HN Gopher Feed (2017-08-26) - page 1 of 10 ___________________________________________________________________
Bitcoin Energy Consumption Index
136 points by schwabacher
https://digiconomist.net/bitcoin-energy-consumption___________________________________________________________________
rainbowmverse - 2 hours ago
Just another thing people went wild for without thinking about
externalities. You don't need to be a genius computer scientist to
realize a thing that requires a constantly rising amount of
processing power just to keep pace will eventually need an
unreasonable amount of power.
[deleted]
diafygi - 2 hours ago
Well...yeah. It's kind of by design, right?I mean, it's either
"work" or centralization, so that's the trade off bitcoin makes.
The work is the disincentive against cornering, right?
jaekwon - 50 minutes ago
No. There are sustainable alternatives to PoW. See Tendermint
and the Cosmos Network, for example.
mark024 - 2 hours ago
demand & offer, if the energy were more expensive, fewer would mine
and the difficulty would drop, I wish I could mine on my low
powered laptop, but if you want to raise the pitch forks against
bitcoin, on the same logic, we could stop playing computer games,
watch movies/shows/tv etc, even using modern phones, the old nokias
that lasted a week one one charge would do fine.
rainbowmverse - 2 hours ago
People have been raising the issue of our civilization's
wastefulness for years. Where have you been?
mark024 - 2 hours ago
Don't remember seeing any article about how many houses we
could power by not playing computer games.
rainbowmverse - 2 hours ago
A bit old, but it's one of the first results on
Google.https://www.scientificamerican.com/article/video-
gamers-use-...>> U.S. homes have about 63 million video game
consoles, and together they use about as much energy as San
Diego does in a year, according to a 2008 study by the
Natural Resources Defense Council
glenstein - 1 hours ago
Sure, we talk about plastic in the oceans and CO2 and
electricity usage at a general level. But I think the commenter
you are replying to is basically right that there isn't a
sustained cultural conversation targeting the wastefulness of
very particular forms of applied electricity usage.And I don't
think a one-off article changes that since you can find one-off
articles about practically anything. It seems weirdly specific
to talk about bitcoin's energy cost this way when we don't
single out, say, Clash of Clans or facebook posts about the Ice
Bucket challenge and lament their specific energy costs. And I
think the reason for the difference has to do with the
idiosyncratic culture surrounding bitcoin rather than bitcoin
being a unique harm in terms of electricity usage.
virtuabhi - 2 hours ago
I think you are missing the point that the service which consumes
so much energy should provide some value.
antocv - 2 hours ago
Byteball is not PoW or PoS, but has no energy waste for consensus.
schwabacher - 2 hours ago
The statistic that stands out to me from this article is that 1
bitcoin transaction uses enough energy to power 5.58 us households
for a day.I'm hoping someone more knowledgeable about bitcoin can
comment - is it likely that this will continue as the mining reward
decreases? How expensive will transactions be after that happens?
And if smaller rewards reduce total mining and power consumption,
how vulnerable does the blockchain become to attack?What i'm
wondering is if transaction costs in the 'end state' of bitcoin can
be competitive with centralized competitors like credit cards,
paypal, etc. given this level of power consumption?
GBiT - 2 hours ago
Well... Right now we have blocksize limited to 1 mb. If we will
remove this limit and Bitcoin becomes a global currency, we can
earn a lot from transaction fees. nChain estimates about 0.05 for
a transaction if it will became us big as VISA. If you interested
where is one youtube video talking about possible fees.
TekMol - 2 hours ago
I'm hoping someone more knowledgeable about bitcoin can
comment I did and was quickly voted to the bottom. bitcoin
can be competitive with centralized competitors like credit
cards In it's current form it can't. It's already running at max
capacity. No further increase in transactions per day is
possible.If there will be a cryptocurrency that can handle as
many transactions as Visa, it will be something else then what we
currently call Bitcoin.
spiorf - 50 minutes ago
Lightning network allows trustless instant and low fee
payments. It is at the embrional stage yet, and the whole
structure has yet to be defined, but the point to point
protocol for trustless off-chain instant transactions is ready.
etatoby - 1 hours ago
Iota?
csomar - 2 hours ago
Well, transaction costs are already super high. I made a
transaction yesterday for $5 and it was single input/output. But
it was urgent, so I paid generously.As the network grows, the
demand for transaction grows too. The fees will not increase
because the reward decreases. Simply miners will stop mining as
it is no longer profitable. But this will happen in 2090-2140. So
it is very far.I think in the future, lightning networks and
centralized wallets will be the way to go. The blockchain will be
used by only a few big guys and transaction costs will be over
$100/tx.
Digiconomist - 2 hours ago
So, the block reward is indeed increasing, but two other things
are increasing very fast. First is the price per Bitcoin, and
second is the number of fees per block. Just the day before
yesterday miners received 1800 coins from mining and an
additional 500 from fees. That's already over 20% of the total
daily reward. This two things are more than compensating the loss
of block rewards (in BTC terms). Things aren't expected to
improve based on this.It's kind of insane if you compare to other
payment services (if that's how you use BTC). Not only do you pay
$5-$10 per transactions, but that transaction also consumes
20,000-30,000 times more energy.
maxerickson - 2 hours ago
So the calculation is incredibly sensitive to the assumptions, that
miners spend 60% of revenues on electricity and that they have an
average cost of $0.05 per kw-h.Anyone have any sense of how
accurate either of those is?
Digiconomist - 1 hours ago
Just want to note that 60% is the expected future (ultimately),
but the current % is more like 22 (found by taking the total cost
# divided by the total annualized mining revenue #).
jstanley - 1 hours ago
So in that case it's only ~2 houses rather than 5.58? Is this
your website? Do you think the figure should be made more
accurate?
pedrocr - 2 hours ago
Spending 800M$ a year in electricity alone to run a digital
currency is massive and at 8$ per transaction seems incredibly
inneficient. The comparison to the VISA network is incredible.
Independently of your opinion of the value of Bitcoin in the long
term the current network is definitely not more useful to society
than the VISA network.
GBiT - 2 hours ago
800M is not to run the network, its hard money. If 1 mb limit was
removed today, this network can handle loads of VISA and more.
Electricity is spent to create new blocks... Hard work is done to
create new Bitcoin and verify transactions.
politician - 2 hours ago
This is one of the reasons I prefer proof-of-stake schemes, despite
the complexity, low power consensus is preferable given roughly
equivalent tamper resistance. State collusion with mining pools is
a credible threat to proof-of-work schemes.
jstanley - 2 hours ago
Proof of Stake is just Proof of Work with hidden work.Miners will
crank whatever handle they can crank to increase their payout, up
to the point where they spend more marginal effort cranking the
handle than the corresponding marginal payout is worth. In PoW
(in bitcoin) that handle is SHA256. In Proof of Stake, it's more
obscure, but they will find it, and they will crank it, and
you'll just be back where you started.I'm not convinced PoS is a
practical improvement on PoW.
jcfrei - 1 hours ago
This is a misleading argument. Yes, miners will always spend
more until marginal revenue == marginal cost. The problem with
the proof of work system of bitcoin (and many others) is its
inefficiency that only allows for a low transactions
throughput. Proof of work has no inherent value for the system,
it's simply a way to cap the network throughput to about 1MB
per 10 minutes because anything lower than 10 minutes will make
the network increasingly vulnerable to adversarial attacks [1].
There's got to be a way to increase network throughput beyond
this while maintaining censorship resistance and
decentralization.[1] C. Decker, Information Propagation in the
Bitcoin Network:
http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...
tylersmith - 1 hours ago
The point is expend work to create signatures, creating a
crytoeconomic cost to state changes.
jcfrei - 54 minutes ago
PoW doesn't increase the security of the ledger itself, its
purpose is to reduce the number of forks and also making
double spending attacks very expensive. Why can't the
computing power of the entire network be used to just
verify the integrity of all transactions and skip the nonce
finding part? This would immensely increase network
throughput. The reason is because Bitcoin's PoW
implementation can't provide the same level of consensus
and security with a higher number of transactions. Newer
PoS systems might.
spiorf - 1 hours ago
The problem with POS is that you do not have a mathematical
guarantee of immutability. It costs nothing to try to stake on
different blocks, and every counter-measure relies on the fact
that the network is not partitioned.This would be fatal in case
of a remote crash vulnerability, because an attacker could
partition the network at will.Or a nation/state could cut
internet access.Without real world energy, you lose byzantine
fault tolerance.
merkaloid - 2 hours ago
>Number of U.S. households powered for 1 day by the electricity
consumed for a single transaction: 5.58The one that surprised me
the most
Taek - 26 minutes ago
It's a bad stat. The electricity that goes into a block doesn't
just confirm the transactions in the block, it also confirms all
the transactions in all blocks prior to that block, and those
transactions have a cumulative value of about $70 billion.The
bleak picture painted on the article is an incomplete one by far.
alister - 2 hours ago
You can't compare Bitcoin to Visa. Visa is merely a payment sytem
-- a means of transfer of money that already exists. Visa is not
money.Bitcoin however is money. As well as being a payment
system.The correct comparison would be to compare the cost of
Bitcoin to U.S. dollars or gold. Gold requires hundreds of dollars
per ounce and untold energy to extract. U.S. dollars require the
existence of a powerful economy and trillion dollar military to
keep the currency secure and desirable.
quinndupont - 23 minutes ago
Bitcoin wants to be money, but it really isn't. It fails the
traditional account (originally from Jevons); see Kub?t 2015 [1];
Mandjee 2015 [2]. More obviously, it is far too volatile to
function like money in a normal sense, see Golumbia 2017 [3][1]
http://www.sciencedirect.com/science/article/pii/S2212567115...
[2] https://litigation-
essentials.lexisnexis.com/webcd/app?actio... [3]
https://motherboard.vice.com/en_us/article/xwwv83/cryptocurr...
leroman - 1 hours ago
The fairer comparison would be Bitcoin vs Visa the corporation,
which includes buildings, people, air-con, employee traveling for
work, to begin with.Still, let's hope Bitcoin moves away from
wasting energy soon.
akvadrako - 56 minutes ago
Bitcoin can't move away from wasting energy - the entire design
is based on that aspect.
Taek - 54 minutes ago
Also the courts that enforce the contracts visa makes, the FBI
that chases people who commit fraud, the police and jails who
enforce the decisions of the court, etc etc.Blockchains can
operate without all of those.
Digiconomist - 1 hours ago
The comparison to VISA is a common one. Whether it makes sense to
use BTC in a certain way ultimately depends on the user and how
they're using it. But honestly, as a medium of exchange Bitcoin
simply doesn't make sense in most cases.
spiorf - 1 hours ago
At least until/if Ligtning networks is proved to work.
IgorPartola - 1 hours ago
Compare it to cash and coins seems the most appropriate. How much
energy does harvesting cotton, making into bills, and
distributing it all over the place take? Don't forget those fun
armoired trucks that have to cart it from place to place. Pennies
famously cost more than $0.01 to produce because of the cost of
metal. Metal that has to be dug out of the earth, trucked,
smelted, trucked, stamped, trucked again.
alister - 1 hours ago
A literal comparison to paper bills isn't quite right. A small
sheet of linen/cotton paper could represent $1, $100, or
hundreds of millions of dollars (eg., a stock certificate of a
million shares of Apple stock).You have to compare Bitcoin to
the concept of money, like U.S. dollars, but not literally the
paper. A comparison to bars of gold is OK however since that is
money and not a representation.
[deleted]
hwillis - 1 hours ago
According to this it costs almost 21 cents to "make" a dollar
of bitcoins. According to the mint's 2015 annual report[1]
they made 1,114 million dollars in circulating coins at a cost
of .51 cents per dollar in coins.However bills cost 4.9
cents/dollar for $1 bills and half a cent per dollar for $20
bills. So the vast majority of money is much, much cheaper
than a bitcoin.[1]: https://www.usmint.gov/wordpress/wp-
content/uploads/2016/06/...
IgorPartola - 1 hours ago
That's to make it. What about trucking it around, accounting
for it, securing it, etc.?
acchow - 1 hours ago
I don't agree with the comparison to "making" coins or
cash.Coins and cash actually get consumed as they degrade
and/or get lost or destroyed. You need to replenish the
supply.But you can circulate bitcoin forever.You need to
compare transactions.How do I send you cash? You can give me
an address to meet you at. We both drive our cars or take
public transit there and consume some amount of energy and
time to meet up. Then I give you cash.Or you could just tell
me a bitcoin address to send to.
egypturnash - 40 minutes ago
I can also put that cash in a sufficiently opaque and
uninteresting-looking envelope, put it in the mail, and the
Post Office will take over. There is time and energy cost
incurred, but it is a cost already being paid. Mostly by
advertising, right now, since an assortment of lawmakers
have decided in their infinite wisdom that it's not
something our tax dollars should be supporting any more.
colordrops - 27 minutes ago
Cash and coins are not a store of value and are also a fiat
currency associated with a central authority. Gold is a better
analogy.
hwillis - 1 hours ago
>The correct comparison would be to compare the cost of Bitcoin
to U.S. dollars or gold. Gold requires hundreds of dollars per
ounce and untold energy to extract. U.S. dollars require the
existence of a powerful economy and trillion dollar military to
keep the currency secure and desirable.No it isn't- the energy
cost of bitcoin is ongoing and depends on the volume of
transactions. Each time money changes hands, it costs energy to
verify it. Comparing it to VISA or ACH makes the most sense,
because those also incur ongoing costs per transaction.
tylersmith - 1 hours ago
Energy consumption is in no way related to transaction volume.
Whether there are thousands of txs per block or only one the
energy used will be the same.
matt_wulfeck - 3 minutes ago
Which is part of the problem, since the max number of
transactions Bitcoin can process a second is around 10.
alister - 1 hours ago
If read the article correctly, he's including the cost of
mining Bitcoin, not merely energy cost to verify a coin (which
is absolutely trivial). Once all Bitcoin is mined (yes, there's
a built-in maximum), or it becomes prohibitively expensive to
mine, there won't be any mining costs.You can look at the
current Bitcoin energy costs as the startup cost to establish a
new gold mine or a new country with its own currency.
jstanley - 1 hours ago
Once all bitcoin is mined, there will still be mining costs,
but they'll be 100% paid by tx fees.Bitcoin will probably
look extremely different by then, so most bets are off
anyway.
cloudhead - 1 hours ago
Not quite, even when the cap is reached, new blocks will
still need to be created for new transactions, which will
require proof-of-work to achieve consensus, and thus energy
expenditure.
hwillis - 1 hours ago
Mining always needs to happen. Once it stops producing
coins, the cost burden just moves over to the people using
the currency. The mining cost only decreases if the proof-
of-work difficulty decreases.If mining becomes less
profitable, fewer people will mine and the proof-of-work will
tune to be less difficult, but the cost never disappears and
there's still a huge amount of energy wasted in the selection
process for adding blocks. If too few people mine the
currency will be totally destabilized.
acchow - 1 hours ago
> Once all Bitcoin is mined (yes, there's a built-in
maximum), or it becomes prohibitively expensive to mine,
there won't be any mining costs.In that future you will still
mine blocks, but there won't be any new bitcoin generated in
that block. Sure, you might want to use a different word for
that than "mining", but it will still have very real and
significant energy.
tylersmith - 1 hours ago
"Validators" is the more generic for term what are also
called miners or stakers.
proofofstake - 1 hours ago
For a fair comparison we should look at "energy" in an abstract
manner. Time and money is energy too. Every time gold exchanges
hands, it also costs energy.
spiorf - 1 hours ago
Think about the energy expended to take that gold out of
earth. And to make the chemicals for extractions....
spiorf - 1 hours ago
This is very wrong. It does not work that way at all.Volume or
value of transactions has nothing to do with the energy
expended.The energy is needed to calculate a mathematic proof
that makes sure your transaction cannot be reversed or tampered
with.This mathematic proof on average is calculated every 10
minutes, with no correlation to the number of transactions.You
make a transaction, and if the bitcoin network has expended
1TWh after you sent it, at least 2TWh are needed to reverse
that transaction (and/or any other transaction). You can see
how over time it becomes impossible, even with unlimited money,
to reverse one.
hwillis - 1 hours ago
The hashing is merely a way to choose a random block. It's
not a proof and it doesn't do anything fancy. It just picks
a random computer to say "this is how the transaction history
looks".The energy increases with the volume of transactions
because there will be more people calculating hashes. The
more people mining, the harder they make the hash calculation
so that the target is ten minutes. More transactions = more
people mining because there is more demand to verify blocks.
spiorf - 1 hours ago
I repeat, you got it very wrong.Transaction number is not
correlated with mining energy expenditure.Mining is used to
secure the ledger in a way that the same amount of energy
is needed to alter it.The block hash begins with a number
of zeros.Try for yourself how many tries it takes to find a
string that hashes to a hash beginning with 3 zeros.Bitcoin
block hashes begin with 13 or 14 zeros IIRC. This means
that you need to try trillions of combinations again if you
want to alter a block. And then you must keep finding other
hashes with enough zeros fast enough to outcompete the
whole network.But the cost of hashing is the same, with 1,
10 or 1000 transactions in a block. And the block time is
on average fixed at 10 minutes.You don't hash transactions
directly, you hash a block header that keeps only the
merkle root hash of the transactions. The merkle root is
fixed size.
Retric - 55 minutes ago
Hash costs are a large fraction of overall costs, but not
100%. Network bandwidth is not free. The more
transactions the more beefy the full nodes must be, worse
every node pays the full costs or lose out on some
transaction fees. Further, compute nodes must keep in
communication with full nodes adding even more
transaction overhead.But, it gets worse as maintaining a
value store takes compute power just to maintain value.
When hashing power drops it becomes easier to double
spend and regular double spends would nearly instantly
destroy the value of all existing bitcoins outside of
pure novelty value.
pdpi - 49 minutes ago
> Transaction number is not correlated with mining energy
expenditure.You're only kind of right. The mining
algorithm cares not one bit about number of transactions,
so higher tx volume has no direct effect on the mining
energy expenditure. But it does have a second order
effect.More transactions usually entails higher fees (as
people compete for block space to put their transactions
in). More fees means higher mining rewards, means higher
incentive to mine, means more mining activity, and,
therefore, higher energy expenditure.
hwillis - 43 minutes ago
You can't just scale the number of transactions in a
block forever and still have a stable currency. If you
have only a few miners working on massive blocks, then
they confer very little confidence onto the transactions
in the blocks. More transactions, more mining. The
whole point of the system is to verify transactions and
it stops working if it doesn't do that.
SimonPStevens - 54 minutes ago
You have a very distorted view of how it works.The number
of transactions is entirely unrelated to the number of
people mining. There could be an increase in transactions
while the number of miners falls, or vice a versa. This is
why the hash difficulty adjusts, to ensure that the new
block rate (and therefore the transaction rate) stays the
the same regardless of the number of miners.If the number
of miners dropped, energy use would drop, but transaction
throughput would remain exactly the same.Also, transaction
size (in value) is entirely unrelated to transaction size
(in kilobytes) which is what effects the number of
transactions that can happen. Most transactions that just
transfer some bitcoin from one assess to another are
exactly the same number of kilobytes irrespective of how
many bitcoin are being transferred.
pdpi - 44 minutes ago
> The number of transactions is entirely unrelated to the
number of people miningI also commented elsewhere to this
effect, but this is not quite true: number of
transactions correlates very strongly with higher
transaction fees, which further incentivises mining
activity. Higher transaction volumes also usually come
hand in hand with higher prices, which is another
incentive for mining activity. Just because there is no
direct effect (which you're absolutely right ? the mining
algorithm cares not one bit about the transaction volume)
doesn't mean there aren't second order effects at play.
zeroxfe - 1 hours ago
> the energy cost of bitcoin is ongoing and depends on the
volume of transactionsWait, what? That's not correct at all.The
energy cost is based on the "difficulty", which is derived from
the moving average of the hashpower in the network. Bitcoin
effectively forces the network to take a specific amount of
time to mine a block irrespective of the number of mining
nodes. The transaction volume has nothing to do with it.
pedrocr - 1 hours ago
>Gold requires hundreds of dollars per ounce and untold energy to
extract.The gold you trade is already almost all extracted, I
doubt there's 1B$ a year in gold extraction investment but maybe
there is.>U.S. dollars require the existence of a powerful
economy and trillion dollar military to keep the currency secure
and desirable.All currencies require a relevant economy using
them to be valuable so that's not a real requirement. As for a
trillion dollar military that's doubtfull. There are plenty of
currencies with the market cap of Bitcoin that don't have nearly
as much of a military backing them.
moobyfrong - 58 minutes ago
Accurate figures exist. In 2016 world gold production was 3,100
metric tons, worth US$128 billion. Above ground gold stock is
something over 180,000 metric tons.New mining increases gold
stock 1-2% per year, but very dependent on market
conditions.Gold has double the volatility of equities with less
total return than U.S. treasuries. It doesn't really belong in
most people's portfolios.
jimrandomh - 1 hours ago
> Gold requires hundreds of dollars per ounce and untold energy
to extract.A valid comparison. Gold mining is spending resources
to increase the amount of gold in existence, without delivering
any other value.> U.S. dollars require the existence of a
powerful economy and trillion dollar military to keep the
currency secure and desirable.Not a valid comparison. Outside of
a few relatively inexpensive activities at the US Mint and inside
banks, no resources are being spent specifically on increasing
the money supply. The value of the dollar is the byproduct of
economic activity that exists primarily to achieve other things.
Finnucane - 7 minutes ago
Gold is also not money, and arguably also mining it is largely
a waste of resources and environmentally disastrous.
jstanley - 1 hours ago
Note that bitcoin mining does not primarily exist to increase
the amount of bitcoin in existence. That's just part of the
incentive to mine.Bitcoin mining exists to timestamp
transactions so that the network can achieve consensus on the
state of the ledger. It is designed to use as much energy as
possible, so as to make it expensive to cheat.
tylersmith - 1 hours ago
In fact, in the white paper it's just described as the
decentralized time stamp server and that's its entire
purpose. The term "blockchain" and all the hype about its
magic powers came later.
proofofstake - 1 hours ago
> compare the cost of Bitcoin to U.S. dollars or goldAll-in
sustaining costs for mining an ounce of gold (worth $1,293.70) is
between $1,100 and $1,200.
hypnoce - 1 hours ago
>Bitcoin however is money.Bitcoin is not money as we think in a
modern way. If you think of money a way to exchange goods then
yes Bitcoin is money. Modern money (printed piece of paper
labeled in currencies in its materialized form. Just a sequence
of digits on your bank account) is dept. That's why currencies
have interest rates (IR). It is also possible to create money out
of nothing. IR and volume are adjusted according to the economy.
Bitcoin is closer to a commodity in the sense that it is finite
and requires work to be extracted.
abalone - 1 hours ago
Note: Ethereum adds another 30% and is rapidly rising.[1][1]
https://digiconomist.net/ethereum-energy-consumption
z3t4 - 1 hours ago
While it's a lot of power being used, it's pretty much all
automated, versus any other currency that takes a lot of manual
labor. Bitcoints biggest flaw in my mind is that there is no trust
built in. After each transaction it should be possible to give a
rating, so that each wallet/account has a reputation, it could work
like "Pagerank". Trust is essential to Bitcoin and Bitcoin markets
usually has either public trust, or rating and escrow added on.
[deleted]
mrb - 57 minutes ago
BECI is flawed, I wrote a critic of it some months
ago:http://blog.zorinaq.com/serious-faults-in-beciThis motivated me
to research and publish a more precise energy comsumption estimate,
and I have been published in Bitcoin
Magazine:http://blog.zorinaq.com/bitcoin-electricity-
consumptionhttps://bitcoinmagazine.com/articles/op-ed-bitcoin-
miners-co...I always like to remind people that Bitcoin miners
consume about the same amount of energy as Christmas decorative
lights in the US. Kinda puts things in perspective...
[deleted]
chinathrow - 43 minutes ago
> I always like to remind people that Bitcoin miners consume
about the same amount of energy as Christmas decorative lights in
the US. Kinda puts things in
perspective...https://en.m.wikipedia.org/wiki/Whataboutism
amelius - 1 hours ago
> Electricity consumed per transaction: 165 kWhThats about $20 in
the US.If a transaction is that expensive, how can this system even
work for transactions with a value of that order? Are large
transactions "sponsoring" small transactions?What happens if more
people use the system for small transactions? Will BTC become
unusable?
rothbardrand - 1 hours ago
Yeah, that's inaccurate. The major portion of that energy
expenditure is keeping the bitcoins that aren't moving secure.Put
another way, this is saying it is estimated to take about $800M
it keep $40B of bitcoin secure.This is probably a bit expensive
in terms of comparing to fiat currencies (But then we are
probably not covering all the real costs of those currencies)...
but bitcoin is still in the technology adoption life-cycle and
has not yet become a currency.When the inflation of BTC has
declined and it has become fully adopted (assuming this happens)
then the numbers will likely start to make a lot more sense.Also,
the vast majority of transactions in about 2 years will likely be
happening off chain using lightening network and the like.Those
transaction fees will happily be covered by merchants who are
currently paying %2-%5 per transaction to Visa et. al. and will
be more than happy to pay %1 or less to Bitcoin to manage a
lightening channel.Really, it will be companies disrupting Visa
building payment networks out of lightening channels and they
will have to keep fees really low because LN is open source and
anyone can compete with them.
avar - 56 minutes ago
A transaction here is a block. A block averages 2000 or so
transfers, so that $20 becomes $0.01 for any individual transfer
in the block.Electricity price in the US is also irrelevant. As
the article shows just over 0% of blocks are mined in the US, or
a rounding error. Bitcoin mining chases cheap electricity.
jaekwon - 48 minutes ago
No, a transaction here is referring to a transaction. The
block reward on Bitcoin is already 12.5BTC is 12.5 ? $4000+.
That incentives the expenditure of significantly more energy
than $20 worth.
avar - 39 minutes ago
You're right. Sorry. After re-reading the article I see the
entirety of my comment is wrong.
sireat - 47 minutes ago
I could have sworn there was still sizeable Bitcoin mining done
near the cheap hydros such as in Washington State(around
3c/kWh).Sure China and Ukraine is cheaper but not that much.
justinzollars - 1 hours ago
Wow. Nice rough math! Thats ridiculous. Hopefully Ethereums POS
(proof of stake) system will fix this.
jaekwon - 58 minutes ago
Check out Tendermint and the Cosmos Network.
jstanley - 1 hours ago
Large transactions are not sponsoring small transactions.
Transactions are priced by their size in bytes, so the monetary
value of the transaction is totally irrelevant to the fee.People
holding bitcoin are essentially sponsoring all transactions, if
you want to look at it that way, because miners are making money
both from fees and from new bitcoin that is created, which
dilutes the value of all existing bitcoin.
amelius - 1 hours ago
So, if you look just at transaction cost the system clearly
cannot sustain itself. But as more people buy into BTC, the
system keeps from collapsing. If you ask me, that's starting to
look like a Ponzi scheme in disguise ...
rothbardrand - 1 hours ago
Check your premises-- your transaction cost is inaccurate.
amelius - 33 minutes ago
Check jaekwon's comment above.
jacquesm - 1 hours ago
What the article fails to take into account is the huge volatility
of BTC relative to the USD. So if you are going to make this
calculation over a whole year then you have to split it up into
many small calculations (for instance, per block with the going
rate of BTC:USD at the time) and then accumulate in USD.On another
note: a very large fraction of all bitcoin mining is happening in
China and electricity cost there is quite different compared to the
USA.So I seriously question the prime assumption leading to the
quoted energy consumption.
spiorf - 1 hours ago
The energy expended is a guarantee of security and immutability.The
fact that real world energy is expended is the thermodynamic
guarantee of the irreversibility of a transaction.If you have
access to the VISA database, and change something, you cannot have
the cryptographic proof that it has not been tampered with. At the
very best, you trust a VISA root key.With Bitcoin you trust math
and physics, telling that if the whole network has expended 1TWh
after my transaction, at least twice that energy will be necessary
to reverse it, and the only data i need to prove that, is the
blockchain.
Taek - 44 minutes ago
*at least an equal amount of energy is needed to reverse it
kybernetikos - 1 hours ago
I get that the energy is being used for something useful and
cool, but when the energy cost to secure a single transaction
could power 5 households for a day, then something is wrong and
needs to be fixed.Surely even fans can agree there's a level at
which it just doesn't make sense any more.
joeyspn - 1 hours ago
> something is wrong and needs to be fixedIt's already fixed
with PoS... IMO the winner of the cryptocurrency-race will be a
PoS-based coin.
tylersmith - 1 hours ago
PoS deserves research but it's far from shown itself to be
viable as the dominate consensus mechanism.
Taek - 42 minutes ago
A lot of research was done by heavyweights for PoS in 2012
and 2013. The consensus was that it was a fruitless pursuit
and that PoS could not match PoW in terms of security and
decentralization.Several papers have been written about
it.https://download.wpsoftware.net/bitcoin/pos.pdf
tylersmith - 37 minutes ago
I'm just trying to not be absolutest by stating it can't
work. I'm in the camp that believes it's just obfuscated
PoW.
jstanley - 1 hours ago
Yes, there is a level at which it doesn't make sense any more.
In a sufficiently efficient market, that is the point we are
at, at any given point in time.I believe the bitcoin mining
market is efficient enough already that we're more or less
there.
slg - 1 hours ago
That shows the primary failings of putting all trust in an
efficient market. The "makes sense" breaking point in an
efficient market is when it stops making financial sense for
the miners. It relies on rational miners who don't don't
succumb to the sunk cost fallacy after investing large sums
upfront in mining rigs. While it also ignores the negative
externalities involved in increasing global electricity usage
like climate change.
kybernetikos - 59 minutes ago
Yeah, I hadn't really considered how simple economics
essentially forces this to grow to exactly the point where
the externalities are unsupportable based on the benefit
provided.
Taek - 37 minutes ago
That energy is not just confirming the transactions in the
existing block, it is protecting all transactions in the
blockchain history, adding security to each of them. That
represents a history of more than $70 billion in value.
Suddenly it doesn't seem so expensive anymore.
toisanji - 2 hours ago
Such a waste of energy for this experiment.
givinguflac - 2 hours ago
That is an absurd amount of energy. This really changes my opinion
on this being a feasible currency.
spiorf - 1 hours ago
The energy expended is the security of the currency.If a
transaction is confirmed by 1 TWh of proof of work, that much
energy is required to alter it, meanwhile the bitcoin network has
expended even more energy.It is still young, and the exponential
growth in energy consumption is going to stop as an equilibrium
is reached.
GBiT - 2 hours ago
Energy is whats backing Bitcoins value. You need a lot of energy
to create this valuable document - block
tradersam - 2 hours ago
This is completely true; miners will mine the coin that gives
them the best ROI. If Bitcoin's value decreases without an
equal decrease in difficulty, the whole thing could crash quite
fast.
politician - 2 hours ago
That's a good point -- in earlier times slaves worked the mines
to extract gold from raw earth. Gold was a good store of value
because of its scarcity. Likewise, Bitcoin mines the electrical
grid.
jstanley - 2 hours ago
Are you arguing that using the electricity you paid for is
immoral, or are you arguing that using slaves is not immoral
as long as you use them for something good?I don't see how
your analogy applies.
hwillis - 1 hours ago
Slaves are unimportant to his point. Gold being scarce
means it was hard to counterfeit gold coins in a time when
you couldn't mint coins in a reliable way. Likewise, the
purpose of bitcoin mining is to verify transactions in a
way that is hard to counterfeit, making it more difficult
to get a majority share of mining. The difficulty enforces
scarcity.
jstanley - 1 hours ago
Sorry, I thought it was a thinly-veiled moral argument
equating bitcoin mining to use of slaves. Glad I was
wrong.
politician - 1 hours ago
Correct.
hwillis - 1 hours ago
Energy doesn't back bitcoin, it just stops the currency from
inflating. Or it would, if mining could always produce new
bitcoins, but IIRC its supposed to stop after a while.The
difference being that a bitcoin does not entitle you to some
unit of energy or work produced from it. The energy used to
verify bitcoin transactions is just lost.
jstanley - 1 hours ago
Energy backs bitcoin in the sense that "cheating" (reversing
transactions or double spending) costs inordinate amounts of
energy.
hwillis - 19 minutes ago
"backing" a currency usually refers to exchanging fiat
money for a good with intrinsic value. That does not
describe the relationship between bitcoin and electricity
at all.Energy ensures bitcoin's ownership, not its value
(although it does impact its value indirectly).
GBiT - 1 hours ago
The more energy Bitcoin network uses, the more valuable
Bitcoins are... If Bitcoins value falls down, energy usage
will fall down too. Energy is used to create valuable
document - The Block. And block is not necessary new
Bitcoins, its transactions too.
hjnilsson - 2 hours ago
1/1000th of global energy production. Or the output of one
nuclear power plant, or the same as all energy lost to friction
for every car in the world. That really puts it into perspective.
homero - 1 hours ago
Much of the mining is done next to hydro plants in China.
etatoby - 1 hours ago
Still, there is a fixed amount of hydro power available,
short of building new dams. This puts Bitcoin's toll on
fossil fuel.(If Bitcoin didn't exist, the hydro power would
still be there and would be used for something else,
therefore less fossil fuel would have to be burned in its
place.)
aianus - 1 hours ago
> If Bitcoin didn't exist, the hydro power would still be
there and would be used for something elseThat's not a good
assumption. There are many power plants in China in the
middle of nowhere unconnected to much. It's completely
plausible that the entire bitcoin network could run on
clean energy that otherwise couldn't be used for much else
because it's too remote (geothermal in Greenland or
something).
Digiconomist - 1 hours ago
I hope we're not building hydro power plants for the sole
purpose of supporting the Bitcoin network. The energy may
be "clean", but these projects have their own impact on
the surrounding ecosystem.
1001101 - 2 hours ago
I agree. I've been racking my brain on ways to connect proof of
work to something useful (like folding proteins, general purpose
distributed computing, etc.)
SilasX - 1 hours ago
There's primecoin, which uses a proof of work based on finding
a special kind of prime number, which (they claim) has use in
the outside world, at least the academic
one.https://en.wikipedia.org/wiki/PrimecoinGenerally, to have a
useful PoW, it needs to meet some criteria:1) Easily
verifiable2) Necessary work on the problem is easily
quantifiable and estimable3) Problem can be programmatically
generated from random data.One model might be NP-complete
problems. Users feed in problem instances they want solved,
with a bounty. You find out how many guesses it should take. A
valid proof of work then requires solving enough such problems,
combined, to exceed the difficulty threshold. (You'd also need
to solve one based on the current known transaction
history.)The problem there is that it's hard to know if a given
NP complete problem instance is "one of the hard ones" and to
find such instances.
kobeya - 1 hours ago
Do that and it would no longer be useful as proof of work.
Proof of work-i-was-going-to-do-anyway is not useful for
securing the ledger.
akvadrako - 1 hours ago
That's incorrect. All that matters is you can't game the
system by taking shortcuts or deciding what the problem will
be beforehand; the work cannot be even partially computable
without knowing the previous block.
spiorf - 53 minutes ago
But there is no known function that has these properties
and is useful in real world.
Taek - 48 minutes ago
No, you are incorrect. The important aspect of proof of
work is that it is very expensive to create an alternate
history (maybe one where you didn't send $15,000,000 to the
exchange, for example). If you are doing useful work,
someone can pay for it, and you can use that payment to
make an alternate history for free, defeating the security
assumption of blockchains.Blockchains only work by probably
wasting in order to build a history. If you aren't wasting,
then it wasn't expensive to build the history (it was
subsidised), and it wouldn't be expensive to build a
different history (that one could also be subsidized)
chrisallenlane - 54 minutes ago
There's Gridcoin, which, if I understand correctly, is
essentially the "coinification" of
BOINC:http://www.gridcoin.us/It would be great if it ever
became profitable to mine this.
dane-pgp - 1 hours ago
It's worth noting that this Bitcoin Energy Consumption Index
(BECI) is not without controversy. A more detailed analysis is
this one:http://blog.zorinaq.com/bitcoin-electricity-
consumption/and the author of that has specific criticisms of the
BECI calculation:http://blog.zorinaq.com/serious-faults-in-beci/
iaw - 2 hours ago
As the network hash power increases that value will only go up.
inborn - 1 hours ago
did you mean price will go up? either way it doesn't offset
that high cost of use, so if humans here still value efficiency
they might find it worthwhile to switch tools.
GBiT - 1 hours ago
Energy usage rises if Bitcoins value grows. Miners are mining
to get profit. If they will use energy and don't get profit,
they will stop mining.
jstanley - 1 hours ago
Other way round: energy usage will go up if price rises.
GBiT - 1 hours ago
You right
[deleted]
chriswilmer - 1 hours ago
This is a stupid comparison. The number of transactions can be
increased by a factor of a 1000 easily while holding the amount of
energy expended constant.
rspeer - 1 hours ago
If it's so easy, please describe how.
TekMol - 2 hours ago
The reward for mining a block will go down over time. In the end,
all mining will be financed via the transaction fees. Then the
market will figure out how much energy should be used per
transaction.
iaw - 2 hours ago
Does that justify wasting enough electricity to power Dallas,
Texas in the mean time?
TekMol - 2 hours ago
Obviously it generates enough value for some people that they
are willing to pay for it.Watching television probably uses up
even more energy. And I would argue it has a negative impact on
life quality. But who am I to decide what people should value?
iaw - 1 hours ago
Watching television does not use up more energy than mining
bitcoin, that's the point of the linked article.
TekMol - 1 hours ago
The article states that the "electricity consumed for a
single transaction" is equivalent to what 5 households use
up in 5 days. Which seems to make you think that one would
"use up" less energy by watching TV then by doing a Bitcoin
transaction. But that is not true.Making a Bitcoin
transaction uses up hardly any energy.The miners mine for
the block reward. That is completely unrelated to
transactions. They even mine if there are no transactions
and generate empty blocks.If nobody made a Bitcoin
transaction for a month, the energy consumption of that
month would stay pretty much the same.
inborn - 19 minutes ago
it's like making 10,000 sporks to do the work of one good
knife. they can help some ways, just necessarily with rough
edgesAlanis Morissette - Ironic (OFFICIAL VIDEO):
https://www.youtube.com/watch?v=Jne9t8sHpUcKnifey Spoony - The
Simpsons: https://www.youtube.com/watch?v=mcE0aAhbVFc
jstanley - 2 hours ago
It's not "wasted". The miners wouldn't spend the energy if they
weren't getting a good return on their investment.Just because
you don't like bitcoin doesn't make it a "waste" of energy, any
more than mining gold is a "waste" of energy if you don't like
gold.
rainbowmverse - 1 hours ago
You're thinking of waste too narrowly. That power wasn't
available for other things, so more had to be produced to
cover Bitcoin and the other things, which meant more of all
the negatives that come with energy production. Does Bitcoin
provide something valuable enough to human civilization to
account for that? Could that value have come from a more
efficient source?Failing to account for externalities is how
we get rapid ecosystem destruction (before even bringing in
climate change). Those Bitcoins aren't innocent little bits
on drives. They have a cost to the planet they're produced on
and the life that inhabits it.
jstanley - 1 hours ago
If you think you can replace bitcoin with something more
efficient, please do so. The millions of people who use
bitcoin every day would gladly switch to a cheaper version
if it was truly just as good.
rainbowmverse - 1 hours ago
I don't take it as a given that Bitcoin is a good
solution to the problem those people solve with it. The
best of the bad solutions is still bad, and Bitcoin isn't
looking too good by its power consumption. It's okay to
stop, really think about a problem, and find a good
solution instead of charging ahead with a bad one
oblivious to the brick wall ahead.
jstanley - 1 hours ago
What do you think is the best way to store+exchange value
across borders in a way that can't be censored or
reversed by any third party and doesn't require trusting
or asking permission from any third party?Personally, I
think the answer is bitcoin.
JuicyJay - 32 minutes ago
Made an account just to upvote your comment. This is an
incredibly powerful point that appears to be completely
missed by the majority of threads I'm seeing. Maybe PoS
will turn out to be effective and reduce energy costs for
cryptocurrencies, but there is absolutely nothing like
them. The anonymity of money is valuable for any free and
open society, and Bitcoin is currently providing that to
anyone willing to create a wallet.
Nursie - 7 minutes ago
Who told you bitcoin was anonymous?
Digiconomist - 1 hours ago
"Wasting" energy is required to make PoW work, but if we
could achieve the same with PoS (and that seems to be the
case since ETH is switching too) then it would really be a
waste.
bengotow - 2 hours ago
Yeah... doesn't seem promising to me. When transaction fees need
to pay for mining / transaction validation, people will probably
stop using Bitcoin for purchases they could make with other
methods of payment.
TekMol - 2 hours ago
It's the other way round. The energy consumption is defined by
the fees people are willing to pay. Mining will always be
profitable. No matter how low the fees are.
tehlike - 2 hours ago
Funny way to say this. Why not 1 us household for 5.58? Any reason
for this?Edit: title seems to be fixed.
brndnmtthws - 2 hours ago
Long term outlook for mining isn't good. Ethereum, for example, is
moving toward Proof of Stake (https://github.com/ethereum/wiki/wiki
/Proof-of-Stake-FAQ), and Bitcoin will become less profitable for
miners soon, beginning with the activation of Segwit.The reason for
the recent Bitcoin Cash fork, was that miners are terrified of
losing control given the substantial investment required to
maintain profitability. I don't think Satoshi ever thought mining
would become so profitable, centralized, and political. If Satoshi
had, he or she may have rethought the mining aspect of Bitcoin.It's
the end of days for mining as we know it.
GBiT - 2 hours ago
Miners can choose to include more profitable transactions,
skiping segwit ones.POS will not work. you need to back Bitcoins
value with something, and its electricity. Gov backing with gold.
jaekwon - 51 minutes ago
Incorrect. Bitcoin isn't "backed by electricity". You can't
turn Bitcoin back into energy. The energy is used to secure a
distributed ledger to prevent double spend attacks on ongoing
transactions, in a really inefficient way, but don't call it
"backing".PoS will succeed. It already has, we've set all the
pieces. The thing is, you don't want to live in a world where
Bitcoin and PoW dominate our financial transactions. That
world is not livable.Bitcoin transactions are secured by spent
electricity. PoS transactions are secured by cryptographic
signature schemes and reputation of operational security. It's
how the world already functions, just more replicated.
Taek - 32 minutes ago
It takes a cryptographically provable amount of energy to
reverse a Bitcoin transaction, and that amount is equal to
the money spent on electricity mining blocks that confirm a
transaction.Proof of Stake systems have no equivalent. They
operate by trusting the staking parties are not colluding to
create an alternate history. But if they do decide to
collude, there is little thermodynamic cost to rewriting
history.It's a fundamentally weaker system, and one that
depends on trust. The whole value of proof of work is that it
allows you to escape trust.
jcfrei - 18 minutes ago
PoS as well as PoW depend on the assumption that a majority
(either in terms of value invested in hashing power or
invested in tokens) of the network is following the rules.
If you try to double spend in a PoW system you are betting
your current electricity usage on a new block becoming the
longest chain and in a PoS system you are betting the
tokens themselves - from an economic point of view those
two systems are indifferent (if your attempt doesn't
succeed you have wasted either electricity or tokens).
Collusion can happen in both cases. PoS systems introduce
new (probably yet unsolved) problems but they aren't
inferior from an economical point of view imho.
Taek - 6 minutes ago
No, in a proof of stake system collusion to rewrite
history is essentially free.In a proof of work system,
even if you collude you still have to spend a non-trivial
sum of electricity to create that alternate history.
Electricity that would be making you money via the block
reward if you were using it honestly.It is provably more
expensive to reconstruct history in a PoW setting, even
when everyone is happily colluding.
[deleted]
raffomania - 2 hours ago
Has anyone read up on the proof-of-stakes algorithms mentioned in
this article? I didn't hear of those before.
schoen - 2 hours ago
There's some Wikipedia coverage.https://en.wikipedia.org/wiki
/Proof-of-stakeMaybe there's a better or more up-to-date
introduction elsewhere.
Taek - 25 minutes ago
https://download.wpsoftware.net/bitcoin/pos.pdfMost bitcoin
heavyweights who have researched proof of stake have concluded
that it's not viable, and not worth further research in the
context to trustless and decentralized systems.
akvadrako - 59 minutes ago
Don't count on them ever working - it may be mathematically
impossible and at the very least it's a much bigger technical
challenge than PoW.
rspeer - 2 hours ago
Apparently "terawatt-hours per year" is a unit that people use in
public policy, but it strikes me as strange. Converting 16.22
TWh/year to a "more metric" unit, that's a sustained power usage of
1.85 gigawatts.So Bitcoin is constantly using more than enough
power to make Doc Brown's eyes bug out.
aqme28 - 1 hours ago
I too hate seeing __ watt-hours per year. What's the point of the
double time conversion? It's like saying "The movie starts in 3
kilometers per mile-per-hour"
rspeer - 1 hours ago
I mean, I understand why, it's because often you want to relate
it to cost, and electricity is priced in $/KWh, not in
($/sec)/watt.
c3534l - 2 hours ago
I'm really confused by this article. Sometimes it seems like
they're talking about bitcoin mining, then they start talking about
transactions.
iaw - 2 hours ago
The act of mining confirms transactions in bitcoin.