcoin is doing is giving that control to people with the most compute
> power.

Yes, this is basically my biggest personal disbelief about Bitcoin: many
governments could out-mine the entire Bitcoin network right now if they
decided that it was important to national security. I'm not convinced this is
a fundamentally unsolvable problem (there are some alternative models,
Stellar's consensus protocol probably being the most interesting) so I'm not a
cryptocurrency skeptic, but I am a Bitcoin / proof-of-work skeptic. There do
seem to be a bunch of people in the Bitcoin community interested in
alternatives to proof-of-work, which I think is healthy.

(And relatedly, if we _don 't_ need proof-of-work for security, either because
something else works or nothing possibly works, let's stop building a world in
which we have to burn energy for currency transfer.)

> On a related note, I'd like to understand on a practical level how people
> reach "the miners" ... how do miners learn of unintegrated transactions?

I don't understand this clearly and I'm currently the wrong person to ask. The
best I can find is
[https://en.bitcoin.it/wiki/Transaction_broadcasting](https://en.bitcoin.it/wiki/Transaction_broadcasting)
plus [https://en.bitcoin.it/wiki/Network](https://en.bitcoin.it/wiki/Network)
(there's some IRC-style way of learning about nodes, and I think at the
network level, ~everyone is a node and considered capable of mining). I
suppose the paper might know more; we could look.

~~~
javajosh
_> I don't understand this clearly_

I would consider understanding this to be a necessary condition for advocating
for (or using) BitCoin.

Also, one of the interesting outgrowths of focusing on the reachability of the
network is that a few features of the network. Assuming the network is
accepting all transactions, miners _must_ be working on different subsets of
transactions routinely. This implies that there's quite a lot of computation
getting thrown out, routinely, as different miners start working on different
subsets of transactions.

It also implies that there is a miner-to-miner DOS method, where the majority
of the miner network blackballs a miner - no longer accepts their
integrations. This is serious, but much less serious than an arbitrary public
key freeze, which can affect anyone (your tumblers aside, it's always
possible).

Finally, I begin to understand why Satoshi started with money. I suspect at
some level this is not about money, but he needed to incent people to get this
ball rolling. What is it about? It's about coherent, persistent truth.
Transactions are just one kind of event that happens in the world. The pattern
is valid for any global data-structure that you want to have great
survivability and coherence. You might use something like the blockchain
(adding back a _little_ jargon) to store, for example, the mind state of an
AI. The proof of work, rather than a mechanistic search for arbitrary hashes,
might be somehow related to the operation of the AI's "mind".

------
personjerry
Correct me if I'm wrong, but the idea of the blockchain is that everything is
recorded in it right?

So there is more and more information stored in there, redundantly. So
eventually it'll take way too much space for everyone?

(And the more adoption there is, the faster this process is)

~~~
ucho
Yes, that's one of main argument raised against increasing transactions per
block - it would increase block size and ledger growth rate.

~~~
beaner
Increasing the block size doesn't increase the transactions per block. Usage
does.

------
reddytowns
This is why I hope that Proof of Stake currencies currencies like Neucoin take
off.

~~~
liamzebedee
Exactly. Many like to focus on the shortcomings of Bitcoin (of which there are
many, I agree). Some more even like to predict the 'death of Bitcoin' based on
these. However we shouldn't ignore the fact that cryptocurrency is developing
rapidly (hell, it's only 6 years old), and many obvious issues are being
slowly but surely worked on (privacy, wallet security, energy consumption,
mining decentralisation, sustainability and tx fees, microtransactions,
contracts, scripting, etc.).

As for when it hits mainstream consumer adoption, who knows. I'm here for the
ride.

------
chaostheory
Someone I know covered his roof in solar panels. Instead of buying a big
battery, he just runs a BC server farm. It's not unsustainable.

~~~
cryptoz
That only works if it becomes part of the BTC protocol that you can only mine
if the electricity comes from renewable, non-polluting sources. Otherwise, due
to solar not being the cheapest, most accessible source of energy everywhere
that people want to mine BTC, you'd have lots of people choosing to increase
greenhouse gas emissions in order to fill their own pockets.

It would be interesting to see estimates of the cost of those greenhouse
gasses, in terms of extinct species, effort to clean up the atmosphere, or
other expensive/bad things that can happen when you claim that increasingly
using energy in non-efficient ways is just fine. Are these costs higher or
lower than the value of the money created?

Perhaps BTC is sustainable, but your argument certainly does not refute the
article's claim - at least, until we've already solved our energy & pollution
problems.

~~~
chaostheory
If bitcoin does become even more mainstream, given its energy requirements and
the potential strain it may put on existing traditional infrastructures; will
solar and other alternative power sources always be more expensive?

~~~
lmm
There's no economy of scale for solar - just more and more panels, in contrast
to more traditional power sources where running one big boiler / set of
turbines can be more efficient. So I think solar gets worse off as electricity
demand increases.

~~~
eru
There's an economy of scale in producing solar panels. And there can be
economies of scale in installing them.

------
FatalLogic
There is no question mark in the original title, though probably there should
be one.

It's only one character, but adding it has significantly changed the meaning
of the title. The article is full of confident statements of opinion,
presented as facts, so I don't think the writer intended to make that title
into a question and invoke Betteridge's Law of Headlines.

Whether it's correct or not, it does seem like the issues raised in this
article have been discussed many times before during the past 5 years. Is
there anything really new?

Here's some reaction to it from the pro-bitcoin side:
[http://redd.it/3bj0vo](http://redd.it/3bj0vo)

