Bitcoin's Climate Change Impact Is Under Scrutiny(nytimes.com)
nytimes.com
Bitcoin's Climate Change Impact Is Under Scrutiny
https://www.nytimes.com/2021/03/09/business/dealbook/bitcoin-climate-change.html
21 comments
The thing is either Bitcoin is successful which means the value settled on it's blockchain will be very substantial, so the electricity used to secure that value will be worth it.
Or it fails as many on HN predict in which case you have nothing to worry about because this electricity usage would only be temporary, no miner would spend energy securing an unused blockchain.
Or it fails as many on HN predict in which case you have nothing to worry about because this electricity usage would only be temporary, no miner would spend energy securing an unused blockchain.
It's not even a binary choice. The price of the amount of the electricity spent by miners is pegged to the value of the block reward[1]. As the market value of Bitcoin goes up, so does the mining electricity consumed. And if the market value of Bitcoin goes down, so will the mining electricity consumed. So there's an equilibrium: the electricity consumed is already settled at the value being generated.
And value is being generated, because Bitcoin is currently inflationary. The inflation is exactly the block reward that is being forced, through the economics of it, to be "burned" in electricity. If that were all that were going on, Bitcoin would drop in value accordingly. But, for a decade now, that hasn't been happening; the increase in market value represents the value being generated.
My point is that the economics of the situation means that the electricity being consumed is already in equilibrium with the value being generated, and will remain so.
[1] Plus the value of the transaction fees paid in each block, but that doesn't really change the economics here. The reason it's pegged like this is simple: mining is profitable as long as the electricity purchased still results in a return, which provides the upper bound. Spending less leaves money on the table for other miners. So the price of electricity consumed stays in equilibrium with the fiat sale value of the Bitcoin mined.
And value is being generated, because Bitcoin is currently inflationary. The inflation is exactly the block reward that is being forced, through the economics of it, to be "burned" in electricity. If that were all that were going on, Bitcoin would drop in value accordingly. But, for a decade now, that hasn't been happening; the increase in market value represents the value being generated.
My point is that the economics of the situation means that the electricity being consumed is already in equilibrium with the value being generated, and will remain so.
[1] Plus the value of the transaction fees paid in each block, but that doesn't really change the economics here. The reason it's pegged like this is simple: mining is profitable as long as the electricity purchased still results in a return, which provides the upper bound. Spending less leaves money on the table for other miners. So the price of electricity consumed stays in equilibrium with the fiat sale value of the Bitcoin mined.
Honestly I don't think many HN people predict that it doesn't succeed. It's more a question of succeeding at what?
It’s not guaranteed that the value of securing the network will be worth its cost even if the value it provides is very high - the cost could be many times higher still!
I don’t say to this to argue that the energy consumption either is or is not worth it, just calling attention to a gap in your logic here.
I don’t say to this to argue that the energy consumption either is or is not worth it, just calling attention to a gap in your logic here.
The fact that nobody can simply say, "here is what Bitcoin does, this is why the energy consumption is justified" is a strong indictment against the supposed value that Bitcoin brings.
But, there is no legal mechanism that measures the utility of commercial activities, and which dictates that energy should be consumed only by enterprises that have a certain utility. This is unprecedented territory.
But, there is no legal mechanism that measures the utility of commercial activities, and which dictates that energy should be consumed only by enterprises that have a certain utility. This is unprecedented territory.
Here is what Bitcoin does today:
It creates an unregulated, slow, sometimes-anonymous way to transfer USD between parties who distrust one another...
AND
...a vehicle for speculation, not far from gambling.
Basically, it's a way for people to invest in global organized crime and/or speculate about Bitcoin hype.
Does that justify the energy it uses? Not in my opinion, but I don't think its users care.
It creates an unregulated, slow, sometimes-anonymous way to transfer USD between parties who distrust one another...
AND
...a vehicle for speculation, not far from gambling.
Basically, it's a way for people to invest in global organized crime and/or speculate about Bitcoin hype.
Does that justify the energy it uses? Not in my opinion, but I don't think its users care.
> way to transfer USD between parties
There's a bigger world outside the island of U.S. There are more political regimes, tax regimes, banking restrictions and all sorts of uncertainty that needs sound and cheaply stored/secured/transferrable money that would protect a person and their family/community against all these issues.
Just the recent multi-trillion debt expansion is a pointer to that. You can't and you won't store your savings in USD-denominated cash. Your options are either getting in debt and tying yourself to a certain credit institution/jurisdiction, or getting some freedom by exiting into Bitcoin.
There's a bigger world outside the island of U.S. There are more political regimes, tax regimes, banking restrictions and all sorts of uncertainty that needs sound and cheaply stored/secured/transferrable money that would protect a person and their family/community against all these issues.
Just the recent multi-trillion debt expansion is a pointer to that. You can't and you won't store your savings in USD-denominated cash. Your options are either getting in debt and tying yourself to a certain credit institution/jurisdiction, or getting some freedom by exiting into Bitcoin.
That's exactly my point. Bitcoin is useless in the US because we have a relatively stable, universally useful currency. You seem to think the stimulus will cause dramatic inflation, but I doubt it.
For people who want to use USD as a replacement for their unreliable local currency, Bitcoin may be one of the easier ways to hold and trade it.
For people who want to use USD as a replacement for their unreliable local currency, Bitcoin may be one of the easier ways to hold and trade it.
> The fact that nobody can simply say, "here is what Bitcoin does, this is why the energy consumption is justified" is a strong indictment against the supposed value that Bitcoin brings.
I argue the opposite in a separate comment. The fact that Bitcoin has retained and increased its market value, despite having being inflationary this entire time, demonstrates the value that it brings. I can't tell you where that value is, but if it weren't there, the market would collapse. And it hasn't.
Perhaps 10 years isn't enough for a speculation bubble to burst. But then, at what point would we say that there isn't a bubble? 50 years? 100 years? One might ask the same question about gold since we left the gold standard. Is indefinitely sustainable speculation a bubble at all? Or is that what we call a commodity?
I argue the opposite in a separate comment. The fact that Bitcoin has retained and increased its market value, despite having being inflationary this entire time, demonstrates the value that it brings. I can't tell you where that value is, but if it weren't there, the market would collapse. And it hasn't.
Perhaps 10 years isn't enough for a speculation bubble to burst. But then, at what point would we say that there isn't a bubble? 50 years? 100 years? One might ask the same question about gold since we left the gold standard. Is indefinitely sustainable speculation a bubble at all? Or is that what we call a commodity?
Bitcoin still doesn’t provide any significant value
outside of black market purchases, though.
The increase in value is due to an increase in hype and a lot of people hoping to get rich quick - not due to increased practical adoption.
Governments aren’t going to let it replace currencies they can control - and to be honest, I’m not sure we’d want it to - somebody’s always in control, and I’d argue it’s better to at least know who they are (see any HN comments on “flat” organizations). It’s just a bunch of wasted energy to arbitrarily move money from one set of traders to another.
> It’s just a bunch of wasted energy to arbitrarily move money from one set of traders to another.
If it's wasted energy, then it's wasted money. But traders don't have unlimited funds. They are somehow generating at least as much wealth as the value of the electricity that is being used.
If it's wasted energy, then it's wasted money. But traders don't have unlimited funds. They are somehow generating at least as much wealth as the value of the electricity that is being used.
I would like to know what the global amount of quiescent hashing power being wasted/unused on devices that could be contributing at a low priority to crypto mining.
Increasing the number of low hashrate miners while at the same time increasing the networks total hashrate would force the difficulty to increase and possibly make power hungry mining operations no longer economically viable and could have the added benefit of a more robust, more decentralized system.
Increasing the number of low hashrate miners while at the same time increasing the networks total hashrate would force the difficulty to increase and possibly make power hungry mining operations no longer economically viable and could have the added benefit of a more robust, more decentralized system.
If you go back 20 years, there were plenty of available CPU cyles that were unused. They could productively be used for stuff like SETI@home and Folding@home.
But newer CPUs, screens, storage devices, and therefore entire computer systems have gotten very very good at not using power when they're idle. Probably a lot of this was because of the EPA Energy Star program.
What you advocate would probably increase total power consumption. Dedicated ASICs used by the "power hungry mining operations" are overall more energy efficient than using otherwise idle cycles on general purpose CPUs.
But newer CPUs, screens, storage devices, and therefore entire computer systems have gotten very very good at not using power when they're idle. Probably a lot of this was because of the EPA Energy Star program.
What you advocate would probably increase total power consumption. Dedicated ASICs used by the "power hungry mining operations" are overall more energy efficient than using otherwise idle cycles on general purpose CPUs.
Your explanation sounds reasonable. I suppose there would also be an added power cost in the increased network overhead.
I'm currently running a 2 core node on the Monero network using the official GUI. It doesn't noticeably affect my PC performance but then I'm not a gamer. Supposedly I have a 1 in ~5000 chance/day of writing a block for which the reward is currently worth about 250 USD.
I could join a pool or use Nicehash and actually earn a few dollars a day but I found XmrRig and Nicehash spin up my cooling fans and my reasons are more altruistic than for profit, though it would be awesome to win the lotto.
I'm currently running a 2 core node on the Monero network using the official GUI. It doesn't noticeably affect my PC performance but then I'm not a gamer. Supposedly I have a 1 in ~5000 chance/day of writing a block for which the reward is currently worth about 250 USD.
I could join a pool or use Nicehash and actually earn a few dollars a day but I found XmrRig and Nicehash spin up my cooling fans and my reasons are more altruistic than for profit, though it would be awesome to win the lotto.
Most bitcoin mining is in China and is powered by coal. China is more interested in getting ahead in bitcoin then they are worried about what Greta and company thinks. Progressives know China wont bend so they go after soft target counties happy to bend over for the cause du jour. USA, Canada etc.
Is everyone going to stop like how "gas" is under scrutiny? No.
Replace with coal, or any other commodity. Copper, Gold, Silver, Platinum, etc.
"the annual carbon emissions from the electricity required to mine Bitcoin and process its transactions are equal to the amount emitted by all of New Zealand. Or Argentina."
So? When did comparing to a country become a metric of success or for cause of concern? We can say the same/use the same metric for Gold, Silver. In general an economic indicator of prosperity is energy usage.
If anything this sounds like a marketing piece for the companies cited in the article vs a rag on bitcoin itself.