
The fightback against the Bitcoin energy guzzlers has begun - edwinksl
https://www.wired.co.uk/article/bitcoin-mining-energy-consumption-new-york
======
ISL
Isn't the solution to charge more?

One could have a tiered rate system, where the first N kWhr are inexpensive
and the rates rise after that (just as we do in Seattle)

[http://www.seattle.gov/light/Rates/docs/2018/Jan1/Schedule%2...](http://www.seattle.gov/light/Rates/docs/2018/Jan1/Schedule%20RSC%20Jan%201%202018.pdf)

If supply is constrained, and demand grows, it won't stop growing until the
price goes up.

An imposition of a quota system is interesting, just because it might yield
free residential heating for homes that welcome miners into their basements.

~~~
pandasun
Why does this need a solution? There's nothing wrong with mining.

~~~
SlowRobotAhead
I wonder what the chances are that you believe in man made climate change?

IDK, I see a bit of an issue turning energy into heat so people can get play a
commodity game, most of whom don’t understand at all.

~~~
gruez
>IDK, I see a bit of an issue turning energy into heat so people can get play
a commodity game, most of whom don’t understand at all.

Is it any better than spending money to dig up yellow rocks or carbon crystals
to be used as status symbols?

~~~
jdietrich
Not really. I think that the gold and diamond industry is hugely destructive
and I'd encourage everyone to avoid their products wherever possible. Gold has
some valid industrial uses, but diamonds are just bullshit and I think the
world would be a better place if everyone believed that.

If De Beers found diamonds in my neighbourhood, I'd petition my local
government to refuse them a permit to mine; if that permit was granted, I'd
petition them to enforce high environmental standards and ensure that the
externalities of that mining activity are appropriately priced.

~~~
PyroLagus
Diamonds do have some industrial uses, but those can be lab-grown with
absolute purity, and for jewelry, synthetic diamonds are actually 20-40%
cheaper than mined diamonds and look better, whether that's because of a
higher clarity or colors that "real" diamonds don't have. So there's really no
reason to mine diamonds anymore except to market them as more expensive and
more luxurious "real" diamonds, which is just bullshit. And there's no reason
to buy mined diamonds unless you look to spend extra money and want to support
an environmentally destructive and exploitative industry; the very same
industry that financed wars to get what they want and tried to make sure that
lab-grown diamonds couldn't be called diamonds even though they have the very
same chemical composition so they could keep selling their blood diamonds
without ethical and cheaper competition. Luckily, they lost that battle.

And since we can't create gold in labs yet, at least not more than a few
atoms, it's actually better to buy diamond jewelry (as long they're lab-grown)
than gold at this point. Just don't buy the De Beers lab-grown diamonds; even
if those are ethically produced, we shouldn't support that company in any way,
shape, or form.

------
another-one-off
There is something interesting to be said about Bitcoin's ability to expose
and correct market distortions so neatly.

I personally quite like the idea of a quota system for access to cheap, local
power. It is interesting however to imagine what might happen if the power was
sold into the market at market rate and the profits divided up amongst local
businesses and residents instead of giving them cheap power.

That way, they in theory would be no worse off (they can buy power and the
dividend cancels the loss of the subsidy), but they can also directly buy
things that have higher utility than the direct energy would provide them.

That would also stamp out local bitcoin mining operations and divert the cheap
energy to uses more productive than burning it for crypto creation.

~~~
ballenf
If the local systems sold the electricity on the open market and used the
funds to subsidize public services or just keep taxes lower, the locals would
still benefit and there'd be no bitcoin mining incentive.

The market distortion here means that the overall % of green energy in the
country is lower than it otherwise would be.

~~~
s73v3r_
Are you sure that your approach would cancel out the higher costs of
electricity on the people living there?

------
khazhou
Seems to me if Bitcoin was going to "become a thing" (to use American
parlance), it would already have done so by now. What milestone could mark
success for this currency? Conversely, when shall we declare failure?

~~~
bunderbunder
As a tradeable commodity, I'd say that an easy bar for having "made it" would
be when you see a BTC exchange-traded fund on a major stock exchange. Progress
seems to be happening on that, but we'll see.

As a currency, I'd say that, in the narrow case of BTC itself, failure is
baked into its design. The current protocol imposes an estimated upper limit
of 3-7 transactions per second on the network. That's just not acceptable for
a currency (assuming it has dreams of being more useful and widely accepted
than Ithaca Hours, anyway), and the suggested plans around forking are awkward
at best.

There are also solutions like the Lightning network. To me, I have a hard time
seeing those as efforts to make Bitcoin a currency so much as efforts to
create a new currency that is backed by Bitcoin. Sort of like the gold
standard of old, where different currencies were backed by commodity reserves.

~~~
gbhn
Sure, but a main point of a crypto currency is realizing there's no reason to
back a monetary currency with anything. It's just a shared hallucination.
There's no rational reason a new currency would be "based" on btc holdings.
That's just silly.

My view is that the upper end of btc viability is taking over some fraction of
why people want gold. The system is way too expensive for a viable txn network
(a la cash or Visa) and will never become one.

~~~
bunderbunder
> a main point of a crypto currency is realizing there's no reason to back a
> monetary currency with anything

I'd argue that BTC is very much backed with something - lots and lots of
thermal dissipation. The entire argument for why it should be accepted as a
stable, reliable, trustworthy store of value is based on proof of work.

If BTC is challenging anything about money, it's challenging the idea that
money needs to be something that exists under the auspices of a government
body.

~~~
khazhou
On the Bitcoin gravestone will be written:

    
    
      "I challenged"

------
mihaifm
Bitcoin mining can scale depending on demand, from a bunch of laptops to
massive farms. It is only greed that brings more and more miners into the
game, pushing energy demands higher.

It's normal for governments to crack down on mining at some point, the energy
consumption is indeed hilarious, but that's not going to bring down bitcoin
anytime soon.

~~~
bunderbunder
Nah, I'd say the waste is built into the Bitcoin design itself.

The reward rate is relatively constant, since the protocol automatically
scales the difficulty of completing a block to try and make it happen on about
the same interval regardless of how many people are mining. And mining is also
a zero-sum game. (Unlike in real-world mining.)

This creates a completely wacky incentive structure where, instead of
incentivizing producers to only expend enough resources to satisfy market
demand, and no more, they're instead incentivized to expend as much energy as
possible, at all times.

It's like if there were a King who likes to buy cheeseburgers for $10,000
apiece, and he always buys the first cheeseburger he sees, but he considers
any cheeseburger that is more than 1 second old to be spoiled. So then you end
up with a market where people are furiously making cheeseburgers as fast as
they can, and just littering them everywhere, in the hopes that one of the
cheeseburgers they made happens to be the one that the King sees first
whenever the urge for a snack strikes him. Meanwhile, the world is getting
increasingly littered with spoiled, rotting cheeseburgers.

~~~
VonGallifrey
> This creates a completely wacky incentive structure where, instead of
> incentivizing producers to only expend enough resources to satisfy market
> demand, and no more, they're instead incentivized to expend as much energy
> as possible, at all times.

This is not entirely correct. You pointed out that the reward rate is
relatively constant which limits the income of all miners combined to 1.25
Bitcoin/minute. They really can't be spending more then that on mining. That
includes Hardware + Energy + Salaries + Offices + Warehouse. Any single miner
is also only going to get a fraction of that 1.25 Bitcoin/minute and anyone
spending more then what they get will find themselves with a deficit.

That is also just until ~May 2020 when the next Halving is going to occur.
They have until then to figure out to decrease their spending on mining to be
lower then 0.625 Bitcoin/minute.

------
emddudley
> Thanks to nearby Niagara Falls, Plattsburgh has a quota of cheap electricity
> available at a low rate

Plattsburgh is 300 miles away from Niagara Falls, on the other side of the
state! I don't know why Plattsburgh prices are so low, but it's certainly not
proximity to the Robert Moses Niagara Power Plant.

~~~
jellicle
But it is. The town is allocated cheap electricity from Niagara Falls, and
until recently, did not use its full quota.

------
uncletammy
It would be interesting for miners to offer all merchants within the
geographic area affected by their power consumption fee-less transaction
processing (free mining for their neighbors) . If it's technically achievable
I could see it introducing some unusual but generally positive dynamics.

~~~
jstanley
It would be easy to do, but the savings in transaction fees would not be
enough to be worth the increased energy cost, even for the people who use
Bitcoin, which most of them probably don't.

------
crispyambulance
I admit I don't know much of anything about cryptocurrency, but is there
something fundamental about the need for "mining" (in whatever form) for
currency? It seems like the intent behind bitcoin mining was to mimic the
scarcity of mining for gold or other precious metals by substituting hefty
computations. But isn't that just a means of getting the currency bootstrapped
in some way which ensures that it becomes scarce? Aren't there other, less
energy intensive ways to do that?

I mean, could there not be a cryptocurrency which bootstrapped off of the
exchange with "real currency"? Or perhaps by direct exchange of goods and
services?

~~~
lytedev
Unfortunately I believe one of the core concepts is the "proof-of-work" and
Bitcoin cannot work on the decentralized and distributed manner it achieves
without it.

~~~
brohee
We should really rename "proof-of-work" as proof-of-waste, as it is what it
is, frankly...

~~~
wyldfire
What does the word 'waste' mean to you? Why would you use this word to
describe what is done by the proof of work?

If you think cryptocoins have no utility, then it stands to reason that the
proof of work is wasteful. And beyond: the time and money spent by developers,
corporations, exchanges, etc: all waste.

But if you think that cryptocoins do have some utility, then it seems unfair
to call it a "proof-of-waste". The PoW is the only way to _equitably_ mint new
currency.

~~~
s73v3r_
"What does the word 'waste' mean to you? Why would you use this word to
describe what is done by the proof of work?"

Because it's a waste. It's not worth what it costs to do, and it's making our
world worse by eating up more resources.

~~~
wyldfire
> It's not worth what it costs to do

If you concede that it has utility at all, then all you're saying is "I
wouldn't be willing to pay that much". But clearly the market will bear a
higher price than you're willing to pay.

Other things that are proof of waste: 1k USD iPhones, Cartoons on TV, all-you-
care-to-eat restaurants, dabbing, hoverboards.

~~~
s73v3r_
I'm seeing a whole lot of "whataboutism", but I'm not seeing anything relevant
to the current conversation.

------
UnhelpfulYoda
Weren't the smarter miners already relocating to places like Iceland which
have more cheap surplus geothermal power than they ever use themselves anyway?

------
dalbasal
If the future if money is bitcoin, and the input to bitcoin is energy... does
that mean energy companies will eventually create all the money?

~~~
21
Using your logic this is already happening, the vast majority of money in the
world is just records in computers.

------
akerro
I'm sure air conditioners in US banks or public offices consume more energy
than Bitcoin mining worldwide. They never turn off computers at night,
insurance companies require to leave lights on at night, each office has a few
TVs with chomecast showing pictures of nature (irony ha!) all day and night
long... but it's BTC mining they're fighting with.

~~~
nonbel
Yea, I did a similar analysis on the energy wasted due to the new reddit
layout (I got 3 TWh per year, or ~10% of bitcoin electricity usage):
[https://news.ycombinator.com/item?id=17619025](https://news.ycombinator.com/item?id=17619025)

I'd love to see someone go more in depth with these types of "how much energy
is wasted on x" estimates. Including just addressable grid and power plant
inefficiencies. I suspect bitcoin is simply not a big deal (at this point), so
this entire issue is concern trolling.

And then you come to the problem of what it means for the electricity to be
"wasted". Eg, is going to church "wasting electricity"? What about the entire
alcohol industry? Playing videogames? Preparing and storing deserts?

~~~
viraptor
> I suspect bitcoin is simply not a big deal (at this point), so this entire
> issue is concern trolling.

Or people actually care. The fact there are existing, worse ways to use energy
doesn't mean we shouldn't care about Bitcoin. For the same reason I'm
composting, even though the nearby supermarket throws out way more packaged
food than I'd ever buy.

~~~
nonbel
>"The fact there are existing, worse ways to use energy doesn't mean we
shouldn't care about Bitcoin."

Its more like you are trying to catch rainwater in a strainer full of holes
but are worried about a tiny pinhole in the side. So sure people may actually
care about it, it just makes no sense and living your life that way is not a
recipe for success.

For 2013 we have the estimate for total energy supply of 157,500 TWh/yr
[https://en.wikipedia.org/wiki/World_energy_consumption](https://en.wikipedia.org/wiki/World_energy_consumption)

Lets say bitcoin used 1000 TWh/yr worldwide (~15-30x what is estimated to use
now). That'd work out to:

    
    
      100*1000/157,500 ~ 0.63 %
    

Currently its more like 0.02-0.04%. As someone else posted, just christmas
lights in the US alone is ~6 TWh/yr (~.004%).

EDIT: That energy supply number is actually TPES, which ignores efficiency:

 _" Closely related to energy consumption is the concept of total primary
energy supply (TPES), which - on a global level - is the sum of energy
production minus storage changes. Since changes of energy storage over the
year are minor, TPES values can be used as an estimator for energy
consumption. However, TPES ignores conversion efficiency, overstating forms of
energy with poor conversion efficiency (e.g. coal, gas and nuclear) and
understating forms already accounted for in converted forms (e.g. photovoltaic
or hydroelectricity)."_

I suspect that if mining encourages even tiny innovations in power plant and
grid efficiency it will have a net negative effect on energy waste. Apparently
its that about 65% is lost due to powerplant, and 10% due to
transmission/distribution, for ~75% total:

[http://insideenergy.org/2015/11/06/lost-in-transmission-
how-...](http://insideenergy.org/2015/11/06/lost-in-transmission-how-much-
electricity-disappears-between-a-power-plant-and-your-plug/)

~~~
hcknwscommenter
"if mining encourages even tiny innovations in power plant and grid efficiency
"

But it won't. All the incentives to increase power plant and grid efficiency
are already there. Moreover, as you state quite clearly, bitcoin energy use is
a small proportion of energy usage.

~~~
nonbel
Mining is somewhat unique in that it doesnt really matter where it is done and
it is very easy to tie profitability to electricity cost (since that is the
main cost).

So I disagree, at least if it gets big enough to matter. I'd expect power
plants, towns, etc to find it more worthwhile to invest in more efficient tech
to attract the miners.

~~~
viraptor
Why would they want to attract? The article summarises it well: ignores local
workforce, requires resources, can relocate quickly - it doesn't sound useful
for the towns.

~~~
nonbel
Obviously to make money...

Towns with weird subsidizing schemes going on won't be able to take advantage
unless they account for the new opportunity.

~~~
hcknwscommenter
Only if they tax the heck out of mining. How well do you think that is going
to work?

------
gwbas1c
I thought part of Bitcoin's design is to use the cost of electricity as a way
to prevent wide-scale mining?

Anyway, turning off power to mining companies will just trigger investment in
better off-grid power solutions. It's a double-win for everyone else.

------
al_ramich
as long as there is value in mining there will be miners. But it's a new drain
resource that required energy and I'm sure energy companies, governments, and
greens will have a say. Not clear to me though why mining requires so much
power? Is there a way or existing initiatives to reduce this?
[https://arstechnica.com/tech-policy/2018/05/new-study-
quanti...](https://arstechnica.com/tech-policy/2018/05/new-study-quantifies-
bitcoins-ludicrous-energy-consumption/)

~~~
zhte415
> as long as there is value in mining there will be miners.

I'm gonna get a bit Marxist on value here.

Transaction value, or intrinsic value?

A bitcoin can be exchanged at the current exchange rate, as can any commodity
given unit of exchange.

What is the intrinsic value of that commodity? The amount of wind needed to
blow through a windfarm makes it virtually free aside from the depreciation
and cost of producing that windfarm, which is the cost of production.

What is the future discounted future value of Bitcoin? That will depend on the
Bitcoin interest rate, for which there is only a transaction value, there is
no yield on Bitcoin. Not yield means no return on capital. Given it has cost
to produce, yet to yield (intrinsic return on capital) it is a negative sum
game, so zero.

If the power's there, why not use it, even at below market rates? Because
Bitcoin may be using cheap power, but why does that power even need to be
there? Paying little / subsidising producers to over-produce for negative-sum
good is still paying something, and encouraging over-production and
inefficient production.

Bitcoin is interesting, has some transaction value, but negative intrinsic
value/opportunity cost.

~~~
woah
It’s pretty simple, bitcoin mining has the same purpose as gold mining: to get
something which is hard to get. The rarity just makes these things useful as a
store of value.

The world would be better off without bitcoin mining, and much better off
without gold mining.

~~~
zhte415
The speculation value of bitcoin dominates the use store of value, well,
value. It is a speculative instrument at this point. Yes, a nice proof of
concept, but now an instrument of speculation with a net negative yield.

Gold mining was of kinda stable fixed supply for millennia, then after the
'miners' in Johannesburg discovered half of the world's gold beneath their
feet and industry progressed, became of productive value. As of diamonds
today.

Bitcoin is of value there. It proved the blockchain, fantastic achevement. But
like a natural vs synthetic diamond, of little future value. Further resources
invested mining it are seeking returns which will not tend to zero but end in
negative. Ethereum, the blockchain which no one fully understands or trusts,
the left to Bitcoin's right.

Pivotal ideas, yes. And the end is a long way away.

------
andirk
Isn't the energy spent for the security of the network, instead of armed
guards and bombs? Compared to that, is it more or less wasteful then how we
secure USD?

------
ryanlol
>Is the libertarian dream of bitcoin as an unregulated global currency about
to be destroyed by municipal electricity companies?

Sounds like author has no idea what he’s talking about.

~~~
UnhelpfulYoda
Libertarian 'dreams' are routinely destroyed when faced with reality.

(I can't wait for that 'crock o shit' libertarian sea nation to get it's first
visit from the libertarian pirate nation.)

~~~
ryanlol
There is absolutely zero chance of municipal electricity companies destroying
bitcoin. Cutting off some miners will not destroy bitcoin. Raising electricity
costs aren’t going to destroy bitcoin.

This isn’t about libertarian dreams, that’s just not at all how PoW works.

The author is clearly utterly clueless (or intentionally trolling).

If you happen to disagree, I’d absolutely love to know _how_ municipal
electricity companies could even hurt bitcoin.

------
pandasun
Man that's a good deal. I'm paying $2,200 per month in electricity costs for
mining and am getting nowhere near those kinds of rates.

------
4rgento
If the revenue from the money transfers business is 30 billions per year and
the cost of electricity is 0.12 U$D per KW/h. Then the cost, in energy terms,
of the money transfer business is 250 TW/h in a year. This is a lower
bound.[1]

Bitcoin miners are consuming in the order of 73TW/h[0] annually.

Let's consider those quantities equal for the next argument:

Isn't it a good thing that crypto is generating business for the energy
sector? If those revenues are invested in more energy research it is favorable
to human kind, isn't it?

Why deny the energy sector its business and favor the financial sector?

[0] [https://digiconomist.net/bitcoin-energy-
consumption](https://digiconomist.net/bitcoin-energy-consumption) [1]
[https://www.quora.com/How-big-is-the-international-money-
tra...](https://www.quora.com/How-big-is-the-international-money-transfers-
market)

~~~
jjeaff
>Isn't it a good thing that crypto is generating business for the energy
sector?

Wouldn't it be good for the window industry and service/repair industry if we
all went around town throwing rocks through windows?
[https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window](https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window)

The energy sector is primarily producing the energy in question with non-
renewable resources that pollute the environment and raise costs for everyone
else, disproportionately harming the poor. Not to mention rising food costs
due to money grabs in the ag industry with things like corn based ethinol.

