
Bitcoin mining and energy consumption - reinierladan
https://blog.bitcoin.org.hk/bitcoin-mining-and-energy-consumption-4526d4b56186
======
seanwilson
One of the big selling points of Bitcoin is that it's meant to be
decentralised but it doesn't look like this plays out. Proof of work seems to
inevitably lead to all the power going to parties that can afford specialised
hardware who are in countries with low electricity costs.

Running a Bitcoin miner on commodity hardware now is pointless which seems to
go against the spirit of Bitcoin when it started. Was this predicted at the
inception of Bitcoin? It's interesting how economics impacts the security of
the protocol like this.

Proof of stake is meant to consume less resources but then the power is then
handed to people with the most money? Coming up with a way to have a
decentralised currency where everyone involved gets a fair say without
consuming too many resources is a super interesting problem.

~~~
jasode
_> Was this predicted at the inception of Bitcoin?_

It was not predicted in the original Bitcoin whitepaper. Yes, it discussed the
theoretical feasibility of a 50+% attack to double-spend but it didn't
explicitly predict a "consolidation" to specialized hardware miners that
leaves out the miners at home using regular computers.

 _> It's interesting how economics impacts the security of the protocol like
this._

Every decentralized protocol suffers from _unintended centralization_ caused
by economics. The same thing happened to other protocols like NNTP (Usenet),
SMTP, HTTP+HTML, and Git.

The underlying issue is that technical protocols still have to be realized on
_real hardware_ like cpus + harddrives + network bandwidth and consume _real
costs_ like human labor. You can decentralize a protocol _specification_ but
you _can 't decentralize the amount of money_ different entities are willing
to spend on that protocol. Each protocol whether NNTP/SMTP/Git/bitcoin does
not come with a $1 million grant for homeowners to spend at Newegg to keep
protocols decentralized.

That's why protocols consolidate towards big players in a power law
distribution.

~~~
seanwilson
> It was not predicted in the original Bitcoin whitepaper.

> Every decentralized protocol suffers from unintended centralization caused
> by economics.

> That's why protocols consolidate towards big players in a power law
> distribution.

Hmm, given the amount of foresight in the original whitepaper I'm surprised
the current situation wasn't predicted especially if it's common with other
protocols that are intended to be decentralized.

~~~
dyeje
It could have been foreseen and omitted. We still don't know who Satoshi is or
what their motivations are.

------
moneytide1
The electricity consumption is a red flag, but perhaps it could be cheaper
than the cost to build and maintain Guarda/Loomis trucks that carry physical
currency, energy to melt metal to mint coins, and all the costs of building
brick&mortar banks (even then, bankers provide auxiliary services like loans
and advisement).

We are all spending time talking about it as a collective effort to determine
whether or not it should be adopted in order to optimize the transfer of
value. Ultimately it could flush out the middlemen who just seek rent by being
a financial gatekeeper. Bitcoin isn't entirely different from that.

Many folks see it as a slot-machine. Buy, sit on it, cash out back to federal
reserve notes. Profit. The question here is - what will those proceeds be
spent on? If people are still conditioned from an early age to seek out
excessive hedonistic experiences, what are we gaining by implementing bitcoin?

Part of me sees bitcoin explanations as a Rorschach test - you can observe
some character traits of the person through their explanation or prediction of
bitcoin.

I am wary of the entire thing because we are starting to spend more time
talking about money. Or making money on money. It just has nothing to do with
what we actually DO with our time/resources. But that is content for a
different thread.

I am not a financial expert. Just working-class trying to invest surplus cash.
I want to use simple terms and concepts and condense the complex discussion.

~~~
sandworm101
These numbers are far beyond the energy required for trucks hauling cash. And
they dont fully account for the truck-type energy to build and manage the
bcoin mining industry.

~~~
jackpeterfletch
We're starting to stop using cash anyway though right? Regardless of
blockchain.

------
albertgoeswoof
Bitcoin's electricity consumption is unfortunate, it's difficult to assess
whether it is a waste or not. The current position blockchain tech can be
compared to the state of networked computers in the 70s and early 80s. Not a
huge amount of value delivered at the time, yet very few could have foreseen
the impact of the internet and personal computing on the world.

If blockchains and distributed computing does present a new leap forward in
how we communicate, this electricity will not be wasted.

~~~
QAPereo
Is it a waste to burn CPU cycles, to have a chunk of entropy to wave around so
that you can possibly buy shit?

Yes.

~~~
scrumper
It's not so different to burning diesel to dig up rocks so you have a chunk of
metal to wave around.

Which isn't, you'll notice, necessarily a counter argument to yours.

~~~
DSMan195276
I would actually argue it is very fundamentally different. Once you've dug up
your chucks of metal, trading them with others requires very little extra
energy to be expended (Especially if we're going to go all the way to talking
about actual cash, which is easy to split-up into smaller denominations).

Vs. Bitcoin, which will still require miners to expend the same amount of CPU
cycles to keep the network working so you can transfer your Bitcoins to
others, even after all of the Bitcoins are mined and the blocks provide no new
Bitcoins into the market.

~~~
scrumper
It'd be interesting to see a table of 5 year energy cost from inception of a
bar of gold vs. equivalent value of Bitcoin, at various #s of transactions.

------
joss82
From a quick research online, it seems that most mining pools are located in
China [1]

Roughly 2/3rd of electricity in China is produced from burning coal or gas,
which, upon combustion, emit their own weight in CO2, basically. [2]

From this two facts, one can conclude that Bitcoin has a pretty huge carbon
footprint overall. This is not the impression that I got from reading that
article.

[1] [https://bit-media.org/bitcoin/where-in-the-world-are-
bitcoin...](https://bit-media.org/bitcoin/where-in-the-world-are-bitcoin-
mines-located/)

[2]
[https://en.wikipedia.org/wiki/Electricity_sector_in_China](https://en.wikipedia.org/wiki/Electricity_sector_in_China)

~~~
vog
If I remember correctly, mining farms (and data centers in general) are
usually colocated to an energy source, i.e. a plant.

Some of those plants are not fully stretched, because there's almost no
civilization nearby, so delivering to the next city comes with a huge loss in
the energy network.

So miners can get cheap energy from those plants - energy that would otherwise
be unused or lost anyway.

Not sure how much this saves in the end, but this shows that you can't simply
convert energy to CO2 emission without considering which types of plants are
used and where these are located.

~~~
matt4077
That's a very convenient myth.

It misses the fact that China didn't build power plants out where it's too far
away from civilisation to be useful.

Transmission losses are also nowhere near the suggested values. 1.5% per 200
miles is today's standard. Meaning you could cross _all of China_ with a loss
of:

    
    
        east-west axis: 2200 miles
        0.985^(2200 miles / 200miles) = 0.846 = 15.4% loss
    

(and that's from the farthest desert to the east coast. Go south instead, or
note that there actually are a billion people living in inland China, and
actual losses are <5%)

~~~
vog
Thanks for making this clear.

------
6d6b73
"Also, one can argue that Bitcoin actually saves energy. The world’s financial
system requires many resources beyond the electricity to run servers."

What a bunch of crap. Bitcoin also needs servers (i.e exchanges, uses
computers, routers, switches etc. )

~~~
659087
The mental gymnastics crypto cultists perform to justify their chosen greed
outlets become more impressive every day.

------
ben_w
Makes a reasonable effort to calculate bitcoin energy use (and it’s good to
share reasoning, not just headline totals!), but it falls short with the
whataboutism of, for instance, shipping gold by aircraft.

Assuming all flights are independently profitable, the cheapest ticket I've
seen from London to San Francisco is £261 return, which sets an upper limit on
fossil fuel emissions of about 6 barrels of oil equivalent. Me plus luggage is
about 100kg, which at current prices is worth £3.292.122,21

------
alborzmassah
Is this not the price paid for the trust, security, and utility that bitcoin
brings? I don’t hear alternatives being suggested.

~~~
matt4077
How about not bitcoin, where a transaction doesn't consume 9 day's worth of an
average family's energy budget?

Utility: a transaction costs $10, right? It's useless.

Security: Have you followed this? The actual recommendation is to print your
private keys and stick them in a vault.

Trust: It's funny that, fundamentally, people started doubting the Federal
Reserve when the gold standard was abolished, because suddenly "value of money
is just fiction". Yet here they are, imbuing some far more ephemeral
nothingness with the same sort of faith-based value.

~~~
UncleEntity
People doubted the Federal Reserve _long_ before 1971...

~~~
matt4077
....and Bitcoin can't even dream of the trust that comes with having been
doubted _long before 1971_.

------
Mitchhhs
Can someone explain something to me:

So people mine bitcoin, which is really just validating the transactions on
the network, and they get paid in bitcoin for doing so. However, they will
receive fewer and fewer bitcoin over time because of the fixed supply. At some
point doesn't mining become unprofitable, causing the network to crash. And if
the price drops doesn't this exacerbate this problem? Would love some clarity
here.

~~~
nathan_f77
> However, they will receive fewer and fewer bitcoin over time because of the
> fixed supply. At some point doesn't mining become unprofitable, causing the
> network to crash.

This would actually cause the price of Bitcoin to increase, so that it keeps
up with the cost of mining it. The miners won't sell their Bitcoin for less
than the cost of electricity.

At some point, large mining operations will run their own power stations, and
they'll just run on solar / hydro / geothermal power. They might even sell any
surplus energy. Other miners might start paying for their electricity with
Bitcoin, so the price of electricity might become directly related to the cost
of mining Bitcoin.

------
KnightOfWords
> It is also easy to make this number look very small:

>The energy that Bitcoin consumes in a year would only last the U.S. for 19
hours.

That doesn't sounds small to me, given the relative utility of 320 million
people against that of Bitcoin.

------
ballenf
Why is energy consumption itself become a bad thing? I get greenhouse gas
emissions being bad, but why make energy consumption itself a negative?

Not to mention that "consuming" energy is somewhat a fiction: it's more so
changing the entropy of a system. True consumption of energy, at the extreme,
would imply sending energy into deep space (any direction other than the sun
really) where it can never be recovered.

Is the problem that such entropy changes usually (always?) result in at least
some heat loss? And the the planet is warming, so heat itself is seen as a
negative?

To make my point a different way, if a mining rig were 100% solar and 100%
efficient (both fantasy, of course), then it could consume unlimited solar
energy with no ill effects. Thus basing our judgment on energy consumption
instead of waste heat and energy source issues seems misguided.

Is it just too complicating to discuss this in terms of CO2 emissions and
waste heat, instead of Watts alone?

~~~
ResearchAtPlay
Every form of electricity production consumes an array of limited natural
resources. Wind and solar power don't have no direct CO2 emissions, but
minerals need to be mined, plenty of clean water is consumed during
manufacturing, and wildlife habitats are impacted by land-use change (wind and
solar plants have a comparatively larger land footprint than fossil fuel
plants).

Fun Fact: The article says Bitcoin mining consumes ~1.1 GW of power. There is
currently a massive political struggle over the construction of "Site C", a
1.1 GW Hydroelectric dam in British Columbia, Canada. Construction on that dam
began last year, but public opposition caused a new provincial government to
review the dam construction. The dam will flood 93 square kilometers of land
but produce 5.1 GWh of low-carbon electricity annually, about 53% of the
articles assumed Bitcoin mining consumption of 9.6 GWh (which is = 1.1 GW x
8760 hours/year). Whether construction of the dam will be cancelled or
resumed, the decision will be controversial! (The decision will be announced
before the end of the year).

In summary, bitcoin mining from renewable energy sources is desirable, but
bitcoin mining (and all other forms of computing) will always have some
negative impact. That is something we need to be aware of.

------
nate_robo
Slightly off topic but would it be an advantage to use a low energy miner such
as a Raspberry Pi as a bitcoin miner, or would that just be a waste of time
and yield fractions of a cent / a cent per day? Admittedly little knowledge on
bitcoin mining

~~~
OfficerGuac
Bitcoin is usually mined through mid-to-high end graphics cards. People
running a pool of 6-7 of these cards per machine are seeing diminishing
returns, so using a Pi wouldn't cover the electricity needed to keep it
running.

~~~
symmetricsaurus
Bitcoin is mined using ASICs, and not GPUs.

But, it’s true that mining using a raspberry pi would not be very useful.

------
robin_reala
_Its base reward (currently at 12.5 Bitcoin per block) will half every four
years, until it reaches zero._

That’s not how halving works.

~~~
Xophmeister
BTC is discrete, to 8dp, rather than being represented by rational numbers, so
eventually it will reach zero from rounding.

------
matt_wulfeck
When a handful of people control 40% of your market: it’s not decentralized.

When you consume more energy than your house does over 1 week to make a single
transaction: it’s not efficient.

When it takes hours or days to settle: it’s not fast.

So what is bitcoin, anyway? From what I can tell a way for people to get rich.

------
Sujan
> It is also easy to make this number look very small:

Most of these comparisons sounded pretty identical to the ones from the "If I
had the intention to lobby for a ban of Bitcoin mining, I would use references
like the one below" list to me.

------
phoyd
digiconomist has a more "realistic" estimate by including real world factors
like cooling costs, the operation of older, but still profitable hardware etc.
into their balance sheet. Their number is 32 TWh over the year (vs 9,6 TWh in
the article above)

[https://digiconomist.net/bitcoin-energy-
consumption#assumpti...](https://digiconomist.net/bitcoin-energy-
consumption#assumptions)

Also, their yearly estimate was only 26 TWh a month ago. If we project this
into the next year, then we'll end with 130 TWh at the end of 2018 - or
roughly 40% of what the UK consumes.

------
patsmith
Take your best guess when Bitcoin will fall of the cliff:
[https://twitter.com/BitcoinPlunge](https://twitter.com/BitcoinPlunge)

------
em3rgent0rdr
Can also utilize the waste heat...by selling a miner as a "heater that makes
money".

------
Canada
Looks like the HN domain name extraction rules need an update for .hk

~~~
cesarb
The current public suffix list
([https://publicsuffix.org/](https://publicsuffix.org/)) already has org.hk as
a suffix, so HN might be using an outdated version of the list.

------
yonatron
"Stellar maintenance entities, are those pesky Star-beavers ruining your
convective zone? Do their hydrogen dams constantly clog up radiation from your
photosphere? Never fear! With new extra-strength Dam-begone, your star will
shine as brightly as 4 galactic years ago! Stay radiant! Stay prominent! Don't
wait. Get Dam-begone this rotation! Operators are standing by.". - (I think
you might have meant "hydroelectric generator dams")

------
gtrubetskoy
Another aspect that is frequently overlooked is that keeping bitcoin requires
no energy at all (literally you can write the key on a piece of paper), and a
transfer (not considering the mining aspect) requires very little as well (it
can be an SMS message).

Contrast that with the all the office buildings (e.g. Manhattan) and computer
systems required by banks, ongoing. The banking industry has google-size
datacenters as well, they just don't like to talk about it. As well as the
energy to print the paper/plastic cash and all the statements, etc. It is very
difficult to estimate the true energy consumed by fiat, while bitcoin energy
is in the hashrate, and that's pretty much it.

~~~
6d6b73
You don't need banks to store cash. Bitcoin without electricity is useless,
cash on the other hand is not.

~~~
gtrubetskoy
But you _do_ need banks to store cash. And the bank better have a secure vault
and security guards and cameras and all that.

An elliptic curve key, which is what possession of bitcoin is, is just a large
number. To send a bitcoin you need to create a "transaction", and in fact the
only aspect of generating a bitcoin transaction that requires energy is the
SHA calculation, not something you can do in pencil, the EC math is actually
simple enough that a computer is not required.

Also your argument that cash does not require energy does not apply to the
cashless society we have become today, when was the last time you actually
used cash? Credit cards are useless without electricity.

~~~
6d6b73
I have cash in my pocket. I'm not a bank. Therefore you don't need bank to
store cash. Simple? And I use cash on a daily basis.. We're far from being the
cashless society you claim we are.

~~~
gtrubetskoy
But you can only have so much cash in your pocket. The bitcoin private key is
32 bytes always, regardless of the amount.

For example here is the famous 37 BTC ($500,000+) donation to Andreas
Antonopoulos yesterday, this couldn't be done with cash, at least not as
seamlessly, inexpensively and quickly:

[https://blockchain.info/tx/e68ebe16e6aaa08e3f9d271ba78aaeb4c...](https://blockchain.info/tx/e68ebe16e6aaa08e3f9d271ba78aaeb4ce7db01b0dc0f3b4d5eb29a14dbddf69)

------
drinchev
I don't get why journalists are not writing about the criminal side of
Bitcoins.

Lots of "users" ( not investors ) interested in Bitcoins are actually .onion
sites or other shady / crime organisations.

They actually don't care for human life and I doubt they will care for
electricity consumption.

~~~
zaphar
Honestly Bitcoin is probably an improvement for law enforcement. Cash is more
anonymous. Bitcoin is completely public and traceable while in the network.
And the moment you pull it out of the network you are connected to a real
world entity.

