>power usage of cpus, then gpus, and then asics, you'll see that in general power consumption for bitcoin constantly increases.
That does not tell the whole story though, power usage per gigahash is a more accurate measure, because the higher the GH the more secure the network. From CPU, to GPU to ASIC the power use per gighash has fallen significantly.
If you really want to compare it to the banking sector then you need to include the full and real costs of that banking system, power alone is not the only cost. One bail out, as seen in the last few years, dwarfs the power cost of bitcoin. That is without considering the knock on effects of the banking meltdown on the overall economy.
And bitcoin can take advantage of improvements to reduce power consumption of ASICs (as there is no next step tech that will provide an increase in gigahash as ASICs did, so now it goes to refining the power usage. Additionally larger farms are looking at renewable alternatives and uses for the excess heat being produced. It is still a very young sector so there is a lot of working out to do, but it is being done.
This is a pretty dumb comment. The costs associated with bitcoin come down to power and hosting costs, the costs of banking can be huge, difficult to verify and can lead to consumers losing money that banks hold. No one loses bitcoins when a bitcoin miner goes broke or shuts down.
Banks don't fail because of mysterious hidden costs that they didn't know existed. They fail because they get the accounting wrong and/or because people defraud them - i.e., the exact same reasons that lead to mtgox's failure. Difference is, bank deposits are FDIC protected.
We are in agreement. Bitcoin is pegged to energy price, as was noted in the top comment. Energy prices are down. Currencies largely pegged to energy prices, such as the ruble are also down.
On the converse the cost of the bailout is pegged to the price of money. Fiat lowers that cost via inflation. The surplus currency created by the bailout is reflected in low interest rates.
The key is that money is more fungible than energy. Buying energy and converting it into bitcoin is likely to be inefficient when the market reaches equilibrium. As a value store, nobody wants rubles when they try to cash out.
Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the cost of GH and the bad actor and good actor are competing for the same product. The good actor requires less GH to continue to be a good actor than a bad actor requires to become a bad actor. If the bad actor does not mange to obtain 51% of the network hash power then they have to be a good actor or get rid of their equipment.
Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it.
There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction fees, it should happen there as well. But the mining reward is currently substantial, which greatly over-allocates resources to security.
Add that in to the fact that Bitcoin mining has huge externalities in many parts of the world, due to the fact that electricity is often produced by burning coal, and coal externalities are poorly accounted for, and you have a big problem. Or rather, you would have a big problem if Bitcoin were big enough to matter.
You say "there's some efficient amount of money to spend on security, and markets will aim for that amount ... will happen with negligible mining reward" I think is false. See comment: https://news.ycombinator.com/item?id=8887085
I would say the upper bound on the amount of energy someone will spend on BTC is roughly the cost of (prestige of mounting a 51% attack) + (BTC market cap of one individual). If people allocate resources to BTC efficiently then one rogue person will just mount an attack and take over the network for the combination of prestige and fortune. Any person with large BTC wealth will want to have more security to protect his investment appropriately, and your security against said attacks is buying more hashing power. The fact that over time hardware becomes cheaper just means it's a constant losing battle.
Other markets that allocate money to security I think can reach an efficient amount because the system they're protecting does not, as a core part of it, require you to have more processing power than your user's / people you transact with. The two security models are so drastically different I don't think a comparison can be made. Perhaps the closest comparison is password hashing where it's good practice to increase difficulty over time to slow down attacks, but with 2FA and lockouts after N attempts, you actually don't need to allocate significant resources there.
That does not tell the whole story though, power usage per gigahash is a more accurate measure, because the higher the GH the more secure the network. From CPU, to GPU to ASIC the power use per gighash has fallen significantly.
If you really want to compare it to the banking sector then you need to include the full and real costs of that banking system, power alone is not the only cost. One bail out, as seen in the last few years, dwarfs the power cost of bitcoin. That is without considering the knock on effects of the banking meltdown on the overall economy.
And bitcoin can take advantage of improvements to reduce power consumption of ASICs (as there is no next step tech that will provide an increase in gigahash as ASICs did, so now it goes to refining the power usage. Additionally larger farms are looking at renewable alternatives and uses for the excess heat being produced. It is still a very young sector so there is a lot of working out to do, but it is being done.