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Bitcoin's energy consumption 'equals that of Switzerland' (bbc.com)
87 points by saravana85 3 months ago | hide | past | web | favorite | 121 comments



Someone created Bitcoin. It was a neat idea and people played with it. When the first pizza was bought with Bitcoin, I wonder how the creator felt? "Oh cool, real world use!"

Then Bitcoin bubbled. People panicked and jumped on board without researching, Bitcoin went up a bazillion %. I wonder how the creator felt? "Oh wow... Lots of people want this!"

Then the bubble burst, price went down, people got mad, but, most importantly, Bitcoin inspired others. I wonder how the creator felt? "Oh huh... This is really changing the world..."

Now, the problems are rearing their heads. Energy consumption, 51% attacks, scalability issues, etc. I wonder how the creator feels? "Oh dear..."

[ this is, of course, assuming the creator is still alive ]

It just boggles my mind that this weird internet currency exposed something so powerful in society: The intense desire for personal wealth that one truly owns.


> The intense desire for personal wealth that one truly owns.

Not at all. It's the desire to get rich quick without lifting a finger. Also philosophically speaking, "wealth that one truly owns" as in "wealth that is not dependent on others" is not a thing. If your wealth is in Bitcoin, you are trusting in fellow Bitcoin users and your wealth is entirely dependent on their feelings about the cryptomarket. That is hardly a better safer store for your wealth.


> Not at all. It's the desire to get rich quick without lifting a finger.

I disagree with that. Bitcoin did not start off with get-rich-quick schemes. It started off with a core bunch of people who wanted independent options to wealth. One of the major issues we're going through today [ in terms of tech-misinformation ] is how everyone assumes cryptocurrency & blockchain are just buzzwords that people only got interested in to make money & scam. Not true. Bitcoin started off with a completely different ideology among the early adopters before it got to where it is today. Don't look at the current trend of youtube """educators""" [ read: hype-beast / scammers ] and think that's what drives the development.

> "wealth that is not dependent on others" is not a thing

That's actually a very good point! I wouldn't necessarily agree to your ending statement of whether it is / isn't a safer store for one's wealth, but I do agree that wealth needs dependencies. I guess I should have made my statement to be more along the lines of: "Independent wealth OPTIONS where users can control their dependencies."


I prefer depending on the market instead of the state dictating how much my money is worth.


Why? The market is dumb (in a technical sense). The state is constantly monitoring and adjusting. It’s like saying you trust a car with a brick on the accelerator over a self drive Tesla.

Sure the Tesla makes mistakes and kills someone every now and then, but I’d take that over the brick.


> Why? The market is dumb (in a technical sense). The state is constantly monitoring and adjusting.

The market is relatively 'dumb', but its decisions are based on human expectation and applied peacefully through voluntary transactions. The state is relatively 'dumb' too, but it's also evil most of the time, and its decisions use violence to be committed.

Also, when the market is wrong, some people may lose money (specially those that were the most wrong), but the system corrects itself. When the state is wrong, the error accumulates because the system can't self-correct.

>It’s like saying you trust a car with a brick on the accelerator over a self drive Tesla.

The market is much like a machine learning algorithm. I say the market is the Tesla AI and the state is a drunk driver.


The Bitcoin "bubble" has "burst" at least 6 times now. Which one were you refering to? Every time it recovers and reaches another all time high in a couple of years. Being the nascent but potentially world changing technology, it might take a few years to realize its true market cap. And along the way, we will see a few pumps and dumps. Its just normal.


I've yet to see a single legal use case for bitcoin.


Bic Camera in Japan at one point used it as their "point" system. Unfortunately you had to have one of their wallets, but essentially if you bought stuff with them and you had registered for the bitcoin rewards, they would give you some bitcoins. You could also transfer your own bitcoins into the wallet. You could then buy stuff at the store with it at some nominal rate. I thought about buying a computer with bitcoins because when you could still mine with CPUs, I heated my apartment mining bitcoins (then I lost interest ;-) ). Honestly, this is exactly the kind of thing I was hoping bitcoin would turn into. When Japan outlawed crypto currencies, the Bic Camera thing disappeared (or it's possible it disappeared earlier... I wasn't paying much attention).


[flagged]


I see you choose on completely ignoring the Tether fraud and those that came before that makes Bitcoin's price entirely artificial and way higher than it should.


An alternative form of payment in countries with hyperinflated currencies, a means to make fast international payments (far faster than Swift), an investment (debatable) vehicle that exists outside the control of the finance sector, certainly an upward social mobility tool for many miners in developing countries, and a general store of wealth vehicle (in no way different to gold in this regard).


How is all of this possible when the network is barely able to support half dozen transactions a second? It's not even enough to cover one shopping mall, let alone some "countries" or the whole planet.


I didn't say it could run a country's currency supply. I said it was an alternative to a country's hyperinflated currency, and it would be one of many. What normally happens on the ground in such a situation is that the average person will use an array of different currencies that are accepted in their environment in order to make up for the country's standard (so in Zimbabwe for example, people will use a mix of the USD, ZAR and a number of other currencies in their day-to-day lives).

Bitcoin is just another alternative. Yes you're not buying a loaf of bread at the corner store with it, but it's definitely useable (and is used) for other types of payments.


FYI Swift v4 is in trial and has realtime payments.


I'm referring to the most recent one that I believe most are familiar with: when Bitcoin reached ATH of $20,000 and then plummeted to $4,000 [ I think that was the lowest... ]

I'm not against BTC, and I'm not saying it's dead, I'm just pointing out the obvious crash that recently happened :^)


The Times 03/Jan/2009 Chancellor on brink of second bailout for banks[


wow what a hate comment really. you totally miss all of the pain points that Bitcoin addressses


lol, I think you need to re-read what I wrote and not have that "hate" implication going through your mind.

I'm not against BTC, I love blockchain & decentralization, I toy around with many cryptocurrencies myself. I'm not ragging on anything with my comment, just making an observation about events and attaching how I would feel if I were the creator / catalyst for said events :^)


Interestingly, article cites a source that contradicts the headline. The Joule paper puts the number at 45.8TWh. The main focus of the article has some guys putting the number at 58.93TWh. That's quite the discrepancy.

In general I have come to treat anything that cites Alex de Vries with suspicion. Amongst other things, the repeated discussion of the number of transactions and the power expenditure. The power expenditure does not scale by number of transactions. Associating the two without mentioning one is not a factor of the other creates a misleading impression. Doing so repeatedly suggests bad faith.

Bitcoin does use a lot of power though. On the other hand, the reward halving does mitigate some of this. If you are confidant that Bitcoin won't increase on average 20% every year forever then you should be happy that the problem will fix itself.

The current problem comes from the value rise being greater than the reward halving. To sustain that it has to double in value every 4 years _forever_. The early growth has been higher than that, but to just sustain current power levels BTC would have to be worth millions in a few decades.


Exactly. People here always seem to assume that its power consumption will increase linearily the more people it use (from what the whole network consumes now).

But in the future, the amount of energy consumed for a single transaction will tend towards exactly the fee paid for that transaction multiplied by the cheapest electricity price in the world.

So either the transaction fees will be outlandish, or for a transaction that costs $0.10 you will consume roughly 2kWh.


You make it sound as if it is reasonable for a transaction is to cost 2kWh, that is a huge amount of electricity/energy. If anything that used that much energy became the dominant means of payment, the average person would use more energy in payments than they would in powering their home in a day.

Trip to the shops, but fuel, some take away and a few things online when you get home and you’ve used 10-16 kWh of energy, multiple that by a population (even a small one), and even the massive investment into renewables that there is now will be quickly eclipsed.

Adding transactions that are so intensive to people’s everyday energy consumption would be a huge step backwards IMO.


Who is claiming that bitcoin transactions will be used by average person for everyday payments?

Making a bitcoin transaction is like recasting gold bars - not something you want to do often with small amount of gold. This will be done only for large individual payments or for large settlement payments aggregating thousands or millions of normal payments. Everyday payments will be performed on second or higher layers (e.g. Lightning Network)


https://medium.com/@hillpot/bitcoin-vs-gold-which-hurts-the-...

gold vs btc, at least BTC energy expenditure can be patched / limited to only renewables.


Neat! I wonder how they arrive at these numbers though?

I had a conversation with a non-techie friend the other day about cryptocurrencies and she expressed scepticism about the technology because of its immateriality or intangibility. Something about cryptocurrencies being artificially constructs doesn't sit well with some non-techies. I mean, when you think about it it's just as arbitrary that precious metals and gems have a store of value/worth above and beyond their utility. I guess we're in a transitionary period.


>cryptocurrencies being artificially constructs doesn't sit well with some non-techies

fiat currencies that non-techies do use are also artificial constructs. There is however the gold bars in federal reserve/national bank myth so the fiats appear as non-artificial to many people. Possibly that makes the difference. Or, more likely, people use fiat currencies since forever and don't really think about that. I believe more "the thing that exists for ages and I'm familiar with" vs "the new thing" thing. Anyway I'm not trying to invalidate your point, my experience with talking to non-techies about cryptos is more or less the same as yours


There's definitely an emotional component to investment (a line I often hear from property investors vs equity investors is "I can touch and feel my investment, what about you?"). The tangibility gives a much stronger sense of ownership and is also probably one of the reasons why hardware wallets are so popular in the crypto community.

That said, most people who buy gold as investments these days do so through ETFs or some other paper-based method so they never even see the gold themselves, let alone get a chance to "touch and feel" it.


Hardware wallets are popular because so many exchanges were hacked and coins stolen. Keeping crypto on exchanges for a long period of time is simply stupid, there's no upside (except saving 100 USD on a wallet).


Eh, try to explain to people that money (as in USD) is the same thing as Bitcoin, except in centralised databases (plus a very small portion in portable pieces of paper/metal). There's a database in the FED that tracks who has how many dollars (it's coarse grained, banks subdivide it into accounts themselves). And new dollars are minted all the time when someone is issued credit, ending their life when the credit is paid back.

This is not to defend Bitcoin, but it is mind boggling how few people ask themselves "where does money come from, exactly?".


I think this is the reason all sort of conspiracies regarding who controls the money become so popular. People just use money, no time or reason to think of those things or even why the world moved to fractual first place.


Fiat money is not the same thing:

- anyone can issue Bitcoin - if anyone accepts Bitcoin they accept it regardless of origin

With fiat money, there are additional rules to limit money laundering and theft. (e.g. paper trail audit rules and special markings on banknotes - money matching these laws is not to be accepted)

Plus you cannot just issue say Zimbabwe dollars anywhere, that's considered a forgery. Likewise you can only issue Bitcoin if you do manage to notify the decentralised ledger that you have mined it. (Which is why verification is slow.)


Bitcoin wouldn't exist without gold.


Relevant info is at the end of the article :

"The electricity used for Bitcoin produces about 22 megatons of CO2 annually, a study in the scientific journal Joule estimated. That is as much as Kansas City in the US."

Bitcoin = Kansas City


Interesting: Kansas City = Switzerland??? A bit mindblowing if true.


Oh I see it is that time of the year - People upvoting Bitcoin has breached $X or Bitcoin energy consumption is equal to Y country stories.

And the discussions are also same old - People criticizing bitcoin, others defending and then a small majority who feel quite smug about buying at $10.

Can we really stop upvoting stories which add zero value to what we already know?


Bitcoin's price is going up again, however its many severe problems remain unsolved.

On the other hand, the climate crisis is more urgent than ever. Is a huge waste of precious resources by something as useless as today's bitcoin really tolerable by society?

My hope is that bitcoin is soon abandoned in favor of something more eco friendly, scalable, usable and with better privacy. With a low bitcoin value there will be fewer miners and less waste of resources.


The last time some ding dong did this, it was Czech republic, and the math was off by a factor of 10,000 or so.

Bitcoin, realistically, uses about as much energy as a popular video game. For reasons which should be obvious.


Does this energy consumption come more from mining (i.e. finding the new bitcoins) or from transactions?

If the former, then the Bitcoin network should find a way to reward nodes for transactions in a more environmentally-friendly manner since mining should (in my understanding) disappear or become insignificant at some point.


It's both at the same time. "Mining" is just a fancy word for securing transactions. The new bitcoins are a reward for doing the securing, along with the transaction fees. Over time, securing transactions will yield less new bitcoins but will still keep yielding transaction fees.


> Does this energy consumption come more from mining (i.e. finding the new bitcoins) or from transactions?

They're not different things. Mined blocks is how you add transactions to the chain (because bitcoin is PoW-based). The miner is rewarded as part of that process by embedding a coinbase transaction in the block, which lets them create a set number of new coins out of nowhere (as well as collecting transaction fees from the transactions they include in the block)


Almost every altcoin and their grandmothers are working on it, but it's a legitimately difficult problem.


I am no expert but I fail to see what will be an environment-friendly solution will really be.

The problem is any solution which doesn't need a boat load of money will be get concentrated quickly because everyone and their grandmother wants in.


Why would miners ever agree to that?


The alternative is government regulation eg banning mining cryptocurrencies.


Bitcoin was literally designed for the express purpose of surviving that.


In the sense that bitcoin miners can 'just' more their operations to mining-friendly countries until there are no more mining-friendly countries, sure. But pragmatically Bitcoin would not survive a coordinated assault on it's legality if enough countries decided it's too environmentally toxic.

Plus, there's no reason why Bitcoin should survive. Another cryptocurrency that's much more energy efficient would work just as well, so people could move their money if regulation was likely. It's one of the existisitential threats that Bitcoin faces in the long term.


Bitcoin miners by definition wouldn't. If they did, they are not mining bitcoin anymore, but a fork.


The energy consumption is priced into the cost of holding and transacting Bitcoins.

I wonder if it is any different with any other thing you pay for. Or if any money you pay for anything ultimately results in energy being used up.


That is all fine and good, but is it necessary at all (even if some people are willing to pay for it).


At the moment, we don't have anything clearly better. But everyone except the most hardcore Bitcoin maximalists believe some form of Proof-of-Stake will work well enough. PoS will bring along a different suite of problems, but requiring a nuclear power plant's worth of energy will not be one of them.


I would like to bring Open Representative Voting (ORV) into the game. On ORV, every account can freely choose a Representative at any time to vote on their behalf, even when the delegating account itself is offline. These Representative accounts are configured on nodes that remain online and vote on the validity of transactions they see on the network. Their voting weight is the sum of balances for accounts delegating to them, and if they have enough voting weight they become a Principal Representative. The votes these Principal Representatives send out will subsequently be rebroadcasted by other nodes. Open in this context means, that every account can be chosen as a representative by every account.


I know the most people on here have a terrible opinion of bitcoin and cryptocurrency in general but I think a lot of the criticism based on energy usage and transactions per second is in bad faith. When you consider layers built on top of bitcoin (lightning network) this argument holds a lot less weight.


If every single transaction in the world was Bitcoin it would still be a _ridicilous_ amount of energy by several orders of magnitude. It is totally, fundamentally, broken


Just to play devil's advocate, how much energy could be saved by closing all bank facilities and backend systems etc, in case they wouldn't be needed anymore?

Would BTC mining consume more or less energy then today's mainstream solutions?


For a fair comparison, you'd have to match the current bank features first, and they're simply not available in current cryptocurrency.


Just to play devil's advocate, how much energy could be saved by closing all bank facilities and backend systems etc, in case they wouldn't be needed anymore?

Would BTC mining consume more or less energy then today's mainstream solutions?


Do not forget the energy expended by the employees necessary to run the bank, i.e. housing, commutes, food, etc.


Unless you plan to kill the ex-employees after closing the bank, I'm not sure why this is applicable ;)


I have yet to see a technical subject that polarizes the HN crowd so much.

Interesting data point.

You know what they say about products that polarizes people..


Which is why we need useful proof of work. There is no appropriate solution yet. But I know researchers are working on it.


It's pretty hard to do. It appears that you need problems where (1) you can generate a practically unlimited number of arbitrary instances, (2) of arbitrary difficulty, (3) deterministically based on a random seed, (4) that are roughly constant difficulty to validate, and (5) where a randomly-chosen instance is likely to be useful to know a solution to.


If someone thought those cycles could be put to better use they would pay out bitcoins themselves to mining machines to convince them to run their computation instead, it's straight arbitrage.


You might be able to convince a lot of cryptocurrency adopters to switch to coins that were based on a useful proof-of-work (sometimes called "proof-of-useful-work") even if the kind of useful work that secures the coin isn't one that many people are currently paying for. After all, some present and prospective adopters care a lot about externalities, whether ethically or out of fear of future regulation or marketing.

A wonderful case would be where biomedical research somehow had an unlimited and ongoing need for solutions to arbitrary, random simulation tasks (where it was also relatively easy to confirm the correctness of an alleged solution). This doesn't really seem to be the case, but cryptocurrencies' impact and popularity would be improved quite a bit if it were!


Heating.


it's important to note that it should be compared with what it's supposed to change: gold mining, bank stores, payment systems. Then the cost is less.

Also important that this is the first iteration of a technology that will eventually be replaced with Proof of Stake systems which will be replaced by X.


There are already online only banks without physical presence in most places and many countries don't tie their currency value to gold. The payment systems are not great on either side of the issue.


> many countries don't tie their currency value to gold

Is there any national currency still on the gold standard?


It doesn't look like it. I wanted to stay on the safe side without research :-)

But it's interesting - not really a gold standard, (they're pegged to USD) but it looks like Lebanon has between 1/3 and 1/2 GDP worth of gold backing it's currency.


But how much energy does a bank serving as many customers as bitcoin consumes?


Paypal does 200 transactions per second, Bitcoin does 3. I doubt that Paypal consumes as much energy as Switzerland.


Here you can find a study (2016)[1] about non cash payments with numbers (see the Key Finding part).

[1]https://www.federalreserve.gov/newsevents/press/other/2016-p...


That's the right question, how much energy does the current financial system use, solely for our "basic" transactional needs (store/retrieve/send payments).

Did anyone come up with an estimate?


Back of an envelope maths:

bitcoin does some ~450k transactions/day [1]

Switzerland has some 8.5m people [2]

Let’s assume bitcoin is only used in Switzerland, meaning we get some 0.05 transaction per person per day, or in other words every citizen of Switzerland may execute one transaction every 20 days. I have no numbers for how many financial transaction swiss people perform per day, but lets use a conservative estimate of one per day (think of the daily coffee paid by cc), so that there are 8.5m transactions/day handled by the swiss banks.

Now, if the total energy budget of Switzerland would be going to running their banking system (which it probably does not do) it would still be 20 times as efficient as bitcoin.

[1] https://www.blockchain.com/charts/n-transactions

[2] https://en.m.wikipedia.org/wiki/Switzerland


Significantly less?

[Edit] See: https://news.ycombinator.com/item?id=20352255


This is not a bug, it's a feature.


It is a feature yes but that makes this technology very inefficient to process transactions.


Without this "feature" it would be trivial to double-spend transactions. The entire concept of Nakamoto consensus (upon which Bitcoin security rides) relies upon provable waste of electricity to a degree that the average transaction is impossible (or at least financially unviable) to reverse within some widely accepted timespan.

And yes, this implicitly makes Bitcoin a bad idea, as well as blockchain in general.


Well, any blockchains that uses this amount of energy for it's consensus, though there are plenty of blockchains that don't really need that much energy (Git doesn't use much to run a commit either)


But git also doesn't solve a distributed consensus problem. The problem of reaching consensus on the official HEAD commit is externalized to traditional PKI methods, e.g. GitHub.


Well, no, the consensus of a git repo depends on who use it.

For example, on Linux the true HEAD is where Linus says it is. Everyone else is wrong. That's a consensus of everyone working on Linux.

In more distributed projects, HEAD is where everyone agrees HEAD should be.

Human consensus is a valid form of blockchain consensus.


> Human consensus is a valid form of blockchain consensus.

No, Linus is a form of an oracle here. Linus says the head is X therefore it is.

(oracles are fine! we could also just call them "authorities"! having an authority at the head of a project is fine! but it's not really blockchain.)


I would disagree that is not really blockchain, Linus is a form of consensus for the git blockchain of the Linux project, I see no issue in that.


> Human consensus is a valid form of blockchain consensus.

Not if you want a trustless system. Otherwise, why waste time/energy? A bank can currently perform the "human consensus" part already (ala credit cards and fiat money).


You can clone democracy if you want trustless.


Bitcoins energy consumption has no correlation with its transaction throughput.

Price goes up > People turn on more miners > Difficulty goes up > Less efficient miners become unprofitable > People turn off more miners > Difficulty goes down.

It's a self-correcting dynamic purely due to economics, not linked to usage.


So ever since Bitcoin's creation, it has been using the exact same amount of power? Because the transaction throughput surely has changed.

Do you not agree that, loosely, there is a correlation between transaction throughput/ popularity/ real world usage, and the amount of people being happy to invest time, effort, and money into mining?


Throughput increased (from 0), since people started using it. But the maximum throughput cannot increase without protocol changes. There are workarounds like lightning network, but that's off the main blockchain. There's a hard limit on how many transactions you can put in one block. More mining power doesn't change that maximum.


The amount of power may not be the same, but the economic formula hasn't changed from the start. Inputs to that formula are solely bitcoin price / hardware price / electricity price / other miners. Miners don't care about network throughput at all.

Is this market failure? I don't know... Bitcoin still works despite it.


I would not go as far as to say there's no correlation. The price of Bitcoin is also dependent on how many people would use it / value it, so the profitability of miners. Multiply by 100 the usage compared to now and for sure the price would go up by a lot.


"Very inefficient" is an understatement too! I wonder how much energy Visa and Mastercard combined use to process their transactions. Mind you, they probably do orders of magnitude more transactions per second.

I recently had a discussion with a friend about the viability of a distributed/ blockchain alternative to YouTube. Extrapolating BTC inefficiency to a distributed CDN processing TBs and PBs of traffic...


> "Very inefficient" is an understatement too! I wonder how much energy Visa and Mastercard combined use to process their transactions. Mind you, they probably do orders of magnitude more transactions per second.

There's about 6 orders of magnitude difference in transaction cost. Mastercard/Visa would use ~2W.h per transaction, Bitcoin about 1MW.h.


This will be bad for global warming. All that extra energy being produced.


I read somewhere that many of the larger mining operations use solar power to make it affordable.


Hydropower works at night.


Yup. With things like heating, refrigeration etc at least it has a tangible benefit on human lives. This is just selling the health of the planet for money!


money has a tangible benefit to human life


Another day, another anti-bitcoin article on HN.


Reality is stubborn, isn't it?


It looks like HN has to be anti-Bitcoin while the adoption rate of Bitcoin is tiny.

As more people adopt it, they will probably be less afraid of it / against it.


Yeah, but more people are NOT adopting it. Plus, HN is a community of highly intelligent people, who know technology, unlike the vast majority of Bitcoin holders.


Bring it on.

The net benefit of Bitcoin existing outweighs the energy consumption. If we really care about the planet and all of that, then let's start by cutting down our use of internal combustion engines first.


> The net benefit of Bitcoin existing outweighs the energy consumption.

Says who? The laughable number of transactions and the huge energy required per transaction are saying quite the opposite.


Well, sickos need to be able to pay for child porn somehow. Without Bitcoin, it just not possible. Chinese Commies also need to move their dirty money out mainland China - how is this possible without Bitcoin? So, there are many use cases for Bitcoin, but none of them are good for the planet!


So Bitcoin cannot trivially be subject to a 51% attack, certainly not by Sweden anyway.

~~~ So awesome, I have to make an account to see the dead comment. Way to go HN mods.


Hashing power is not directly equal to power consumption

Sweden may hypothetically purchase miners 2x more efficient than the average miner and therefore need only half their countries power output.

In addition I would be surprised if Sweden can't source power from other countries ( prove me wrong I'm not sure on this one)


> In addition I would be surprised if Sweden can't source power from other countries ( prove me wrong I'm not sure on this one)

They absolutely can, though I think they've been mostly net exporters for the last ~10 years.

According to https://www.svk.se/siteassets/drift-av-stamnatet/bilder/map-..., Sweden has 7 HVDC (Denmark x2, Germany x1, Poland x1, Lithuania x1, Finland x2) plus 2x 400kV to Denmark, 2x to Finland and 4x to Norway (plus a 220kV).


The latest miners are running on 10nm technology. So unless Switzerland can start manufacturing 4-5nm devices right away, what you said is basically impossible. Also, if the Switzerland government by any chance acquires 4-5nm technology, what will keep the miners from doing that too? You would be surprised how deep their pockets are. Well they all paying all of Switzerland's electricity bill, so that might give you an idea.


Missing from all of the discussions about this is the fact that almost all of the electricity is purchased with the mining reward, which is temporary. It is cut in half every 4 years, and will eventually dwindle to nothing. The amount of electricity Bitcoin miners can afford to buy therefore will fall.

Of course, until now that effect has been more than compensated by the increase in the Bitcoin price. But that certainly can't continue forever either, and so the electricity usage and carbon footprint of Bitcoin will inevitably fall in the future.


Mining rewards will be replaced by transaction fees. There will still be an economic incentive to keep the hardware running.


But at that point the cost of the electricity consumption of Bitcoin will be borne entirely by Bitcoin's users, who will not pay more than the value they derive from use of the network. That would only fund a small fraction of today's Bitcoin mining electricity consumption.


> But at that point the cost of the electricity consumption of Bitcoin will be borne entirely by Bitcoin's users

I'm not sure what you mean by this. If a certain percentage of energy is used by PoW, less is available for other purposes, and thus prices will rise for all energy users.


My point is that Bitcoin users will not pay transaction fees that are anything close to the current mining reward that is subsidized by inflation of the Bitcoin money supply. Therefore when the subsidy inevitably falls, so will the total income of all Bitcoin miners. And in the long term Bitcoin miners collectively cannot afford to buy more electricity than their total income, therefore their electricity consumption will also fall.


Thanks for clarifying!

Fees are denominated in satoshis though, and even today the average USD amount of fees is around $8,000 per block[1] (around 6% of the total reward). A 10x increase of the BTC price will make that amount around the same as the current total reward.

[1] https://fork.lol/reward/fees


Fees may be denominated in satoshis but unlike the block reward they are not fixed. Users choose their fees at every transaction, and they will not pay more than the value they derive from making transactions. The total value of all fees paid is determined by the actual usage of the network, not the Bitcoin price.

Of course today usage of the network is somewhat correlated with price, but it's not directly proportional and the correlation will weaken in the future.


No it doesn’t, assuming the mining tech improves via FPGA and ASIC, leading to more hashes per KWh. It’s very hard to predict the future ratio between hash rates and mining rewards.


Improvements in mining tech do not change the total amount of Bitcoin earned by mining, and thus the budget miners collectively have to buy electricity. Efficiency of mining is irrelevant because the difficulty adjusts to keep the mining rate stable, and the total number of Bitcoins available to mine is fixed and unchangeable.


The sensationalism ignores that this tends to be trapped pockets of otherwise wasted surplus energy. Bitcoin creates a global energy arbitrage market for the first time. Energy can't be transported long distance, but it can be used to mine bitcoin. The benefits here are massive, including incentivizing cheap green energy, or the use of mining for ambient heating.


"Energy can't be transported long distance" -- Electric power is regularly transported long distances with low loss. Total transmission losses in the US are about 5%, and a lot of power is shipped 1000 km or more.

"Bitcoin creates a global energy arbitrage market for the first time" -- There are existing energy arbitrage technologies, such as aluminum smelting. The requirement is low capital cost with high energy cost, so you can have plants that are idle most of the time, waiting for low marginal-cost energy. Bitcoin mining isn't actually very good for this: the capital costs of rapidly depreciating mining chips are quite high.

"Incentivizing cheap green energy" -- every consumer of energy does this. Consumers that run mainly during the day are much better at incentivizing wind and solar.

"Mining for ambient heating" -- also suffers from the problem that mining chips are too valuable to leave idle, so you can't place them in homes and only run them when it's cold.


re: aluminum smelting... @see Coinmint [0]

In this case, the Moses Saunders dam [1] used to get a nice steady stream of draw (necessary to keep the equipment operational) from the Alcoa plant, but when it shut down that draw went away. Throwing a bitcoin mining operation into the old facility is a great way of keeping things running smoothly.

  [0] https://www.coinmint.io/
  [1] https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam


> otherwise wasted surplus energy

This makes sense only in two cases: you're using energy from power sources which can't regulate output, or you're adjusting usage immediately based on feedback from the source. Otherwise the generation side just raises, accounting for your usage. Does that actually happen anywhere?

> Energy can't be transported long distance

Of course it can be. I expect you're quite far from a power plant right now. On the extreme we've got high voltage lines going over 2000km.


Or encouraging cheap and nasty fuels to be used to an even greater extent.

I'm pretty sure miners don't pick and choose when they mine, to coincide when there's going to be 'wasted surplus energy' otherwise. They just add on to the demand on the grid, around the clock.

They almost sound like Buddhist monks re: meat eating, from the way you phrase things!


There is a difference in just using the energy to soften peaks or having a constant energy drain. Bitcoin mining is the latter. If you have a constant energy surplus you could easily find other use cases like producing hydrogen.




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