> 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity.
>In other words, 90% of Bitcoin's carbon footprint is used in a partially successful attempt to compensate for its deficient anonymity.
Miners are mainly rewarded by the new bitcoins that are created in each new block. The energy usage does not come from processing transactions; it is largely independent, it is not uncommon that miners even mine blocks that contain no transactions. If you stop 90% of transactions you will definitely not see the hashrate drop by 90%.
It shocks me that so few people seem to understand this; we keep having articles saying that bitcoin transactions are a waste of energy, and everyone ignoring that the block reward halves every few years until it drops to zero, so it not built with the incentives to use this much energy forever. In fact there is the opposite concern: with widespread usage of systems like Lightning Network and no block reward, there may not be enough incentive for people to mine enough to secure the network.
I believe the argument is explained in the linked post by about slide 7. You simply didn't read enough. The author is not arguing that transaction volume and "work" are directly related, but rather that for the entire system to function meaningfully, mining "work" is required to secure the chain and in order for the miners to be meaningfully rewarded, a speculative market of transactions is required (the author does not agree with you that miner's are meaningfully rewarded by Bitcoins, he argues they require fiat, again see slides 1-7). So by his argument if you stopped 90% of transactions you will see a commensurate drop in mining, because the miners won't do it without reward.
This is part of a larger argument that these requirements drive the system towards centralization, thereby defeating all the work to decentralize. These are not my arguments, but they seemed to be reasonably well presented by someone who understands the mechanics of proof of work.
You're final argument that other chains may rob Bitcoin of incentives to mine may well be additional vulnerabilities of the network, I don't know.
>we keep having articles saying that bitcoin transactions are a waste of energy, and everyone ignoring that the block reward halves every few years until it drops to zero, so it not built with the incentives to use this much energy forever.
Bitcoin transactions aren't a waste of energy, a high bitcoin valuation is an incentive to "waste" energy (commit resources to mining).
The block rewards will drop over time, but they're denominated in BTC, so it's hard to predict what the incentive to mine will be.
It will be a long time before block rewards reach zero.
But not such a long time before block rewards are dominated by transaction fees, a few decades at most (in two decades, the block subsidy will be 32x smaller).
> and everyone ignoring that the block reward halves every few years until it drops to zero
It's not the reward that drops to zero, but only the block subsidy. Thus the reward will largely (eventually entirely) consist of transaction fees. Which means your first observation
> The energy usage does not come from processing transactions; it is largely independent
So which part of those 2 statements you quoted is false? Sure, the energy of usage of Bitcoin is not directly used to process transactions, but it still part of the Bitcoin system.
It is strange language to say 'carbon footprint is used' but I see no interpretation where the statement is correct. The 'carbon footprint' is actually 'used' to secure the network, motivated by how the process generates more bitcoin. The size of the carbon footprint is not caused by, nor dependent on, that 90% of transaction volume. It doesn't make sense even when I try to find the most forgiving interpretation. There's an implication that the data means the transactions are enormously wasteful but it doesnt logically follow.
The block reward dropping doesn't mean that the value of the block reward drops though, does it? If the value of bitcoin goes up then the value of the block reward can increase even though the amount of bitcoin in the reward decreases.
That's what is required for the network to remain secure, but there is no direct mechanism to cause that to happen. You can observe all the other blockchains with weak security as experiments: there is nothing preventing the security from just dropping to the point where it is easy to perform 51% attacks.
Absolutely but even as someone who is very much against crypto it’s such a massive hole that threatens miners directly I can’t see it going unaddressed. Or the whole thing collapses which suits me just fine.
It sounds like just a nitpick to me.
The networks exists to process transactions. It's only fair to count its total energy consumptions to see how efficient it is. That it does a lot empty work without processing anything is a by product of a bad design.
If it's mainly about minting new coins and once it's done the energy usage goes down then we could just skip the step, you know?
> 90% of transaction volume on the Bitcoin blockchain is not tied to economically meaningful activities but is the byproduct of the Bitcoin protocol design as well as the preference of many participants for anonymity.
>In other words, 90% of Bitcoin's carbon footprint is used in a partially successful attempt to compensate for its deficient anonymity.
Miners are mainly rewarded by the new bitcoins that are created in each new block. The energy usage does not come from processing transactions; it is largely independent, it is not uncommon that miners even mine blocks that contain no transactions. If you stop 90% of transactions you will definitely not see the hashrate drop by 90%.
It shocks me that so few people seem to understand this; we keep having articles saying that bitcoin transactions are a waste of energy, and everyone ignoring that the block reward halves every few years until it drops to zero, so it not built with the incentives to use this much energy forever. In fact there is the opposite concern: with widespread usage of systems like Lightning Network and no block reward, there may not be enough incentive for people to mine enough to secure the network.