
What Happens When Bitcoin Miners Take Over Your Town - tuna-piano
https://www.politico.com/magazine/story/2018/03/09/bitcoin-mining-energy-prices-smalltown-feature-217230
======
gascan
_for comparison, even the high-end estimates of bitcoin’s total current power
consumption are still less than 6 percent of the power consumed by the world’s
banking sector._

Indeed, congratulations Bitcoin. You are able to process 2.3 transactions per
second using only 6 percent of the power of the _entire worldwide banking
sector!_

    
    
       * VISA: 2,000 transactions per second
    
       * ACH: 800 transactions per second
    
       * MasterCard: 3,000 transactions per second (?)
    
       * NYSE: Who even knows?
    
       * Etc...

~~~
ryanlol
Who cares? Bitcoins power use is hardly linked to it's transaction rate.

~~~
annabellish
Indeed, transaction rate at bitcoin's highest points has been very low. Power
usage is strongly correlated to price, while price isn't correlated to...
anything.

~~~
tim333
Price is correlated to power usage. There's an odd sort of feedback loop where
a rising bitcoin price causes more mining which raises the price of bitcoin
and so on exponentially.

You may ask why not just walk away and let bitcoin return to zero but there
are a large number of people in the mining industry and similar with
incentives to promote and prop it up.

------
ipython
All I can think of while reading this story is... this must be what the Rapa
Nui must have felt like as they cut down the last tree on Easter Island to
erect even taller mo'ai (statues)

I always wondered how such a clearly talented and advanced civilization could
paint itself into a corner. Now I guess I understand.

~~~
pakitan
Someone said that's the solution to Fermi's paradox - every sufficiently
advanced civilization eventually spends all its resources on cryptocurrency
mining :)

~~~
jorvi
Funny, but it actually contains a sliver of truth. There is a theory called
‘The Great filter’ that tries to explain the Fermi paradox. It basically
posits there is some almost insurmountable barrier that must be vaulted for a
species to become spacefaring. Whether that barrier is behind us (the
evolution of intelligent life) or ahead of us (no idea what, avoiding
interplanetary warfare possibly?) has not been conclusively theorized.

------
nathanaldensr
What a sad, sorry state we as a species are in when energy is used for such
purposes. Greed does know no bounds.

~~~
andrepd
As opposed to: gold/silver/diamonds mining (greater energy _and_ human cost),
arms manufacturing (orders of magnitude larger industry), etc. Why single out
bitcoin (which is actually offering a useful service that critically needs PoW
to work)?

~~~
wffurr
Clearly the parent doesn't believe Bitcoin to be a useful service. I agree
with you that precious metal mining and arms manufacturing are _also_ not
useful services, except insofar as some precious metals are used to make
useful things.

I think it's fair to say "Bitcoin is wasting energy" does not necessarily
imply other useless things don't _also_ waste energy given that this whole
conversation and article are about Bitcoin.

The fact that huge sums of money, energy, and human time is _also_ wasted on
arms manufacturing doesn't make Bitcoin mining somehow a good thing.

Your kind of argument is called "Whataboutism":
[https://en.wikipedia.org/wiki/Whataboutism](https://en.wikipedia.org/wiki/Whataboutism)

~~~
andrewla
The argument being challenged is a comparison -- "... is used for such
purposes" that clearly make the point that this purpose is a bad one. That is,
the argument is "this use of energy is worse than most others".

It is not specious to confront the argument head-on. If someone says "I am the
strongest person in the world" and you say "what about that guy over there",
you are not engaging in a useless rhetorical device, you are making a valid
counterpoint to the original point.

~~~
wffurr
Except that it's not a comparison, it's a statement about Bitcoin, not those
other things, which is the key element that makes it whataboutism instead of a
valid counterpoint.

Bitcoin mining is wasting energy.

Other potential uses of such wasted energy include _not generating it in the
first place_.

------
gunnr15
This is happening north of the boarder as well, but not just with Hydro power.
Because natural gas prices are so low ATM, you are starting to see long-term
Power Purchase agreements for sites in Southern Alberta. I can't see any
reasonable argument for putting more carbon in the atmosphere for such a
speculative asset/business model.

~~~
dmm
> I can't see any reasonable argument for putting more carbon in the
> atmosphere for such a speculative asset/business model.

I can't see any reasonable argument for putting more carbon into the
atmosphere for heating mcmansions, driving trucks as a passenger vehicles, or
maintaining a perfect lawn, but other people seem to disagree.

The problem is that the cost of carbon release is too low. If we internalized
the carbon externality with a carbon tax it would give people the pricing
information they need to make good decisions.

~~~
giarc
Alberta has a carbon tax.

------
onychomys
The most surprising thing in that article is that for a new mine to be
profitable, it will require more power than an AWS data center. Like, how is
that even possible?!? That's amazing!

~~~
blattimwind
Amazing in a really bad way. I can't wait for fake internet money being killed
off.

~~~
bringtheaction
There exists other means of achieving consensus in blockchains than the power
eating monster that is proof-of-work [1]. For example, proof-of-stake [2].

We can have our fake internet money and be environmentally responsible too.

[1]:
[https://en.bitcoin.it/wiki/Proof_of_work](https://en.bitcoin.it/wiki/Proof_of_work)

[2]: [https://github.com/ethereum/wiki/wiki/Proof-of-Stake-
FAQ](https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ)

~~~
moccachino
This is interesting. How would people acquire coins in the proof-of-stake
model?

~~~
jdiez17
Same way as in a proof-of-work blockchain. Miners (validators) receive the
transaction fees plus some number of coins per block that is included in the
chain, but instead of anyone being able to mine a block (and thus requiring a
very high difficulty), only nodes that have a large number of coins frozen
(the stake) are allowed to publish new blocks.

~~~
moccachino
Ok, so coin holders are allowed to validate transactions between other coin
holders, and for that they get more coins.

But if I have no coins, I have to buy them from a coin holder with another
form of money.

So this system would require the original issuer to be someone that you trust
and have a reason to do business with in the first place right? So it's kind
of like banks and central banks today?

I realize ICOs by startups are a thing but I kind of want to just ignore that
whole phenomenon... I don't own any kind of coin and don't understand it well
enough, but this seems to me to be a technology that will eventually be very
useful.

~~~
jdiez17
You do need to trust the validators in a PoS scheme, but with PoW you also
need to trust the majority of miners.

------
kfk
It's worth pointing out that compared to other "useless" products of us humans
like diamonds etc. bitcoin is rather ok environment wise. Green electricity
goes up and down and can't be stored so bitcoin is a good way to create some
"value" as those guys in the article are doing.

On the value side, "trust" is one of the most expensive commodities on earth.
More "trust" creates more opportunities for business. Think if you could not
trust a $1 bill to be exchangeable for some product. I think if you look at
crypto as a way to increase trust in whatever area, you can start to see the
value. Think of it in terms of Nash equilibrium, like a prisoner dilemma where
you can "trust" your prison mate and both get more value out of collaboration.

~~~
gowld
But _does_ bitcoin create trust? It's a highly volatile currency. Maybe it's
better than the Zimbabwean dollar, but it's not a foundation for the world
economy.

~~~
kfk
At the moment of writing there is $394B worth of "trust" in the crypto coin
markets. Before you say it's speculation, let me point out that speculation
still operates on trust: the trust of exchanging coins on the market, the
trust the blockchain would not lose their transactions, etc.

~~~
user5994461
There is no dollar amount attached to bitcoin. The moment a fraction of the
coins are being sold, the exchange rate will drop dramatically.

Not to mention that a vast portion of the coins are probably lost in forgotten
wallets, while the rest is in the hands of the early investors who will never
sell it to not drop their value.

------
vinhboy
As someone who mined bitcoin at home before, stories like this is the reason
why I don't advocate for bitcoin. This is a slap in the face of a
decentralized system.

When I stopped mining a few years ago, almost half of bitcoin's mining power
was coming out of China.

I don't know how hardcore bitcoiners live with this contradiction to their
ideals.

~~~
lukifer
This is why I think Proof of Stake is destined to outcompete Proof of Work.
The costs are drastically lower in both electricity and hardware; and in
practice, PoW is basically PoS with extra steps.

------
thisisit
As much I empathize with the people in Eastern Washington this one is similar
to any other stories out there like "This is what happens when X take over
your town" and x can be Walmart, Amazon HQ, or any other big company.

Things like price increases follows as people start moving and most of the
time smaller towns are not equipped to handle the influx.

~~~
walrus01
Bitcoin mining has by no means "taken over" Wenatchee and East Wenatchee. If
you go there and drive around what you'll see is ordinary businesses, fruit
warehouses, huge numbers of fruit farms, etc. And then the datacenters which
are in East Wenatchee and Quincy.

It's just a weird aberration of people setting up super cheap facilities for
ASIC mining that need huge amounts of electricity, but very little network
infrastructure. Compared to the Sabey and Vantage datacenters an Ethereum mine
needs only a few dozen Mbps for a WAN link, at most.

------
klondike_
The more I read about it the more Bitcoin reminds me of the California gold
rush.

Bitcoin's current price is based on pure speculation, it's useless as an
actual currency at the moment. What happens to places like this when the value
crashes?

~~~
freejulian
Why do you think it's useless as a currency? I've noticed "We accept bitcoin"
signs more and more frequently. I've also used it to pay friends who live
abroad. I don't think you've actually ever used bitcoin but apparently you
have plenty of opinions.

~~~
dvlsg
I've seen companies dropping support for it more and more frequently, too.
Stripe, for example.

~~~
freejulian
Wow, you named one. Congrats. I'm referring more to small businesses. To name
a few I've seen: A bed and breakfast I stayed at in Tulum, a cellphone repair
shop not far from my home, a small theater also near my home.

Bitcoin has better characteristics than the USD. If people continue to see
that, it'll succeed. There's of course an element of speculation when buying
bitcoin -- I'm hoping other people see value in a currency which can't be
manipulated by governments, can't be confiscated, can't be censored, has a
known supply, can transfer instantly anywhere in the world, and anyone can
open an 'account' with.

To quote Julian Assange: "Bitcoin is the real Occupy Wallstreet".

~~~
WorldMaker
Stripe is an entire payment network, which means many websites lost Bitcoin
support when Stripe left. It's a bit more than just "one".

I think Steam dropping Bitcoin support is a particularly useful canary as
well. Valve said that the usage they saw of Bitcoin was relatively high (a lot
of people invested in Bitcoin like videogames, to no ones surprise), but the
exchange volatility and increasingly slow transaction times got to be enough
that Valve was more often than not losing too much money on purchases by the
time Bitcoins were exchanged for USD.

------
wyldfire
> ... Carlson suspected that many of these stalwarts were probably doing so
> irrationally ... others had found a way to making mining pay.

> ... separated these survivors from the quitters and the double-downers,
> Carlson concluded, was simply the price of electricity...knew that if he
> could find a place where the power wasn’t just cheap, but really cheap, he’d
> be able to mine bitcoin both profitably and on an industrial scale.

Is the electricity cost really that significant when compared with the
amortized cost of the mining equipment itself?

Lo those many years ago that I looked into mining, it was marked by extreme
risk. New ASIC designs would emerge that would obsolete the old ones.
Retailers would have extremely long and unpredictable lead times for new
equipment. You could bet on the wrong manufacturer and end up with no product
or late product, which would arrive after your competition delivers a
difficulty increase.

I would wager that this system finds equilibrium marked by optimism, such that
everyone has at least a minimal net operating loss. But maybe if you get on
the leading wave of ASIC production somehow you can stay ahead?

~~~
Animats
Bitmain is already at 10nm Bitcoin ASICs. That's the commercial state of the
art right now. 7nm fabs are just starting to come on line.

------
gowld
The article barely touches on a strong solution to this problem: Charging (a
lot) more for high marginal electricity use. The local power authority can
extract most of the value of mining.

~~~
Nazare
That is basically anti-net neutrality, but for energy, instead of information.

Why should I pay more if I use my laptop for mining crypto, instead of playing
the latest AAA video game on the highest settings?

~~~
wyldfire
For some reason, it seems that lots of people find cryptocoin mining amoral.
It's pretty unclear to me how they got there, but I can only guess that it's
something like "free money" or a "get rich quick scheme." To think that I
think is to discount the capital and operating expenses, to say nothing of the
risk taken on.

~~~
s73v3r_
To me, it's the fact that all this power, all these computing resources, are
basically being thrown away. Nothing useful is done with the computational
power. If it was doing something like folding proteins or otherwise using that
computational power to better humanity, then it'd be different.

~~~
wyldfire
It's really not, though. It's just associated with something that "seems
greedy". I could argue that "nothing useful is done with the computational
power used for playing video games or watching and producing films." I could
argue that, but I think that line of reasoning suffers the same way yours
does. It requires a value judgment and you think that the cryptocoin eco
system has no value.

Cryptocoins have tremendous value for remittances alone. We can argue whether
it's optimal allocation of resources and I think that is a healthy debate.
Mining is required for trustless, decentralized currencies with provably
equitable distribution. But we could probably forfeit some of the latter and
eliminate the proof-of-work entirely (in fact it's already been done). Another
option is to make the proof-of-work of greater independent utility from the
transaction itself (also has been done).

------
skybrian
I wonder why the price of electricity there doesn't go up? It's not like they
can't find buyers for it.

~~~
Nazare
Because miners would move to places where the electricity is cheap.

In theory you could always keep raising the price of electricity, because
everybody needs to buy electricity to keep the lights on.

You can't have your cake and eat it too. You can't become a tax haven for
international companies either, and then raise those taxes when you have some
customers.

~~~
skybrian
This doesn't explain why not.

~~~
Nazare
Because long-term you'll end up with a situation, where your special
profitable customers leave for greener pastures (those willing/able to pay
higher fees) and your base customers can't or won't afford it.

Short-term they can make some money raises the prices, until supply-demand
equilibrium is reached again. But then you shoot yourself in the foot for the
long term.

~~~
s73v3r_
But your special profitable customers aren't paying anyway.

------
miesman
[https://www.electricitylocal.com/states/washington/east-
wena...](https://www.electricitylocal.com/states/washington/east-wenatchee/)

------
wyager
ITT: “The vague notion of ideal resource allocation I’ve come up with after 15
seconds of thought is the correct one.”

~~~
Nazare
One could probably intellectually power a small third world country, if one
rerouted all the mental energy that went into deriding Bitcoin's energy
consumption into something useful (like getting more people to click on ads,
HFT, or random gridsearch for GPU deep learning on MNIST).

------
jbob2000
This sucks. Poor people have trouble paying electricity bills. In come the
bitcoin miners, who drive up the cost of electricity, causing the poor to fall
behind on bills and potentially become homeless. All so they can drive a fancy
Land Rover.

Fucking stupid. This gold rush needs to die.

------
awt
If Bitcoin succeeds, it will consume 51% of the earth's energy supply. If you
want to claim this is bad, you will need the support of some sort system of
universal ethics.

~~~
ncallaway
Your argument tries to set a trap for anyone responding, by forcing a debate
on moral relativism.

So, let me counter with this question: If we presuppose we can't label
anything "bad" without settling that debate, then is murder "bad"?

If you think murder cannot be defined as "bad", then why have we outlawed it?

~~~
awt
> Your argument tries to set a trap for anyone responding, by forcing a debate
> on moral relativism.

True.

> If you think murder cannot be defined as "bad", then why have we outlawed
> it?

The original comment has already been downvoted and is on its way to becoming
invisible, so I see no point in having the debate.

[EDIT]

Or for that matter, I don't see the point of taking any unpopular position on
HN.

