Whether PoS will work, I don't know. But the author didn't realize that PoW is certainly doomed.
PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger.
That's why Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already. If the price were to go up tenfold, then so would electricity usage (roughly). That's not sustainable, both technically for grids and economically because electricity prices go up.
Because of that, I foresee two possible futures for PoW cryptocurrencies:
1. The resource usage overshoots and PoW collapses because it gets banned everywhere. (This seems to be playing out now with China having banned crypto mining, Kazakhstan running into grid issues because of the miner influx, and Sweden arguing for a ban in the EU.)
2. The popularity of these currencies stops growing and only some niche applications remain. Speculators leave because there's no more money to be made. Prices go down.
The bitcoin reward also halves every 4 year, so even if price continues to appreciate, the effect is evened out by the fact that less is created every block over time.
Lastly, bitcoin mining to could sustained solely by using stranded energy, which would otherwise be unused. Flared gas in texas, for instance, could provide more power than the network currently uses. There is no reason bitcoin mining has to take power from anyone, and it will trend this way over time because the economics are in favor of finding the cheapest power source.
> Flared gas in texas, for instance, could provide more power than the network currently uses.
While the amount of gas that is flared off is immense (25-30% of the actual consumption of the US and Europe), the problem is that it is only flared off because there are no pipelines to transport the gas away and the amount that the small oil wells produce is too low to justify the cost.
If it were for me I'd force oil well operators to either build a small secondary pipeline for flare gas alongside oil pipelines or place a small power generator to contribute to the electric grid, but unfortunately "regulation" of any kind is seen as a bad thing in wide parts of the US.
>[...] and the amount that the small oil wells produce is too low to justify the cost.
>If it were for me I'd force oil well operators to [....]
Maybe it's too costly for a reason? Building power lines or pipelines to the middle of nowhere has economic and environmental costs as well, so top down legislation forcing every single well to do it might result in worse overall outcomes. For instance, the resources it takes to construct a pipeline/power line to the nearest town might be more than the electricity/methane that can be generated from the well.
> For instance, the resources it takes to construct a pipeline/power line to the nearest town might be more than the electricity/methane that can be generated from the well.
Well, there already is a pipeline for the oil product (so the additional overhead for a small gas pipe isn't that huge) and an electric grid hookup for the pump. That can be used even for a small-scale electrical generator.
>Well, there already is a pipeline for the oil product
not every oil well is hooked up to a pipeline. Some (many? most? not sure) are only serviced by trucks, presumably because they're too remote to profitably operate a pipeline for.
Yeah, but this exposes the issue with "bitcoin takes X percent of the energy production, therefore it's evil".
If you want you can build a generator near those wells. It's just cheaper to get the energy from somewhere else, because energy is fungible. A watt is not good or evil, it's the same as any other watt. Which means crypto energy consumption can be offset just like anything else, and is exactly as evil as any other convenience - driers, for instance, or flood lights, or inefficient heating, or anything else.
Focusing on crypto in particular says more about the author than anything else.
no it's not. A watt that's in the middle of south dakota, with no power lines in sight, is worth much less than a watt in southern california and is connected to the power grid.
>Lastly, bitcoin mining to could sustained solely by using stranded energy, which would otherwise be unused.
You can make that argument about any sort of waste of electricity, like blasting your A/C with the windows open. The problem is you can't guarantee that people are only using wasted energy. People don't mine Bitcoin to generously find a use for surplus energy. They do so for a profit. Also, people will require mining for Bitcoin transactions regardless of whether there happens to be surplus energy.
You cannot have PoW running on burning a free or cheap resource, the entire point of PoW is that the resource you are burning is costly, which pushes up the amount burned to close to the break-even point.
The amount of energy consumed now is not at its current level because of some fixed power requirement of the network. It’s there due to competition. If power was cheaper miners would run their ops using more power and the only thing that would change would be more energy would be wasted.
> ... stranded energy, which would otherwise be unused. Flared gas in Texas, for instance, could provide more power than the network currently uses.
I do like the idea of using energy that would have otherwise gone to waste. Or the concept of putting mining hardware in remote areas where there is energy to be tapped, but no customers for it. I wonder about all the steam that emits from a nuclear plant's cooling tower. It seems like such a waste to let all that energy just go up into the air.
One thing that troubles me is the various reports of theft associated with mining. I occasionally see various stories of energy and CPU-time theft. Plus there was that truck full of GPUs that was recently stolen.
I wonder what parallels could be drawn to the California gold rush. Theft was probably rampant then too.
3. Speculators move to yet another doge coin where the cost is still lower than the rewards.
Hasn't that happened already a number of times? If everyone was still aboard the Bitcoin bandwagon, it would have stopped being profitable long ago; however you have plenty of other bandwagons to jump into. They are all technically practically interchangeable.
I assume this is also the reason PoS will never work. People will just stay with PoW until really forced to, and if forced it's highly likely they will just jump into another PoW bandwagon. Guess this is part of the resistance seen with Ethereum. The alternative is to find a PoS schema which is even more lucrative for speculators (possible what the article is describing), and then everyone will jump into that bandwagon en-masse, but it will not have fixed anything.
If Bitcoin dropped PoW and miners switched to other PoW cryptocurrencies, then that would be a huge reduction in power consumption worldwide because all the other PoW coins combined probably don't have the transactions Bitcoin does.
Additionally, the Lightning Network drastically cuts mining power consumption.
No they are not. For mining a block of BTC a miner gets a reward of 6.25 BTC. Transaction fees, by looking at the past few blocks, don't go much beyond 0.05 BTC. That is not even close.
> Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already
And this is the reason why I cannot take any climate change conversation seriously unless it includes the topic of cryptocurrencies.
Whatever the promises of cryptocurrencies were, now most (all?) degenerated into a mechanism for speculation, and effectively into a self-sustaining and self-promoting mechanism for transferring wealth from the poor to the rich. And, unfortunately, with the side effect of consuming vast amounts of energy.
A rapidly-growing 1% problem, one that has the potential to nullify other costly gains. Such problems need to die young, before they grow into 5/10/50% problems.
No, like others have stated, the climate challenge is switching our entire energy production (plus other fossile fuel end-uses) to net-zero or net-negative emissions.
If Bitcoin disappeared tomorrow, it would give a small reduction in energy use, but at best it buys you 6 months extra to decarbonize electricity production.
Not to mention pow mining is not location or resource specific. It encourages cheap and efficient use of energy. Miners preffer low cost, surplus energy and will relocate wherever that may be. Pow can use nuclear, thermal, wind, solar and alsoo dirty fuels, just like a Tesla. If you have an issue with the use of dirty fuels, then campaign against that specifically, throwing pow under the bus entirely is short sighted.
Also what does btc and crypto replace? The carbon footprint of traditional finance, banking and the military actions to preserve it are massive polluters. Even at its infancy, pow crypto is already a good direction to improve sustainability.
While I think it's fair to properly account for the carbon footprint of traditional banking and state military infrastructure, it is an utter fantasy that crypto is in direct competition with them. Crypto has been steadily integrating with existing banking institutions and regulations over the last five years; and barring some kind of new free-market, secrets-based "killer drones as a service", no distributed hash table can supplant raw military hegemony (aka, the $5 wrench attack [0]).
I think crypto has a lot of socially useful potential, beyond mere speculative gambling and Austrian-school value storage, but that's in addition to the centuries of momentum in our real-world political economy; crypto-currencies are unlikely to replace that entirely, anymore than the internet replaced the New York Times.
Yes. Bitcoin is a mechanism for arbitraging the conversion of energy production directly into black-market money. As such, there is no other possible use for energy so well adapted to exploiting the most horrible, polluting, illegally-in-operation energy production facilities as they get phased out.
What you do is buy up the dirtiest plants, run them until they break, bribe or evade any authorities (if they even exist) who would stop you, and if the plant is being shut down because it's failing to comply with pollution regulation (again, if such even exists) that just puts it in a weaker negotiating position. As such they HAVE to deal with you at whatever price you're willing to pay because they can't go anywhere else because they have to run illegally. But they're powering bitcoin, so it stops mattering if they're running illegally, because bitcoin is the currency in which it doesn't matter if you're being paid for crimes, only that the coin exists.
I consider that powerful motivation to arbitrage the energy system and exploit cases where energy suppliers are running out of options because they are too dirty. And this can be happening anywhere. Climate's global. If all the dirtiest coal burners are huddled together on a secret island for warmth and to eke out the last pennies (of real money) they can earn, they'll do that for bitcoin if they can't operate any other way.
And it'll still matter. It'll just be happening in secret, because bitcoin don't care.
A single percentage problem today. In order to become a mainstream everyday currency, use of Bitcoin will have to increase by three, four, possibly five orders of magnitude.
False. It's not linear, it's not directly related, but it's certainly not unrelated. As reliance on a blockchain increases, as it becomes normalised in our daily lives, the number of entities motivated to be part of the blockchain increases. As the number of entities increases, the number of compute cycles per transaction increases.
He probably speculates, like the degenerate speculators, that it won't end up there.
Why push around everyone to consume differently while distributing vast amount of tax money that immediately go into more wasteful crypto ? It will not stay at 1% and I agree with the OP that it's going to be difficulty to reduce electricity wastage on one end while ignore the elephant baby in the crib taking over the room.
I'm a random internet person in Hong Kong. I have a friend mining half his rent in a hotel room who decided that he doesn't need to pay rent the "normal way" anymore, he can just sleep next to a cluster of mining machines in a hotel room. Is he the stupid one, or am I, paying 3000 USD of my own money monthly ? I have another friend who lost half his saving in shitcoin speculation, I have colleagues who made a 10x profit this year, I mean it's all fucking around me and it's very hard to say it's just a 1% part of an important problem.
I feel sometimes it's going to become the main problem. I can't wait for a mega crash to calm down all this excess. I can't accept I'm the idiot working the traditional way to make traditional money paying for traditional things while the futuristic gamblers mine their hotel room fees on a bet I'm going to eventually be forced into using their tokens at whatever cost when it becomes legal tender, locking the future price into making them billionaires.
For your own sanity I suggest you stop taking the process of getting rich so seriously. It doesn't make sense, nor is the fact that it doesn't make sense a singularity in the grand scheme of time, it has been known since ancient days (I'm not religious, this is just evidence of it's timelessness): "I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all"
This is 100% correct.
Chance is such a significant factor in the outcomes we observe in our lives, yet the majority of us have been fooled into believing otherwise. Sometimes you just have to do what you feel is right _for you_, and hope for the best.
>I'm going to eventually be forced into using their tokens at whatever cost when it becomes legal tender,
I'm assuming the large nation states would attack these tokens before allowing this to happen and I don't think any token ecosystem could withstand a strong nation state attack
We have a test of that unfolding, with China. If bitcoin is more powerful than China's state power I'm prepared to believe it is more powerful than any nation-state. Don't know if it's going to work out quite that way though.
Not taking climate change conversations seriously because a topic that is barely 1%-2% of the total consumption is neglected? That sounds like a poor excuse.
> And this is the reason why I cannot take any climate change conversation seriously unless it includes the topic of cryptocurrencies.
Bitcoin's electricity use (or the electricity use of any other single application) is pretty much irrelevant when it comes to addressing climate change. Proof:
• Too much of what we does depends on electricity and has no even remotely feasible substitutes for it to be plausible to give up on electricity. In fact, switching more things to electricity, such as transportation and heating, is a large part of what we will have to do to address climate change.
• Therefore to address climate change we are going to have to switch to sources of electricity that are climate neutral, which cleans up Bitcoin (and all the other uses of electricity) from a climate standpoint.
EDIT: to clarify, of course Bitcoin's electricity use now has a climate impact. My point is that this will eventually be taken care of by the necessary switch to clean electricity for all our electricity production.
Until that happens we of course should be trying to clean up current electricity uses, but there are currently bigger fish to fry on that end than Bitcoin. To dismiss taking climate change plans seriously because most conversation is about things with bigger impact is not sensible.
If we take too long on the supply side and Bitcoin continues to grow it may move up the list to where it is one of those uses that we will need to address before we clean up the electricity supply.
Yes we need to clean up electricity production, but drawing on more electricity doesn’t make that better, it makes it worse. Case in point, there are coal and natural gas plants in Montana and the Finger Lakes that would have been shut down or downsized, but haven’t been due to bitcoin mining.
Um, the difficulty of switching to renewable energy is directly proportional to the amount of capacity you need to build. That we’ll eventually reach net zero carbon so emissions now don’t matter is a rather outrageous claim
- electricity is the only part where Bitcoin produces emissions (emissions of mining hardware)
- wasting climate neutral energy does not matter (it does: it's harder, takes more time and resources to switch to climate neutral sources; iirc studies estimate Germany needs to cut 50% of energy consumption to achieve 1.5° conformity)
Even if BTC and every other POW cryptocurrency converted this afternoon to 100% renewable energy use (and we ignore the carbon cost of manufacturing the hardware), it is STILL a huge climate problem.
Why?
1) Because that ~1% of total energy consumption is being squandered on maintaining the cryptocurrency instead of any other use. Thus, it prevents those clean energy sources from displacing CO2-generating sources which would otherwise be taken offline.
2) Even if the BTC energy is entirely derived from some power source that could not be used by others, perhaps all geothermal generation on a remote volcanic island, it will still add net heat to the atmospheric system. and, of course, we still have the energy use and CO2 spewage of fabricating and moving the mining equipment into location.
So, no, this problem is NOT taking care of itself.
A while ago, I asked folks if PoW happened entirely off-Earth using the Sun. Predictably, that was still a problem to some people which, to me, says everything.
"folks" is not me, that is certainly not the point I was making, and your "predictability" indicates that your comment is no less based on fact-free as those you criticize.
Obviously, if the mining is done off-earth anywhere, it will not contribute to the CO2 problem, =ASSUMING= that it does not require on-earth energy resources to put the power generation there.
Crypto mining also stops being a problem when 100% of on-Earth power generation is de-carbonized — in that situation, it is no longer diverting energy generation that could be used to displace/reduce remaining CO2-spewing energy generation.
The problem is:
While CO2 power generation is still active, and especially when it dominates, every kW of electricity used for crypto mining either directly generates CO2, or it uses clean generation that could otherwise (but now does NOT) displace a kW of CO2-based generation capacity.
OK, “Crypto is bad until the entire grid is decarbonized” is a reasonable position. It’s not airtight: there are a number of grids and they aren’t all interconnected, but at least it’s on the right track.
Yes, I agree, and was thinking something like that after I wrote - the range is not actually global, but basically grid-scale.
For example, if the Texas grid became ~100% wind and other clean-source-powered, then BTC mining in that grid would not in any practical sense consume clean power that could otherwise displace dirty power. The 100kW you use to feed your miners could in theory be used to reduce production from a nearby coal plan in Oklahoma, but in practice, since the grids are not connected, they aren't, so that is probably the right scale.
That said, if it gets big and the miners are consuming enough production of solar panels and wind turbines to slow clean energy buildout on other grids, that's the second order of the same problem.
So, maybe everyone with crypto should, instead of convening to buy the constitution or a basketball team, go fund the takeover and conversion of an entire grid to clean energy, and build all the miners there.
> So, maybe everyone with crypto should, instead of convening to buy the constitution or a basketball team, go fund the takeover and conversion of an entire grid to clean energy, and build all the miners there.
Agreed.
> That said, if it gets big and the miners are consuming enough production of solar panels and wind turbines to slow clean energy buildout on other grids, that's the second order of the same problem.
True, but even that's not zero-sum: demand drives investment in production which increases supply leading to commoditization. Commoditization, in turn, makes the solution (solar, wind components) more accessible to a broader range of the economy.
GPUs for machine learning wouldn't be where they are today if it wasn't for gamers creating a demand floor that subsidized the research into better hardware.
You’ve created an impossible straw man: crypto is only running on renewables and the rest of the world isn’t because crypto hogs it all. That’s just not ever going to be reality.
It's important to remember that the direction of the causal link is from the value of each satoshi to the cost of electricity use by miners, not the other way around. People value sats, for whatever their reasons. Because they value sats, the mining costs can be financed. If people had no reason to value sats, there would be no mining. The best way to undermine Bitcoin energy use, would be to talk to your local central bank.
The mining is a kind of ratchet. Not really, but psychologically, which is enough. As speculation goes up, people add more mining equipment, which “props up” the price.
I don't think the author was arguing that PoW is perfect, only that PoS doesn't even solve some of the problems PoW does and is therefore even less viable as a currency.
It’s a system with feedback loops, it’ll eventually level out at some equilibrium. You didn’t provide an actual argument for why it should definitely collapse.
The existence of feedback loops very much doesn't imply a stable equilibrium. Actually, any system that is not overdamped will necessarily not reach an equilibrium.
Or maybe the equilibrium is that no country bans it, and PoW currencies don't die on their own due to lack of financial rewards, and PoW artificially inflates the demand and therefore price of energy, leading first to widespread economic issues, then widespread ecological issues, until there is no one left buy pizza from with your BTC. Very compelling equilibrium.
point is that it's not a closed system that just blows up at some point. as long as there are people interested in keeping bitcoin running - it will keep running. for now economic incentives are enough, and it'll probably be enough forever, worst case - ideological incentives will do it.
Is there any forecast of where the equilibrium happen? Say, if you're in a 1000-people closed society where cryptocurrency is the only thing used to buy stuff, what's the economic calculation for the long-term energy consumption? Seems like there should be papers about that...
Good question. Some function of how much PoW each person can deploy in order to attack the chain and how much value is secured by the chain. It’s like a relation between price of a bike and price of a lock to secure the bike.
I think you're right. I phrased my argument like all PoW must necessarily collapse once they get too popular, and that may not be true exactly.
E.g. if Bitcoin had no block rewards, then the income from transaction fees alone might provide a more reasonable ceiling for miner activity. Users will only pay fees that make sense vs the utility they get.
However, for Bitcoin that's not the case right now. The combination of high price and block rewards provide an enormous subsidy for miner activity. (Some back of the envelope numbers elsewhere in this thread[1].)
And if Bitcoin gets banned, all PoW will likely get banned, so it doesn't matter if other PoW systems can behave better.
Interestingly enough, as the ledgers are all public by nature, there would be nothing stopping states from forking blockchains into centralized solutions, outcompeting miners by reducing transaction costs to zero. Crypto-anarchists would lose their minds, but most consumers would probably pick whatever's cheapest and which "just works".
Don't get me wrong, I love the politics of decentralization. But it's worth remembering that decentralization tends to be a cost-center, not a profit-center, from the standpoint of efficiency and performance; and decentralized tech is no guarantee of decentralized results (see Amazon/Facebook/Google, who have quasi-monopolies in their niches, despite being delivered over open and federated web protocols).
3. cryptocurrencies stop the Austrian economics fetishism and index the coin reward to the mining difficulty. That means getting rid of the fixed coin supply.
That would stabilize the price of the token a lot (since price going up would increase the mining appeal, thus expanding the money supply, driving the price down) and also make it much more usable as a mean of payment (the number of token in circulation would grow in parallel with the growth in users).
Obviously it's not gonna happen, because those people have spent a decade convincing themselves that deflation is good and fixed money supply is the righteous way to manage a currency.
The difficulty is where the security comes from. Bitcoin's goal is to have the highest possible prices and difficulty so that nation-states and alien civilizations can't hack it. It's very easy to have a cheap low-difficulty coin. Equally worthless too. You need to understand that proof-of-work is actually proof-of-waste - the waste, the difficulty, the cost, is the security.
You've misunderstood my point: I'm not talking about reducing the difficulty, I'm talking about (sub-linearly) increasing the mining reward as the difficulty grow.
Also the difficulty scaling is important even if you don't take security into account: if you don't raise it, then the block mining frequency rise progressively, and then you end up with more and more orphaned blocks, until you end up with parallel chains that don't really converge to a single coherent one.
I see what you mean now. Interesting thought to peg inflation to difficulty. I think the main issue is that Bitcoin is not, and will not be, a means of payment. So price stability doesn't matter much. The nature of the system favors few, large transactions. The small-block size crystalized that. Bitcoin is truly suited as a clearing layer. Eventually it will process just the largest most expensive transactions in the world. Which is good since that's the only way miners will get paid and the high transaction costs will ensure continued security.
The focus on fixed money supply seems a little absurd to me anyway, given the triviality of creating new crypto-currencies, and the relatively low transaction costs of trading between them.
Imagine making a case for returning to the gold standard, when thousands of other choices for new precious metals, all with the same performance characteristics, were literally just lying around, and a network of drones would let you swap perfectly and instantly between those metals for pennies!
In that light, one can certainly understand the fervent contempt that Bitcoin maximalists hold for "shitcoins"; but a free-banking market cuts both ways. Barring a state blessing one chain and outlawing the rest, creating new cryptos and swapping between them won't go away. The proper way to measure the emergent "monetary policy" of crypto-currency is of the sum of all chains, not of Bitcoin itself.
Indeed. And I personally love to remind the fans of bitcoin's limited supply that with the different forks the bitcoin faced during its life, the bitcoin money supply grew a lot more than it was supposed to, without causing any price collapse.
> PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger.
It’s actually the opposite since the block reward goes down over time
> It’s actually the opposite since the block reward goes down over time
It is true that 10 years ago block rewards were almost 10x what they are today in terms of BTC, but by USD value new rewards are worth several orders of magnitude more today.
> It’s actually the opposite since the block reward goes down over time
See history of block reward in dollars[1]. This the miner's collective budget to find blocks.
It's about 350K USD per 10 minutes now, or 2.1M USD/hour. Pick an industrial electricity price, say 0.05 USD/kWh. That budget will then buy 42 GWh/hour, or 42 gigawatt of power continuously (roughly 2% of global power consumption). Of course, miners have other costs, and their growth is lagging this ceiling. But it gives you an idea.
That's why I think we're heading for overshoot, and future block reward halvings will come too late.
I generally like to think about this from opposite direction: miners and bitcoin investors are incentivised for bitcoin to be used and for the price to go up.
Why miners? Because their main source of income is not the transaction fee, but basecoin, the guaranteed bitcoin payout for each mined block.
Due to Bitcoin being such a huge amount of money, unethical players do anything to lure people in, including MLM-style marketing, artificially inflating volume traded, and overplaying coin stats (like market cap). Then there's also media / influencers who, without second thought, introduce inexperienced people to investing in high-volatility assets.
It's interesting how this mechanism, purportedly for grown-ass adults, is a loot box mechanic.
Pump more energy in! Because you haven't hit a coin yet. And it is getting forever more unlikely that you will… but at the same time, the payoff is even greater than it was last week! Maybe you won't even hit a coin. Your operation is not big enough. But if you do…! So, MOAR…
Loot box mechanic. Turns out it is not just for manipulating children.
The assumption that a 10x increase in price results in a 10x increase in electricity usage is incorrect. There is some correlation but it is definitely not 1:1 as insinuated.
>1. The resource usage overshoots and PoW collapses because it gets banned everywhere.
Bitcoin difficulty adjusts dynamically with available hashpower, in other words if miners started to shut down the network would lower it's difficulty to keep blocktimes stable.
The chain will not collapse because someone somewhere will always keep it going.
As does the energy use by miners. So, energy use reacts to price, and then difficulty reacts to energy use. That's OP's point.
> if miners started to shut down...
Actually, that would be _very_ interesting. Then you'd have millions of dollars of hardware doing nothing. And doing nothing is losing money. Maybe at that point attacking the network is more profitable than watching your hardware depreciate.
>PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger.
Are Google and Facebook eating the world? They are processing petabytes of data on daily basis and every year there is more data and information being shared on the internet. Moore's law is our friend because as long we have better chips more data can be processed and analyzed.
Bitcoin's PoW is based on economy and game theory meaning if people do not find Bitcoin useful they will stop processing transactions or in reality they will stop investing and spending computation power and electricity.
What you're saying is tautological in a sense that for for it to be true, you need to postulate that every human activity is also based on economy and game theory (otherwise, why would people behave as you say they would behave) . So your argument essentially is that governments banning bitcoin is also based on economy and game theory. Which is fine by me.
I'm saying that market needs to decide whether Bitcoin is toxic commodity or not and what I mean by not is Bitcoin being useful like oil and gas are or any other commodity.
And yes majority of people behave according to game theory because if they do not then they lose or in extreme cases die.
Read again what I wrote >majority of people behave according to game theory because if they do not then they lose or in extreme cases die.
Majority of people are not addicts but those who are lose or in extreme cases die like for example alcohol addicts, drug addicts even casino gambling addicts who tend to suicide when losses amass and loans come due.
All of this makes sense if you assume people won’t build new power plants for bitcoin. But they already are. They are renewable plants because these are now much cheaper. Bitcoin acts as a subsidy for the construction of new green power plants.
It is not about spent electricity bills, it is about spent time. This is the problem that needs to be solved, how can you make the work more time consuming without beeing able to go around this with computing here: electric power.
>A report from the security intelligence group RedLock found at least two companies which had their AWS cloud services compromised by hackers who wanted nothing more than to use the computer power to mine the cryptocurrency bitcoin. The hackers ultimately got access to Amazon's cloud servers after discovering that their administration consoles weren't password protected.
This is silly, computer time certainly isn't free and almost anything scaled up on a cloud service can become very expensive within minutes. Just go look at the poor developers that make 1 mistake in their Lambda code and get charged $80,000.
That’s the idea in Proof of time and space used by chia.net
You probably haven’t heard of this coin/network (invented by the inventor of bittorrent) b/c it doesn’t aim to be a speculative asset, but it does have a very sane programming model (in lisp)
Why is nobody talking about XCH (or XFX if you don’t like the size of the pre-mine)? It will have similar issues as PoW in the long long run (at a fraction of the cost), but it’s a clear iteration on the energy consumption issue of PoW chains that doesn’t concede the entire consensus idea is broken and advocate for switching to an oligarchy.
You haven't explained how mining hashrate causes popularity of the underlying cryptocurrency.
The cause and effect is the other way around. Popularity of the cryptocurrency causes popularity of mining (the price goes up so mining is more profitable and more mining can happen).
PoW generates heat, which is not waste, if it is utilized. The endgame of Bitcoin mining is that every bit of heat is utilized, because that's the only way mining will be profitable. Running these miners is profitable even without block rewards (heat alone is sold at a profit).
You didn't take into account, that:
- Bitcoin price growth won't continue forever; it'll find a stable price
- Mining rewards halve every 4 years
Therefore, it seems that the heat demand of humans can run the Bitcoin network securely, even without block rewards. It won't "eat the world", but find a beautiful balance.
> PoW generates heat, which is not waste, if it is utilized.
There are far more energy-efficient ways of generating that heat than PoW. This is an (extremely) flawed argument.
PoW is roughly akin to resistive heating. Heat pumps are about three times as energy-efficient as resistive heating. This does not even begin to take into account that there is no practical way to transfer the heat generated in massive server farm installations to where it would actually be useful without incurring massive losses.
There's also the need to heat water, and that requires resistive heaters. Also, heat pumps don't really work in colder climates as the only heat source. Resistive heating is the most common way to heat spaces with electricity.
> There's also the need to heat water, and that requires resistive heaters.
In terms of a kettle or cooking you're right, but you also can't cook/boil using mining hardware as they're heat limited to ~100C. For hot water heat pumps work great.
> Also, heat pumps don't really work in colder climates as the only heat source.
Ground source heat pumps work just fine in cold climates and have been rapidly getting cheaper.
You would think then that large bitcoin miners would already be doing this. Maybe installing their miners in large office buildings in cold climates. In theory they could eliminate their cost of electricity and outcompete other miners. Why isn't this happening?
There was a startup on here a year or so ago with this idea. They built self-contained cabinets and put them in people's houses as heaters. Wonder how they're doing. Sounds like an ops nightmare.
Yes, that's what's been happening for the longest time. But it doesn't scale endlessly because of real world practical scarcities like affordable electricity and enough affordable silicon to mine on.
Which then results in situations like miners buying up the majority of new GPU releases, leading to shortages for any other users, and still not having enough to keep up with the difficulty increases.
PoW is the optimal strategy for searching physics for the most effective means of transforming energy to electricity. There’s zero waste in this search — it directly converts electricity into money driving pure demand for more electricity which motivates the search for more efficient generation. It’s more efficient than Aluminum production in this regard— the economy can only absorb a certain amount of Aluminum.
A carbon tax would effectively and immediately steer this search away from using fossil fuels for generation.
People who clutch their pearls over PoW are unwitting Malthusians lacking an appreciation for E=mc^2.
Using the same environmental concern logic, the carbon footprint of traditional banking, which still hauls around, protects, and produces real currency, plastic cards, and financing for every other destructive activity… rather dwarfs Bitcoin.
Where are all your posts pointedly taking apart the system you are surely heavily invested in?
You’re part of the problem by being part of human society. Collective economic inaction must be part of the solution.
Producing less superfluous junk at scale must be part of the solution. That means our individual narratives around value stores must change; traditional banking scales even worse than Bitcoin.
Electricity will not be a problem for the world in the next 30 years...
1. We will all move to renewal or nuclear
2. Bitcoin will decentralize more as the miners will move where electricity is cheaper and thus will cover geography of whole world hydro,thermal,solar,wind etc..
3. Bitcoin can be the main chain and all side chains can rollup and commits.
4. The btc uses will be huge and there will be no dearth of transaction fees..
Companies are holding BTC instead of treasuries, nations are issuing Bitcoin bonds, millions of people are buying in as governments print themselves into sinkholes..
Where is the use case?
Bitcoin already proved its use case years ago, it already won. The only question now is how far can it go.
A positive side effect of your (1.) scenario is that it results in a surplus of renewable energy (mining needs the cheapest energy and renewable energy is generally the cheapest). Having a surplus of cheap green energy is probably good for the economy, though a lot more than 1% would probably be needed to see significant benefits.
A positive side effect of hitting your hand with a hammer is a surplus of morphine your doctor prescribes to make you stop feeling it, and a surplus of lithium your psychiatrist prescribes to make you stop doing it.
And no, renewable energy isn't generally the cheapest, coal is. (Until you factor in the health care and funeral service costs.)
Bitcoin is just China's way of exporting coal through the atmosphere.
It may be the case that coal is cheaper if you ignore the capital cost of the plant (e.g. running an old plant beyond its design life) but including capital costs amortised over the lifetime of the plant coal is not even cheaper than natural gas.
My understanding is that a major source of electricity used for bitcoin mining in China was hydro power during the wet season (when there is a natural power surplus because the level in the dam must be reduced)
Illegal coal is. Because if your plant has been shut down for being too dirty, you have no other option but to continue to operate illegally or just straight up die, and bitcoin is by FAR the best option for consuming that illegal-dirty-plant energy.
The reason it's the cheapest is that you're negotiating with somebody who is desperate and has no options left. They have to sell the energy to you for bitcoin production because there's literally nowhere else they can turn.
The more green energy proliferates and climate change action expands, the more of these plants will be reduced to this desperation. The worst energy production is the cheapest, so long as it's been outlawed and the plant has no other options.
As if that's insightful. But in the spirit of HN, can you say more? My understanding is that renewables are the cheapest and will likely continue to trend in that direction, causation or not. So are you suggesting maybe there's a chance of a super inexpensive non-renewable overtaking this trend?
I was responding to someone's argument along the lines of mining needs energy, the cheapest energy is renewable, therefore mining would drive an increase in the supply of renewable energy, and a forthcoming decline of mining would free up a supply of renewable energy.
I broke this chain of logic by pointing out that renewable is an unnecessary consideration and that mining activities will choose the cheapest option regardless of its renewability.
Furthermore I claim that renewable is not the cheapest. Various subsidies aside, renewable is often many times more expensive to deliver where and when required. The total system cost is many times higher.
I’m really struggling to understand what you’ve written. I certainly don’t feel like my “chain of logic” has been broken. Maybe I just don’t understand your argument. Or maybe I’m just being stupid.
To be clear, I think:
- having surplus (or cheaper) energy is good
- generating relatively more energy through renewable resources is good
- renewable energy is cheaper and so lower energy prices promote renewable energy more (but also reduce the supply in general)
- Current bitcoin mining increases demand and therefore generation and, to some extent, prices while supply catches up
- a drop in bitcoin mining would lead to a surplus of (renewable) energy which I think would be good
Can you help me find what the source of confusion is?
Right. The point is that you get renewable energy which is desirable rather than non-renewable energy. If the latter were cheaper the situation would be less appealing.
I feel like we’re talking past each other. I’m not saying we should want bitcoin wasting a bunch of power. I’m saying there could be positive outcomes to that power suddenly becoming available.
Or we could just have a surplus of green energy for everything else we need. And how can we even have a surplus of green energy when we're probably at a 90% of world energy production deficit?
Scenario 1 involves POWcoiners wasting a lot of energy for several years generating tokens which end up being worthless, keeping coal plants which could otherwise have been decommissioned open for longer to service the resulting higher energy demand, and then when the mining stops and the coal plants can finally be shut down, telling the rest of the world it's only thanks to their energy usage over the last few years that we've been investing in renewables for the last few decades
It's like claiming that if I steal a percentage of your paycheck for a few years and until the government stops me, leaving you with more disposable income than when I was stealing it, I've actually helped you by encouraging you to work really hard.
PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger.
That's why Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already. If the price were to go up tenfold, then so would electricity usage (roughly). That's not sustainable, both technically for grids and economically because electricity prices go up.
Because of that, I foresee two possible futures for PoW cryptocurrencies:
1. The resource usage overshoots and PoW collapses because it gets banned everywhere. (This seems to be playing out now with China having banned crypto mining, Kazakhstan running into grid issues because of the miner influx, and Sweden arguing for a ban in the EU.)
2. The popularity of these currencies stops growing and only some niche applications remain. Speculators leave because there's no more money to be made. Prices go down.