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Concerns about Bitcoin's energy use are overblown (bloomberg.com)
66 points by w-ll on Dec 7, 2017 | hide | past | web | favorite | 92 comments

> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better.

That's bad analysis. Bitcoin energy usage is bounded very closely by the value of the coins mined at whatever the most efficient method is at the time. That is, it's worth it to spend electricity mining as long as the coins are worth a little bit more than the energy input.

So bitcoin growth has absolutely nothing to do with hardware efficiencies, and is entirely a function of the outrageously inflated growth bubble it is experiencing.

Basically: cleaner energy and more efficient computing hardware won't save us from this monster. But thankfully the coming crash will.

Actually lightning network will:

1. severely reduce number of transactions on main blockchain, which will:

2. allow for lower transaction fees (due to less competition), with will:

3. cause mining to be less profitable, which will:

4. result in fewer miners, which will:

5. reduce energy consumption.

The current power consumption simply a "growing pain".

The amount of energy used on heating and cooling is several magnitudes larger than whole mining for bitcoin.

It's not a monster, it just sounds ridiculously big, but Internet uses more. Airplanes use magnitudes more, even cow farts are much bigger than CO2 footprint of Bitcoin.

> even cow farts are much bigger than CO2 footprint of Bitcoin.

It sounds like you're trying to joke about "cow farts" but they're a well-known massive source of pollution, I don't think it's a flattering comparison

> but Internet uses more

So the most important innovation of this century, used by billions of people daily, uses more energy than a financial network doing only ~400,000 transactions per day?

If Bitcoin were to replace the entire financial sector, sure, it would be worth the energy expenditure. But as it is, there are solutions thousands of times more efficient for all of the problems Bitcoin tries to solve.

> If Bitcoin were to replace the entire financial sector, sure, it would be worth the energy expenditure.

Except in that case its energy expenditure would increase a thousandfold if not more.

> there are solutions thousands of times more efficient for all of the problems Bitcoin tries to solve.

No there aren't. Just because you don't agree with the validity of some of the problems bitcoin tries to solve doesn't mean it's not trying to solve them.

I don't actually know what you have in mind, but if you name some of the more efficient alternatives to bitcoin, I'll tell you which problems they're failing to solve.

Alt coins that don't waste as much energy solve all the same problems. Bitcoin the first of a new breed, but that just means it's unlikely for the first implementation to win.

What property does Bitcoin have that doesn't have a more efficient solution?

Between proof-of-stake solutions and the traditional financial system, as far as I know Bitcoin doesn't solve anything more efficiently, from transaction processing rate to distributed consensus.

Proof-of-stake has many problems like nothing-at-stake problem etc.

> if you name some of the more efficient alternatives to bitcoin, I'll tell you which problems they're failing to solve.

This. Nothing except prof-of-work generates inherent value. All those other proof-ofs are flawed.

The energy is used to secure the network. The marginal cost per transaction is 0. Scaling solutions will improve the energy used per transaction.

> Scaling solutions will improve the energy used per transaction.

No, they will not. They cannot, because the energy use is directly and irrevocably tied to the market capitalization of bitcoin as a whole.

"X is not bad because Y is worse" is an ethically bankrupt approach to values clarification.

The point is that bitcoin valuation is driven as a bubble. Inbound coin purchasers are expecting another hundredfold increase over the next two years. So there goes your "several orders of magnitude" right there.

Again, it will crash, so this won't happen. But the community expectation (even if the community doesn't realize it) of bitcoin absolutely is that it will eat all the world's electricity.

People have been saying it will crash for almost a decade now. You need a catalyst for a crash. You need a reason for the majority of market participants to throw their hands up and say "you know what, this bitcoin thing is never going to be useful."

We've been waiting for a long time for that catalyst, and if anything I think it's been receding further off into the distance as bitcoin becomes more, not less, established as a mainstream technology.

Owning a Bitcoin offers no value to the holder other than the ability to buy something with it, but in almost every case imaginable there is a better alternative to Bitcoin out there. Usually it's much easier and safer to just use a credit card or a check or a bank transfer (or, heck, physical cash), but even in the case of illegal activities, you're probably better off using a different cryptocurrency that's less traceable.

The people who keep buying into BTC because they think it's fundamentally more useful than fiat currency are in a very small minority. Most of the people buying BTC are viewing it as a speculative investment, but the only reason they're buying it as an investment is because it keeps going up, and the only reason it keeps going up is because people keep investing in it. If it starts going down for some reason, even a little bit, the positive feedback loop could easily switch to a negative one and the bubble will pop. All the investors will start selling at once to try and reap their profits before it falls further.

Also, part of the reason the bubble has gone on for so long is that historically it's been difficult to short BTC. This may change with the advent of Bitcoin futures markets....

How about: "It's eating all the world's electricity so everyone banned it" as a reason for the crash?

Look, I can't tell you the future. I don't know when or how any better than people knew when the dot com crash or real estate crisis would hit. But people in the late 90's and mid 00's absolutely could see that the relevant markets were inflating in unsustainable ways, and absolutely did predict a "crash".

This is no different. Bitcoin is growing in an unsustainable way (c.f. literally eating all the world's electricity if it continues). That never ends well.

I'm not sure you're aware of the real numbers?

The amount of energy used for heating and cooling is extremely huge. Bitcoin is probably 0.0x% of that amount.

Internet is 2% of the whole CO2 emissions, heating and cooling is more than 30%. The industry pollution of China is so big you can't see their impact on CO2 emissions from their cars or their agriculture.

The estimates for Bitcoin, as much as they sound big, they really are not.

Cost in energy per transaction can only fall down with TPS increase (which is something lightning network, or bigger blocksize can do).

> The amount of energy used for heating and cooling is extremely huge.

With the additional benefit that it keeps people warm/cool?

Can you please tell me why you are not interested in solving this problem? My guess is that it is impossible to do with Bitcoin, and people dismissing the energy problems want to protect their investment rather than develop better technologies.

> With the additional benefit that it keeps people warm/cool?

Most of that energy is wasted because of the architecture and irrational desire of 24/7 comfort AC blasting at the coolest setting.

> Can you please tell me why you are not interested in solving this problem? My guess is that it is impossible to do with Bitcoin, and people dismissing the energy problems want to protect their investment rather than develop better technologies.

Problem is solved easily by clean energy sources.

There are bigger problems to solve, like heating and cooling, like CO2 footprint of animal agriculture, like deforestation of Amazon forest for Argentinian and Brazilian steak etc.

We are here mostly programmers, we don't profile the code and then optimize the fastest function, but the biggest bottleneck. Bitcoin is no where near the bottleneck and all scaling solutions will require less energy per transaction.

Problem is also automagically solved by the market. If mining gets to expensive to do, miners will figure out how to use less energy.

For example, market is not solving all of the above environmental problems because, for example, there is not fair market in animal agriculture.

Bitcoin has had plenty of speculative bubbles and plenty of crashes, the reason it keeps on working instead of being abandoned is because it is actually useful, regardless of how much of the market cap is driven by speculation.

"Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme."

> the community expectation

I consider myself a member of the bitcoin community, and I absolutely do not believe it will increase 100x within 2 years. I think this bubble is going to crash.

There is a lot of certainty in your statement for a bunch of guesses.

As it stands right now, Bitcoin's energy use isn't particularly problematic. But that's because Bitcoin is really small. The worry isn't so much that Bitcoin is destroying the planet now, but that if it grows to match the scale of a "real" currency (as its proponents keep saying it will!), its energy usage will become dangerously large.

Compare apples to apples. Take the entire worlds banking infrastructure for credit card processing and banking. (Getting an estimate for that would be an interesting exercise). How does that stack up to the energy usage of bitcoin adjusted for total value, transaction volume, etc.

Dismissing it as not a problem or potential problem by pointing out even bigger problems doesn't make it not a problem. See https://en.wikipedia.org/wiki/Whataboutism

The difference in transaction volumes is striking. The US financial industry alone does millions of transactions per second, whereas Bitcoin manages about 3.

> "The amount of energy used on heating and cooling is several magnitudes larger than whole mining for bitcoin"

Not only that, but some entrepreneurs are selling bitcoin miners as heaters that make money! :)

> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. Not long ago, the Department of Energy was predicting that their electricity use would double every five years, and Google was getting slammed for consuming enough to power 200,0000 homes. In recent years, though, the centers’ total electricity use has flattened even as their number has kept growing. As it turned out, better cooling and power management technology improved efficiency. Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources.

This is just flat out wrong and shows the author has no idea what she is talking about. The rate of BTC production is fixed, so "efficiency" has no impact on the dollar cost of electricity it is using.

If a BTC can sell for $X, it is profitable for the network to spend any amount upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs) mining bitcoin.

At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a day and still remain profitable.

Furthermore, comparing Bitcoin to physical currency is disingenuous even if you completely discount the (gargantuan)scale difference. You would get rid of that energy consumption even if could get everyone to switch to electronic (fiat) money instead of paper currency, and presumably have it be much greener than having them switch to bitcoin.

But just because it's profitable doesn't mean it can't be more profitable right?

If I'm going to set up a mining operation, wouldn't it make financial sense to set it up near a hydroelectric plant where my electric cost is 1/10th of what it is in my home in PA? Any cost reduction is an increase in profit, so there's still motivation to reduce costs, a pretty large one.

As long as there is a non trivial profit margin, more miners will keep entering the game until the the margin shrinks to a small enough figure that nobody else wants to start mining.

Wouldn't that drive the remainder of players to find cheaper and cheaper energy, proving the authors point? Since getting cheaper power means you can hold out that much longer than everyone else since you make that much more profit.

Even if they find cheaper energy, they will still spend $27 million on it a day. They will just consume more electricity.

But consuming more electricity would produce more bitcoin.

The 2 are pretty much linked for each "generation" of miner.

So in order to continue spending $27 million per day at the cheaper electricity rate, they would need to buy more miners, which would produce more bitcoin, which means more profit.

So their whole incentive is based around the price of electricity, and the cheaper they can get it for, the more money they are going to make.

> But consuming more electricity would produce more bitcoin.

No, Bitcoin is produced at a fixed rate. If more power goes into mining, difficulty increases to compensate.

Globally yes, but locally, that's not true at all.

If I have 2x as much hashpower as I did yesterday, i'll get roughly 2x as much bitcoin as a reward (which over time will go down as the global hashrate goes up).

In other words I'll get a larger percentage of global bitcoin production, which is fixed.

You're talking about imperfections in the market. I.e. You having a cheaper source of power than everyone else which allows you to mine the same amount of bitcoins at lower costs and thus higher profits. Thus, some of the $27 million is not used on electricity and becomes profits instead. In reality, how likely is this scenario in which you have a persistent cheaper source of energy which other miners cannot access?

Pretty realistic.

One of the largest US mining operations are said to be located in Seattle where there is dirt cheap hydroelectric. So are many of the Chinese operations.

It's not as mich of a zero sum game as it might seem, it's more of a race to the bottom.

If your competitors are running on cheaper electric, you'd better find some cheaper electric or they are going to increase the difficulty to the point that it's not profitable for you.

TL;DR Bitcoin uses over 75% of the energy used to mint and print all the fiat money in the world for about a percentage point of the transaction volume, but it's okay!

Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up.

While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.

Add in all the costs of the Bitcoin infrastructure to Bitcoin's usage, too - exchanges and so on. And then you still have an instrument so unstable that you can't actually buy anything with it; Steam discontinued BTC purchasing recently because the system is unusable for retail. So you still need that fiat money infrastructure to, you know, pay for anything.

> Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up.

That's unfair. A more reasonable comparison is with credit card transactions. Several European countries are positioned to go cashless you know.

> While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.

That's a really stupid argument to make, but while you're at it, factor in the cost of Bitcoin robberies of people getting hacked, more and more every day. There's even a story around of a guy robbed at gunpoint.

The more popular it gets, the bigger as a target it becomes ;-)

Are you in the universe where no Bitcoin got stolen, ever? Because I surely am not.

Bitcoin loses that comparison, because it cannot become energy efficient. The energy it has to waste in order to continue functioning necessarily scales up with its total value.

The computation has nothing to do with minting. The computation allows every Bitcoin user to “vote” on the correct sequence of transactions in the last block, and the reward for solving a block is just to make sure that people keep hashing. You can’t have a blockchain without a large number of people doing some kind of easily verifiable computation.

Stopped reading once they tried to say Bitcoin is green because it uses less energy than modern money production. Bitcoin handles many orders of magnitude fewer transactions that pretty much every other monetary system - the fact that the energy usage is even comparable shows how much energy Bitcoin truly uses.

Even worse is that energy use is a feature. All the energy used in other monetary systems is incidental, so if lower energy usage becomes a goal, it can be actualized. You can't make more digital Beanie Babies while reducing power consumption since the power consumption itself is what makes the whole idiotic thing work in the first place.

On the other hand bitcoin doesn't need to be reprinted every few years and same coins can be reused millions of times, especially if transaction rate goes higher in the future. I still don't know if that comparison is something to care about.

Transacting with bitcoin requires mining. Mining is what validates blocks of transactions. Mining does create coins, but that's sort of a side-effect. Eventually the mining reward will go away, but the energy costs of transacting will remain.

There still need to be miners to process transactions, they will simply collect on fees instead

The energy usage comparisons were taking into account the energy requirements of reprinting money every few years.

Most money in the world exists only in digital form, so I don't think bitcoin has any benefit in this regard.

The same is true of all electronic payment systems, fiat included. Bitcoin adds nothing to the equation.

> Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources

My sense was that this was only the case in countries that have effective environmental regulation, and that coal was cheaper in countries where you could legally operate super-dirty plants. Is this no longer the case?

Well China is no longer allowing energy plants to sell power to miners which is probably a majority portion of the problem you are referring to.

How does a plant know the person it is selling power to is using it to mine?

Usually, when a regulator imposes a constraint, it's up to the constrained party to (figure out how to) gather the intelligence required to follow the constraint.

It may turn out that there are other regulations (e.g. privacy regulations) preventing a company from gathering that information about individuals, though. At which point the power company would probably have to stop selling to individuals altogether (i.e. provide no residential power service any more, just private commercial/industrial service to other companies, because companies have a lot fewer privacy protections so it's easy enough to figure out whether they're mining.)

maybe it's obvious relatively to the history of a plan. if one residential building takes N times more than others 24/7 you can assume mining

How do they stop them?

Law enforcement?

The marginal cost of hydro energy is nearly nothing. If you build a dam but the local city or factory no longer needs the energy, it costs you nothing to keep sending the water down the turbines. The coal plant might have been cheaper to build, but to produce electricity you need to keep on mining coal for it.

An even better scenario is if the government subsidizes the building of the hydro plant - then you get cheaper up front cost and cheaper recurring costs. This is the case in Austria, according to HydroMiner[0].


So, something I've never quite understood: I believe the computational effort (and energy cost) to mine a coin keeps going up - by design. *

If there is a sudden insta-crash in bitcoin value, is there a point where miners just won't bother anymore?

If the mining energy cost is higher than the value of the bitcoin mined, doesn't it become un-economical and the whole block-chain seizes up? 'Someone will invent a more efficient method' doesn't seem a reasonable justification. If a major crash occurs would the route out be a fork to a variant where mining is reset to be easier/cheaper?

*edit - aha I see the mining difficulty can go up or down over time: https://en.bitcoin.it/wiki/Difficulty

edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for mining a block will halve over time, but not necessarily the difficulty or value of the bitcoin. https://www.coindesk.com/making-sense-bitcoins-halving/

As you note, the difficulty adjusts based on the amount of computational power being used.

However, there's a really fun corner case failure mode. The difficulty is supposed to adjust about once every two weeks to make for a roughly 10 minute interval between blocks. If more power is added to the network such that the interval is, say, 9 minutes, then when the next adjustment hits, the difficulty will be bumped up by 11%.

But! That "every two weeks" thing is based on the block interval. The actual adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that works out to two weeks. If they're mined faster, the network adjusts faster. If they're mined slower, the network adjusts slower.

When the changes in hash rate are slow, this is fine. But what happens if there's a sudden massive change in the hash rate? Like, what happens if the hash rate somehow changes by a factor of a thousand in a brief period?

If it goes up by a factor of a thousand, then the network will start mining blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block interval will hit and the difficulty will also go up by a factor of 1000, then everything continues as usual. No problem.

The problem is if the hash rate goes down by a factor of a thousand. Then the network will start mining blocks roughly once a week. The difficulty will readjust to bring that back down to 10 minutes... eventually. But the interval to the next readjustment is measured in blocks! Let's say you're halfway through the adjustment period when this crash happens, so you have 1008 blocks to go before the next adjustment. That would have taken about a week, but now it will take about twenty years! Unless you can get the hash rate back up substantially, the network will be in extreme slow mode for a long time.

In event of a massive exodus of hashing power like the 1000x reduction couldn't a fork be proposed to change the difficulty?

I would think so. Getting enough buy-in for such a thing could be challenging.

I've read suggestions that it's possible for the hashrate to drop so fast that the difficulty doesn't keep up, and the chain freezes.



Bitcoin is designed to produce a block every 10 minutes. The difficulty will scale back down if a bunch of miners dropped offline.

Let's also acknowledge that the "sky is falling" proclamations around Bitcoin mining energy use are based on numbers that aren't even close to accurate. Current network hash rate is about 12EH/s, and an Antminer S9 does about 14TH/s at 1372W. Thus,

    (12000000THs / 14THs) * 1372W = 1,176,000,000W
Which is about 1.176GW. The article cites 8.27TW, which is off by several orders of magnitude.


Edit: numbers maybe not so far off after all, as it appears to say 8.27TWh/year now.

Those Antminer numbers don't actually take into account cooling, other than the fan on the system. Those are the "at the wall" numbers. Since these machines dump their heat into the datacenter presumably if you're running any significant number of them you'll need a cooling system.

You're also operating under the assumption that every miner is already using these systems, which I don't believe is the case. Lots of people are likely running older systems, and as the price of bitcoin gets higher older less efficient machines become more profitable to turn back on.

I think reading the original source of their power consumption numbers will give a much better insight to where those numbers came from- http://blog.zorinaq.com/bitcoin-electricity-consumption/

Even if you double the estimate, it's significantly less than the BS numbers being tossed around. By a lot.

Okay, here's the real issue with your comment. You have your units all wrong. You're measuring "watt seconds" instead of "watt hours". Lets fix our units here -

(12000000 (TH per second s) / 14 (TH per second)) * 1372W = 1,176,000,000W/s

Now we need to convert seconds to hours (60 * 60)-

1,176,000,000W/s * 60 * 60 = 4,233,600,000,000W/h

That is roughly 4.23 terawatt hours. Take into account cooling and the fact that not everyone is using the same efficient miner from your example and the numbers look pretty damn accurate to me.

Watts is an instantaneous measurement, so I don't think that's right. If a lightbulb uses 100W and it's running for 1h, it consumes 100Wh of energy.

Exactly my point. When you take a 100w bulb and run it for an hour you get 100Wh of energy. If you run a 100W bulb for 1 second then you have 100W/s of energy used.

During your calculations above you use the "terra hashes per second" number- as you said, "14TH/s at 1372W". The device runs at 1372W, and it also calculates hashes at 14TH/s. You can use the same formula you did to calculate the 10Wh for the lightbulb- if you leave the device running for 1h it will consume 1372W/h of electricity (or 1372 Watts * 1 hour).

If you want to convert the W/h unit to W/d you can multiple the "hour" unit by "24" (since there are 24 hours in a day). To convert in the other direction you do the opposite (divide the day by the number of hours in it). Converting from Wh to Watt seconds is similar.

You're not the first person to be confused by this, and wikipedia has a whole section devoted to explaining it[1].

[1] https://en.wikipedia.org/wiki/Watt#Difference_between_watts....

I just noticed the article now says "terawatt-hours per year", which is more realistic. I can't tell if they amended it, or if I misread.

W/s doesn't make any sense. Its Ws or Wh instead

Which of these assumptions leads you to be different than them by 4-5 orders of magnitude? Their numbers are only 3x higher total hashrate estimate and 3x less efficient GH/s over the cutting edge Antminer, which seems reasonable. I'm confused where you diverge so much.


Are you confusing tw with twhr/y?

I think they amended the article.

Opinion piece written by "a blockchain engineer at... a financial technology company in San Francisco."

The premise is simply that Bitcoin uses less energy than physical cash production. Obviously this implies that Bitcoin will replace cash. If it doesn't -- if say the primary use case for Bitcoin remains currency speculation -- then the argument falls apart.

The author sounds like a story teller with no idea what he is talking about. With the current transaction costs bitcoin doesn't even have a real world usage for the common man anymore.

The author is a woman.

There are lot of people that can't understand the use-case of bitcoin, and can't understand why it has value if it doesn't meet theirs, yes.

As you replied to my comment and you indicate that I don't understand it please elaborate. What is the use-case of bitcoin for the common man? Please only count the ones where using classical monetary systems (cash, credit card, etc.) are worse.

Decentralized censorship and inflation resistant savings account.

All these articles seem to imply that bitcoin transactions "cost" energy. My understanding: mining costs energy, the transactions are a side effect of the energy. More transactions does not necessarily mean more energy consumption. What causes higher energy consumption is higher USD/BTC price which drives further investment in mining and increases mining difficulty. Transaction volume may or may not be correlated to USD/BTC, but it seems extremely disingenuous to take the total miner energy consumption and divide it by the # of transactions to put an energy cost per transaction, as if that were a thing.

My understanding is that Bitcoin would fail if the energy costs would be low, the huge costs are what protects it from an adversary acquiring >50% of the "voting rights" on what transactions are valid.

At some point the mining rewards will stop, and transaction fees will be the only reward. The price will be driven by demand, but will need to be kept high.

As a thought experiment, if you took out the mining rewards tomorrow and had only transaction costs, the energy put into each block would be much lower and be a function of the value actually provided in each transaction. Plus the value of existing Bitcoin would go up because of even more scarcity.

I'm not saying Bitcoin should do that, but as proof-by-construction that a more green coin with the same properties could exist.

But how much energy will it use when scaled to the throughput of physical currency?

Probably still not as bad but Bitcoin is still far less efficient than credit/debit transactions at that scale. There are some great crypto alternatives that would use magnitudes less power also.

Bitcoin as it is currently envisioned cannot scale to the throughput of either cards or cash of any major economy, let alone all of them combined.

There are data limits on bitcoin that make it literally impossible, and even given big technical changes that significantly lift limits it would still not even be close. Bitcoin would have to go through an enormous transformation to be able to scale to that many transactions.

It's using alot of energy now because of miners mining coins. There is a finite supply of Bitcoins, how much energy will the network use once there are no more coins to mine?

Replace cash and coins? It has moved in completely other area in the last few years. Sad that all those good goals set in the beginning were crushed with it's success

Man... The author has no idea how any of this works.

Other comments explain it well but damn.

If the dollar can be grossly overvalued for decades, so can bitcoin.


At least the bitcoin blockchain can be audited, unlike the US Federal Reserve, an institution accountable to no one.

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