Bitcoin however is money. As well as being a payment system.
The correct comparison would be to compare the cost of Bitcoin to U.S. dollars or gold. Gold requires hundreds of dollars per ounce and untold energy to extract. U.S. dollars require the existence of a powerful economy and trillion dollar military to keep the currency secure and desirable.
Also these articles fail to mention that volatility is quickly decreasing, thanks to increasing market depths: https://mobile.twitter.com/lsukernik/status/8649208737189519...
Is it 10%,50%,or 0.001%?
Because there's risk, it fluctuates, there's no guarantee it will always go up. People need to decide to what degree do they want to invest and be exposed to the risk and reward. Say someone decides they want 1BTC of exposure, and are contemplating buying an item of 0.01BTC. Would that really be a big deal? Small changes in the degree of exposure shouldn't be a financial problem to worry about.
Plenty of the bitcoin true believers have.
Everything you're talking about makes sense for investing in a commodity, not for a currency.
No it isn't- the energy cost of bitcoin is ongoing and depends on the volume of transactions. Each time money changes hands, it costs energy to verify it. Comparing it to VISA or ACH makes the most sense, because those also incur ongoing costs per transaction.
Volume or value of transactions has nothing to do with the energy expended.
The energy is needed to calculate a mathematic proof that makes sure your transaction cannot be reversed or tampered with.
This mathematic proof on average is calculated every 10 minutes, with no correlation to the number of transactions.
You make a transaction, and if the bitcoin network has expended 1TWh after you sent it, at least 2TWh are needed to reverse that transaction (and/or any other transaction). You can see how over time it becomes impossible, even with unlimited money, to reverse one.
The energy increases with the volume of transactions because there will be more people calculating hashes. The more people mining, the harder they make the hash calculation so that the target is ten minutes. More transactions = more people mining because there is more demand to verify blocks.
Transaction number is not correlated with mining energy expenditure.
Mining is used to secure the ledger in a way that the same amount of energy is needed to alter it.
The block hash begins with a number of zeros.
Try for yourself how many tries it takes to find a string that hashes to a hash beginning with 3 zeros.
Bitcoin block hashes begin with 13 or 14 zeros IIRC. This means that you need to try trillions of combinations again if you want to alter a block. And then you must keep finding other hashes with enough zeros fast enough to outcompete the whole network.
But the cost of hashing is the same, with 1, 10 or 1000 transactions in a block. And the block time is on average fixed at 10 minutes.
You don't hash transactions directly, you hash a block header that keeps only the merkle root hash of the transactions. The merkle root is fixed size.
You're only kind of right. The mining algorithm cares not one bit about number of transactions, so higher tx volume has no direct effect on the mining energy expenditure. But it does have a second order effect.
More transactions usually entails higher fees (as people compete for block space to put their transactions in). More fees means higher mining rewards, means higher incentive to mine, means more mining activity, and, therefore, higher energy expenditure.
Actually it does to some extent because the transaction hashes are used to calculate the block header hash.
Did i get this wrong?
Numbers i said are my guesses, but the order of magnitude should be about that.
I don't remember exactly how many hash ops you have to do to put 1000 txes in a merkle tree, but it should be more than 1000 and less than 10000.
My point was exactly that. Computational cost of the merkle tree is negligible when confronted with the computational cost of the POW
But, it gets worse simply maintaining value takes hashing power to avoid a bad actor double spending and destroying faith in the system. Thus, even as a value store you need to pay for large scale hashing.
If you mean that over time the incentive to centralization become stronger, yes, you are right.
There must be competition to enter the blocks, otherwise when mining subsidy ends, there will be no incentive to secure the ledger.
If you mean that ten times the transaction have a computational cost 10 times greater (or 5, or 2), you're wrong.
> The whole point of the system is to verify transactions and it stops working if it doesn't do that.
Plenty of cryptocurrencies are mining tons of empty blocks. on the short term, if there are no transactions, mining continues with the same difficulty.
The effect is long term: if noone is using the currency for transaction, it has no value so less and less people mine it. The difficulty drops, and the security drops, pulling value down even more.
You are almost right, but it is a very indirect effect, and takes years to manifest itself.
The number of transactions is entirely unrelated to the number of people mining. There could be an increase in transactions while the number of miners falls, or vice a versa. This is why the hash difficulty adjusts, to ensure that the new block rate (and therefore the transaction rate) stays the the same regardless of the number of miners.
If the number of miners dropped, energy use would drop, but transaction throughput would remain exactly the same.
Also, transaction size (in value) is entirely unrelated to transaction size (in kilobytes) which is what effects the number of transactions that can happen. Most transactions that just transfer some bitcoin from one assess to another are exactly the same number of kilobytes
irrespective of how many bitcoin are being transferred.
I also commented elsewhere to this effect, but this is not quite true: number of transactions correlates very strongly with higher transaction fees, which further incentivises mining activity. Higher transaction volumes also usually come hand in hand with higher prices, which is another incentive for mining activity. Just because there is no direct effect (which you're absolutely right — the mining algorithm cares not one bit about the transaction volume) doesn't mean there aren't second order effects at play.
The post I replied to was claiming that more transactions strictly required more miners to process them, which isn't true. Yes, more transactions might incentiveise more miners, but it doesn't require them. And it's only one part of the complex interplay of incentives that miners face.
Say price dropped sharply, that could result in an increase in transactions as speculators scrambled to get their coins to an exchange to sell, while at the same time we might see a drop in miners because with lower bitcoin priced there is less payout for mining.
Ultimately the sequence of incentives and disincentives that drive miners is complex. Because of course, although a drop in price might deter some miners, if others believed that the drop was only temporary may continue mining and just hold the bitcoin to sell later when the price recovers. I think it's hard to say anything totally concrete about the expected miner behaviour following any event.
I knew it was wasteful, but this article is really putting it into perspective. And because of the proof-of-work system, the wastefulness is intentional; you have to prove you've wasted enough time and energy to be allowed to mine a bitcoin.
And, the high value transactions tend to dictate the value of the whole system. Not every transaction is equal in that regard. If all the high value transactions were to move to another system, the coin price would plummet, and so would the amount of energy required to mine blocks, and thus the 'per transaction' cost for low value transactions would plummet.
The right way to think about it is that we spend around a billion dollars per year protecting $70 billion in assets. Put that way, it doesn't seem so bad.
If you look at the percent of the US GDP spent on military defense, you'll see that bitcoin is quite attractive by comparison.
If the entire monetary system of the US were replaced by BitCoin, do you think there would be no need for an army? Would the block ledger be "protecting" all the actual physical assets, land, and people?
You can argue over whether the US should have a military, or its size, but to imply that it's just to protect the dollars isn't going to sway anyone in an argument.
I did not mean to imply that bitcoin could replace the entire military, only that the ratio of spending vs. assets defended is better.
The total value of the United States, all assets, private and public, is closer to $250+ trillion . That's a 1:400+ ratio.
US household assets alone are near $95 - $100 trillion at this point . That's a ~1:160 ratio just for household wealth.
You missed by an extreme amount in your speculation and that's just based on present value. If we were going to be rational about it, we'd want to consider that present military expenditures help to keep safe future value creation (I'll note that I'm not arguing whether those expenditures are $n too high or too low).
It's a hard number to measure. Bitcoin inflation has a fixed measurable cost though (12.5 coins per 10 minutes), if that's acceptable to you for the benefits you get, then it's money well spent burning electricity.
This is another point where BECI is misleading... the author managed to screw up so many things on his site :-(
Feel free to transact more. This will NOT consume more energy, as explained by many other commenters. The energy per transaction decreases as more transactions are processed, see argument #5:
Care to share a source for this claim? I think you might have gotten transaction and new block generation mixed there, but I may be wrong, of course.
Wait, what? That's not correct at all.
The energy cost is based on the "difficulty", which is derived from the moving average of the hashpower in the network. Bitcoin effectively forces the network to take a specific amount of time to mine a block irrespective of the number of mining nodes. The transaction volume has nothing to do with it.
You can look at the current Bitcoin energy costs as the startup cost to establish a new gold mine or a new country with its own currency.
In that future you will still mine blocks, but there won't be any new bitcoin generated in that block. Sure, you might want to use a different word for that than "mining", but it will still have very real and significant energy.
Bitcoin will probably look extremely different by then, so most bets are off anyway.
If mining becomes less profitable, fewer people will mine and the proof-of-work will tune to be less difficult, but the cost never disappears and there's still a huge amount of energy wasted in the selection process for adding blocks. If too few people mine the currency will be totally destabilized.
A valid comparison. Gold mining is spending resources to increase the amount of gold in existence, without delivering any other value.
> U.S. dollars require the existence of a powerful economy and trillion dollar military to keep the currency secure and desirable.
Not a valid comparison. Outside of a few relatively inexpensive activities at the US Mint and inside banks, no resources are being spent specifically on increasing the money supply. The value of the dollar is the byproduct of economic activity that exists primarily to achieve other things.
Bitcoin mining exists to timestamp transactions so that the network can achieve consensus on the state of the ledger. It is designed to use as much energy as possible, so as to make it expensive to cheat.
Bitcoin is not money as we think in a modern way. If you think of money a way to exchange goods then yes Bitcoin is money.
Modern money (printed piece of paper labeled in currencies in its materialized form. Just a sequence of digits on your bank account) is dept. That's why currencies have interest rates (IR). It is also possible to create money out of nothing.
IR and volume are adjusted according to the economy. Bitcoin is closer to a commodity in the sense that it is finite and requires work to be extracted.
Bitcoin could be forked in the future to become inflationary. It has no permanent rules, things can change through consensus.
It isn't like gold (gold can be devalued through poeple losing faith in it, etc., but the supply of it doesn't inflate other than through discovery/mining).
If rules are changed by a fork then you will have 2 different coins. We already saw it with bitcoin cash. Another way would be that the current consensus on Bitcoin itself changes. But that's a risk. How can people then predict such a consensus change. How risky is it to have Bitcoin since the day after the rules may change ?
Ecological concerns aside, this puts a bit of a perspective on the overhead costs of maintaining a currency.
Fiat currencies require a stability of power of course, which is impossible to quantify.
The gold you trade is already almost all extracted, I doubt there's 1B$ a year in gold extraction investment but maybe there is.
>U.S. dollars require the existence of a powerful economy and trillion dollar military to keep the currency secure and desirable.
All currencies require a relevant economy using them to be valuable so that's not a real requirement. As for a trillion dollar military that's doubtfull. There are plenty of currencies with the market cap of Bitcoin that don't have nearly as much of a military backing them.
New mining increases gold stock 1-2% per year, but very dependent on market conditions.
Gold has double the volatility of equities with less total return than U.S. treasuries. It doesn't really belong in most people's portfolios.
However bills cost 4.9 cents/dollar for $1 bills and half a cent per dollar for $20 bills. So the vast majority of money is much, much cheaper than a bitcoin.
Coins and cash actually get consumed as they degrade and/or get lost or destroyed. You need to replenish the supply.
But you can circulate bitcoin forever.
You need to compare transactions.
How do I send you cash? You can give me an address to meet you at. We both drive our cars or take public transit there and consume some amount of energy and time to meet up. Then I give you cash.
Or you could just tell me a bitcoin address to send to.
You have to compare Bitcoin to the concept of money, like U.S. dollars, but not literally the paper. A comparison to bars of gold is OK however since that is money and not a representation.
Bars of gold certainly are a "representation" of money. They are only worth something so long as we all say they are. (Besides the little bit of intrinsic value from electrical wiring.) If people stopped saying gold was worth anything, it wouldn't be.
Btw, you can buy pizza with gold, I guarantee someone will take your gold for pizza.
War economy also functions on gold.
Bitcoin is a payment network with its own currency. Visa is the same thing, but the currency is linked to dollars. It is the most apt comparison.
Still, let's hope Bitcoin moves away from wasting energy soon.
Blockchains can operate without all of those.
Bitcoin doesn't even try to replace contracts. Hard-line Ethereum Classic fans think they can replace contracts (they won't).
You can't use a blockchain to protect your land rights, but you can use it to protect digital rights and that means you don't need external resources like courts to spend their time on digital rights. They can focus entirely on land conflicts and other physical matters, which will make them cheaper overall.
Even if a few people in Venezuela manage to use Bitcoin (propped up by the US dollar, nobody's selling their Bitcoin for Venezuelan currency), that still easily meets my definition of a failed society.
Since I personally don't worry about centralisation and "trust", I like the idea that a system like the blockchain could be used to revolutionise payments without the need for tin foil hats and proof-of-work.
What does "exist" mean? The currency exists, but the amounts transfered over visa and other systems is not related to how much physical banknotes exist.
I haven't touched a banknote or coin in over a year. If they didn't exist I wouldn't have noticed.
You could argue that puts me in the hands of banks and visa/mc and you'd be correct. They know more about me than I'd like. But I hope the energy cost of my transactions are pretty low. More and more stores no longer accept cash, meaning they have no transports for cash.
The currency I use is not backed by a large gold reserve nor a huge military. Just a regular national bank of a small country.
So visa isn't money, but a central bank, commercial banks and visa can maintain a currency without the need for a lot of physical money, and hopefully with reasonable energy use.
All-in sustaining costs for mining an ounce of gold (worth $1,293.70) is between $1,100 and $1,200.
and the author of that has specific criticisms of the BECI calculation:
Also note that BECI overestimates the consumption: http://blog.zorinaq.com/serious-faults-in-beci/
(If Bitcoin didn't exist, the hydro power would still be there and would be used for something else, therefore less fossil fuel would have to be burned in its place.)
That's not a good assumption. There are many power plants in China in the middle of nowhere unconnected to much. It's completely plausible that the entire bitcoin network could run on clean energy that otherwise couldn't be used for much else because it's too remote (geothermal in Greenland or something).
All this outrage is misguided, the market incentives mean miners go to where the cheapest power is, all the industrial scale mining is located next to large renewables sources in China, Pacific NW, Scandanvia/Iceland.
The largest ethereum mine in the world is 100% renewable.
Generally, to have a useful PoW, it needs to meet some criteria:
1) Easily verifiable
2) Necessary work on the problem is easily quantifiable and estimable
3) Problem can be programmatically generated from random data.
One model might be NP-complete problems. Users feed in problem instances they want solved, with a bounty. You find out how many guesses it should take. A valid proof of work then requires solving enough such problems, combined, to exceed the difficulty threshold. (You'd also need to solve one based on the current known transaction history.)
The problem there is that it's hard to know if a given NP complete problem instance is "one of the hard ones" and to find such instances.
It would be great if it ever became profitable to mine this.
Blockchains only work by probably wasting in order to build a history. If you aren't wasting, then it wasn't expensive to build the history (it was subsidised), and it wouldn't be expensive to build a different history (that one could also be subsidized)
It's possible for something to provide a social benefit but not make sense for anyone to pay for as a for-profit business because others would get the same benefit and free ride off them. (Hence the problem of public goods in economics.)
So if the proof of work is only solving some general research problem, then it might not be feasible to double dip like you've described. That's why primecoin was able to avoid the problem.
I've seen partial schemes for this, but no complete ones that would justify implementation. If a full and workable scheme could be devised, I would bet on it replacing sha256 based proof of work, eventually.
Edit: See my here for a model of how NP complete problems could fill the role of you could predict difficulty in advance. There wouldn't be double dipping because the person wanting the answer wouldn't pay both bounties.
My unprovable guess is that any other non-sellable problem will ultimately have the same outcome. It's interesting and useful for a bit, but when you have a billion dollars of hardware grinding nonstop for years in a row, you eventually exhaust everything interesting about the original problem and then it's back to the same waste you started with.
If you attack the network you can steal billions - so if you have that much computing power available for your useful work, you can temporarially use it against the block chain.
As long as that mining power is available anywhere the chain isn't secure.
If a transaction is confirmed by 1 TWh of proof of work, that much energy is required to alter it, meanwhile the bitcoin network has expended even more energy.
It is still young, and the exponential growth in energy consumption is going to stop as an equilibrium is reached.
I don't see how your analogy applies.
The difference being that a bitcoin does not entitle you to some unit of energy or work produced from it. The energy used to verify bitcoin transactions is just lost.
Energy ensures bitcoin's ownership, not its value (although it does impact its value indirectly).
Thats about $20 in the US.
If a transaction is that expensive, how can this system even work for transactions with a value of that order? Are large transactions "sponsoring" small transactions?
What happens if more people use the system for small transactions? Will BTC become unusable?
Put another way, this is saying it is estimated to take about $800M it keep $40B of bitcoin secure.
This is probably a bit expensive in terms of comparing to fiat currencies (But then we are probably not covering all the real costs of those currencies)... but bitcoin is still in the technology adoption life-cycle and has not yet become a currency.
When the inflation of BTC has declined and it has become fully adopted (assuming this happens) then the numbers will likely start to make a lot more sense.
Also, the vast majority of transactions in about 2 years will likely be happening off chain using lightening network and the like.
Those transaction fees will happily be covered by merchants who are currently paying %2-%5 per transaction to Visa et. al. and will be more than happy to pay %1 or less to Bitcoin to manage a lightening channel.
Really, it will be companies disrupting Visa building payment networks out of lightening channels and they will have to keep fees really low because LN is open source and anyone can compete with them.
This doesn't mean that merchants wouldn't switch to a lower-cost payment system if it were available and there were enough customers using it, but it does mean that you can't just assume that Visa, et al, would not lower their prices if they felt the competition was serious enough. What their actually cost is, in such a circumstance, is harder to say. Their basic payment processing cost is probably quite low, even accounting for the people who maintain it, but they also provide fraud protection and frequently kickbacks to customers (cash back, airline miles, points); whether they could switch to chip-and-pin exclusively (in the US) and severely curtail kickbacks while still offering a desirable service to customers as well as merchants...
[Their credit services are presumably well-funded through their high interest rates.]
People holding bitcoin are essentially sponsoring all transactions, if you want to look at it that way, because miners are making money both from fees and from new bitcoin that is created, which dilutes the value of all existing bitcoin.
Electricity price in the US is also irrelevant. As the article shows just over 0% of blocks are mined in the US, or a rounding error. Bitcoin mining chases cheap electricity.
Sure China and Ukraine is cheaper but not that much.
I'm hoping someone more knowledgeable about bitcoin can comment - is it likely that this will continue as the mining reward decreases? How expensive will transactions be after that happens? And if smaller rewards reduce total mining and power consumption, how vulnerable does the blockchain become to attack?
What i'm wondering is if transaction costs in the 'end state' of bitcoin can be competitive with centralized competitors like credit cards, paypal, etc. given this level of power consumption?
I'm hoping someone more knowledgeable
about bitcoin can comment
bitcoin can be competitive with
centralized competitors like credit cards
If there will be a cryptocurrency that can handle as many transactions as Visa, it will be something else then what we currently call Bitcoin.
It's kind of insane if you compare to other payment services (if that's how you use BTC). Not only do you pay $5-$10 per transactions, but that transaction also consumes 20,000-30,000 times more energy.
As the network grows, the demand for transaction grows too. The fees will not increase because the reward decreases. Simply miners will stop mining as it is no longer profitable. But this will happen in 2090-2140. So it is very far.
I think in the future, lightning networks and centralized wallets will be the way to go. The blockchain will be used by only a few big guys and transaction costs will be over $100/tx.
The reason for the recent Bitcoin Cash fork, was that miners are terrified of losing control given the substantial investment required to maintain profitability. I don't think Satoshi ever thought mining would become so profitable, centralized, and political. If Satoshi had, he or she may have rethought the mining aspect of Bitcoin.
It's the end of days for mining as we know it.
POS will not work. you need to back Bitcoins value with something, and its electricity. Gov backing with gold.
PoS will succeed. It already has, we've set all the pieces. The thing is, you don't want to live in a world where Bitcoin and PoW dominate our financial transactions. That world is not livable.
Bitcoin transactions are secured by spent electricity. PoS transactions are secured by cryptographic signature schemes and reputation of operational security. It's how the world already functions, just more replicated.
Proof of Stake systems have no equivalent. They operate by trusting the staking parties are not colluding to create an alternate history. But if they do decide to collude, there is little thermodynamic cost to rewriting history.
It's a fundamentally weaker system, and one that depends on trust. The whole value of proof of work is that it allows you to escape trust.
In a proof of work system, even if you collude you still have to spend a non-trivial sum of electricity to create that alternate history. Electricity that would be making you money via the block reward if you were using it honestly.
It is provably more expensive to reconstruct history in a PoW setting, even when everyone is happily colluding.
In such an adversarial environment proof of stake even has advantages over proof of work. If in a proof of work system a majority of the network starts to double spend or censor transactions, what can you do? You are essentially powerless because any fork (that tries to fix their malicious blocks) can be quickly taken over by the colluding miners. However in a proof of stake system you could simply fork once and destroy/invalidate all the tokens of the malicious miners.
Rewriting a year of history in a proof of stake system takes a couple days on consumer hardware. Rewriting a year of history in Bitcoin is going to require burning a literal hundred million dollars of electricity, if not an order of magnitude more.
In a proof of stake system, typically less than 30% of participants by coin amount actually do the proof of stake. And that's for systems that don't require you to bond coins for months. Exchanges frequently control that many coins. And if an exchange abuses their power, are you going to burn the coins of every single person using the exchange?
It gets worse than that though. You don't need current coins to attack the system. You only need old keys of coins that you sold. After you sell your coins, why wouldn't you sell your keys to an attacker too? If the attacker is paying for the keys, and you sold the coins anyway, there's nothing to lose for you.
Or an exchange can rotate their coins to new addresses and use the old coins to attack the system.
Pow is really an incentive system to keep selfish miners flocking to one chain, by making betting on one chain more profitable than betting on lots of chains at the same time.
The PoS challenge is to do the same without the egregious amounts of wasted energy, by making miners bet their money directly, instead of indirectly through their computers and electricity.
There is absolutely a thermodynamic cost to reversing a transaction in bitcoin. Having the miners run an alternate client doesn't change that.
The fact that real world energy is expended is the thermodynamic guarantee of the irreversibility of a transaction.
If you have access to the VISA database, and change something, you cannot have the cryptographic proof that it has not been tampered with. At the very best, you trust a VISA root key.
With Bitcoin you trust math and physics, telling that if the whole network has expended 1TWh after my transaction, at least twice that energy will be necessary to reverse it, and the only data i need to prove that, is the blockchain.
Surely even fans can agree there's a level at which it just doesn't make sense any more.
First people try to argue that all this gigantic energy expenditure "buys" security.
And then – in the fine print – you are learning that you don't actually "buy" security, you have been sold a subscription. This gigantic waste of energy doesn't do anything unless you follow up with even more energy.
So the calculations that x amount of energy "secures" y amount of economic value is flat out wrong. Because x should be x + x' + x'' ad infinitum.
Oh, and the longer you stay in, the more difficult is getting out, because "sunk cost" isn't a fallacy in this scheme, it's actually real.
Bitcoin is nearing the point where most security will be paid by fees instead of inflation, but imo inflation is the more fair model to pay for security.
I believe the bitcoin mining market is efficient enough already that we're more or less there.
It's already fixed with PoS... IMO the winner of the cryptocurrency-race will be a PoS-based coin.
Several papers have been written about it.
You also trust totally mundane things like internet resilience against phishing attacks, web browsers and other basic tools, the https standard, dns and certificate authorities, etc. etc.
Please note "The right people were online and available in IRC or could be contacted directly."
This motivated me to research and publish a more precise energy comsumption estimate, and I have been published in Bitcoin Magazine: http://blog.zorinaq.com/bitcoin-electricity-consumption https://bitcoinmagazine.com/articles/op-ed-bitcoin-miners-co...
I always like to remind people that Bitcoin miners consume about the same amount of energy as Christmas decorative lights in the US. Kinda puts things in perspective...
The second piece contains a lot of cherry picking that I asked about in these emails as well, but never got a response to (instead my emails were quote mined to support those false statements).
Nothing else to say to you. Everybody else is welcome to ask questions and discuss as usual.
So Bitcoin is constantly using more than enough power to make Doc Brown's eyes bug out.
It's the same thing.
Miners will crank whatever handle they can crank to increase their payout, up to the point where they spend more marginal effort cranking the handle than the corresponding marginal payout is worth. In PoW (in bitcoin) that handle is SHA256. In Proof of Stake, it's more obscure, but they will find it, and they will crank it, and you'll just be back where you started.
I'm not convinced PoS is a practical improvement on PoW.
 C. Decker, Information Propagation in the Bitcoin Network: http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...
This would be fatal in case of a remote crash vulnerability, because an attacker could partition the network at will.
Or a nation/state could cut internet access.
Without real world energy, you lose byzantine fault tolerance.
Some people wonder if pure proof-of-stake is even possible. Ethereum is likely going with DPOS, yet to see a single solution to the nothing-at-stake problem.
PoS can be superior to PoW in every way except the problem of initial wealth distribution. PoW solves this problem elegantly. PoS currently has no meaningful alternative to this distribution method.
What Ethereum is doing with using PoW to bootstrap wealth and then transition to PoS looks like a winning combination.
Anyone have any sense of how accurate either of those is?
Will save people time.
If you're interested in where the 60% comes from in the first place > it's based on the lifetime costs of a number of machines. It was on the page a while ago, but the index page itself isn't a research paper so I removed it. I'll give it a new spot soon, probably on this page (already containing the foundation of the method):
If you just want to see some real-world numbers, check out my break-down a farm recently:
(Note: subtle difference between part spent on elec & part spent on ongoing costs. I take costs and then 1 kWh for every 5 cents spent, so including overhead.)
It would also be useful to separate the table so that one contained the information meant to be conveyed by the index and another contained the impressive comparisons to countries and households and stuff.
In the US, "Class C" fire extinguishers work on electrical fires:
> Carbon dioxide CO2, NOVEC 1230, FM-200 and dry chemical powder extinguishers such as PKP and even baking soda are especially suited to extinguishing this sort of fire. PKP should be a last resort solution to extinguishing the fire due to its corrosive tendencies. Once electricity is shut off to the equipment involved, it will generally become an ordinary combustible fire.
> In Europe, "electrical fires" are no longer recognized as a separate class of fire as electricity itself cannot burn. The items around the electrical sources may burn. By turning the electrical source off, the fire can be fought by one of the other class of fire extinguishers .
Watching television probably uses up even more energy. And I would argue it has a negative impact on life quality. But who am I to decide what people should value?
They were outlawed for the simple reason that the problem they solved wasn't efficient compared to other ways of solving the same problem.
The same thing will happen to cars with internal combustion engines.
People may value the sound of combustion engines or the warm glow of incandescent bulbs but as a society we don't care what they value since we share the effects of externalities.
Making a Bitcoin transaction uses up hardly any energy.
The miners mine for the block reward. That is completely unrelated to transactions. They even mine if there are no transactions and generate empty blocks.
If nobody made a Bitcoin transaction for a month, the energy consumption of that month would stay pretty much the same.
Just because you don't like bitcoin doesn't make it a "waste" of energy, any more than mining gold is a "waste" of energy if you don't like gold.
Failing to account for externalities is how we get rapid ecosystem destruction (before even bringing in climate change). Those Bitcoins aren't innocent little bits on drives. They have a cost to the planet they're produced on and the life that inhabits it.
Personally, I think the answer is bitcoin.
If there was a good low energy alternative to PoW then it's a waste of energy to use that method of validation.
Like incandescent bulbs are a wasteful way of making light when there are more efficient ways.
On another note: a very large fraction of all bitcoin mining is happening in China and electricity cost there is quite different compared to the USA.
So I seriously question the prime assumption leading to the quoted energy consumption.
The reason it has not happened for original Bitcoin is internal politics. If the number of transactions are limited then they are more profitable.
Also, and more important: it is not necessary to for it to be 1000x more efficient, because no cryptocurrency currently has such a big amount of transactions per hour. It would be more wasteful to support 1GB blocks when they would go empty.
But, and this is actually my claim, if volume transaction increases enough to saturate a Bitcoin Cash block, then they will increase block size, as many times as it is needed, as that is the proposed Bitcoin Cash strategy. In stark contrast with the Bitcoin 1MB blocks forever strategy.
(I am assuming you don't think efficiency is measured in watts per transaction, because if you do, /facepalm)
The one that surprised me the most
The bleak picture painted on the article is an incomplete one by far.
Similarly, if the price of the coin were 1/1000th but the block were full, it would have cost 1/1000th the price to confirm those transactions.
What determines the cost/mining reward of a block is not the transactions in it, but the value of the chain as a whole.
The PoW is quite expensive, but remember that mining is a subsidised activity amounting to billions of dollars worth of rewards for the miners, many of whom make extensive use of hydro-electric and solar power.
There's the question of wether we need all this hashing power to protect the billions of dollars worth of bitcoin market cap.
The truth is that ASICs mining was not anticipated and neither was the "arms race" that made mining into a profession. With Proof of Stake consensus algorithms taking front stage in Ethereum, EOS and other blockchain projects, PoW is bound to be abandoned or significantly changed.
"[As] the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware." https://email@example.com/msg09...
"We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easer to get new users up to speed if they don’t have to worry about GPU drivers and compatibility. It’s nice how anyone with just a CPU can compete fairly equally right now." https://bitcointalk.org/index.php?topic=12.msg54#msg54
By the way, 10 TWh/year is about 1.21 GW.