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All the electricity spent isn't to do the transactions, it is actually a security cost to prevent 51% attacks on the blockchain. Amassing the amount of miners

All the electricity spent isn't to do the transactions, it is actually a security cost to prevent 51% attacks on the blockchain. Amassing the amount of miners and electricity to do that attack becomes immense, hence the security. Hopefully in the future Ethereum's proof of stake implementation can solve the problem without wasting electricity.

mikeash 9y ago
The purpose of that security is to protect the integrity of the transactions. Without transactions, the network is pointless. The energy used for mining should be charged to the transactions, just like the energy VISA uses to light its offices would be.
- Dylan16807 9y ago
  > The energy used for mining should be charged to the transactions I mean, it basically is. The built-in rewards drop every couple years, so the only reason people will continue to mine is for transaction fees. What are you suggesting should be different?
  - mikeash 9y ago
    I'm suggesting that a different security scheme should be used, one which doesn't depend on wasting a shitload of electricity. As I mentioned in my edit, an easy way (in terms of coming up with the solution, not implementing it) would be to price the externalities into the cost of energy. Then the electricity would only be used if it was actually worth it.
    - Dylan16807 9y ago
      Not wasting electricity is a good idea. But I don't understand how transaction fees relate to it. That just means a different person pays to waste electricity. And pricing in externalities won't actually stop people from wasting power, so you'd better have a good system set up to use that money to counteract the externalities.
      - mikeash 9y ago
        I'm not talking about explicit transaction fees, I'm just talking about the energy use of the system on a per-transaction basis. Looking at the absolute energy consumed by Bitcoin isn't enough by itself, because you also need to account for how big Bitcoin is. Pricing in externalities will absolutely stop people from wasting power pointlessly. People will only use power if the benefit is greater than the cost. This includes "waste" if the effort of stopping that waste is greater than the cost of the waste, but if externalities are priced in appropriately then that means there's actually a net benefit to that. It's only a problem if the cost to the world is higher but the person paying the bill doesn't see that. In terms of bitcoin, if the electricity to mine one costs X on the miner's power bill, and that bitcoin can be sold for 2X, then the miner will keep on doing it even if the total cost of that electricity including damage to the planet and other such things is 3X. If you price in the externalities so that the power bill actually says 3X, then the miner will stop. You don't actually need to use the extra money to counteract the externalities.
        Dylan16807 9y ago
        But as some miners stop, the efficiency of mining goes up again. In a general sense, the amount of money spent on mining will stay constant. If you make electricity 3x as expensive, then maybe 1/3 as much electricity will be wasted, but it's still fundamentally a waste. If you don't use that extra money to undo the externalities, then the world is still getting more polluted just so bitcoin can spin in place. This isn't something like a power plant where charging $X per ton of CO2 released will make them cut emissions to 0. You would need a per-bitcoin fee to stop waste. Charging per-kWh has a limited effect, because people will always buy [bitcoin price] * [bitcoins per day] worth of electricity.
        mikeash 9y ago
        If pricing in externalities increases the price goes up by a factor of three and bitcoin mining continues at 1/3rd the energy usage then it's no longer a waste. As long as you've done it correctly so that the price is accurate, then people will only use that energy if the benefit it creates is greater. Using energy for some benefit is fine, and bitcoin clearly has some benefit. There's only a problem when the benefit is lower than the cost of the energy, and that only happens when the energy's price doesn't reflect its cost.
- JohnJamesRambo 9y ago
  That isn't how a blockchain works. The decentralization comes with penalties, such as if 51% of the participants say something is true it is. You have to provide some way to insure that doesn't happen due to a malicious attack. Proof of work systems do that buy making the cost and resources to achieve 51% astronomical.
  - mikeash 9y ago
    I don't understand what you think I'm getting wrong here. All of what you say seems completely consistent with the point I'm making.
  - UncleMeat 9y ago
    Yes we know. We are questioning whether the orders of magnitude increase in energy usage is worth the decentralization.
    - Jach 9y ago
      Unless there is a world government that dictates "no" I don't see why arguing with the market that clearly is saying "yes" is worthwhile. Even if externalities like "damage to the planet" were properly priced in by each country and energy source chain that still wouldn't guarantee the energy usage would go down, it just might be slightly less profitable. (From my standpoint there's currently no such thing as energy waste through human activity since the vast, vast majority of local energy in our solar system is not being used for any purpose, "wasteful" purpose or no.)
      - mikeash 9y ago
        The whole idea is that if the price of electricity reflects its full cost, including externalities, then you'll no longer waste it. If people keep mining bitcoins in that environment, then it's because bitcoin mining actually provides more value than the cost of the energy it consumes. If the fact that we're eight light-minutes away from a zero-maintenance 400YW fusion reactor makes it hard for you to consider human energy usage to be waste, just think of it in terms of CO2 pointlessly added to the atmosphere instead.

mikeash 9y ago

The purpose of that security is to protect the integrity of the transactions. Without transactions, the network is pointless. The energy used for mining should be charged to the transactions, just like the energy VISA uses to light its offices would be.

Dylan16807 9y ago
> The energy used for mining should be charged to the transactions I mean, it basically is. The built-in rewards drop every couple years, so the only reason people will continue to mine is for transaction fees. What are you suggesting should be different?
- mikeash 9y ago
  I'm suggesting that a different security scheme should be used, one which doesn't depend on wasting a shitload of electricity. As I mentioned in my edit, an easy way (in terms of coming up with the solution, not implementing it) would be to price the externalities into the cost of energy. Then the electricity would only be used if it was actually worth it.
  - Dylan16807 9y ago
    Not wasting electricity is a good idea. But I don't understand how transaction fees relate to it. That just means a different person pays to waste electricity. And pricing in externalities won't actually stop people from wasting power, so you'd better have a good system set up to use that money to counteract the externalities.
    - mikeash 9y ago
      I'm not talking about explicit transaction fees, I'm just talking about the energy use of the system on a per-transaction basis. Looking at the absolute energy consumed by Bitcoin isn't enough by itself, because you also need to account for how big Bitcoin is. Pricing in externalities will absolutely stop people from wasting power pointlessly. People will only use power if the benefit is greater than the cost. This includes "waste" if the effort of stopping that waste is greater than the cost of the waste, but if externalities are priced in appropriately then that means there's actually a net benefit to that. It's only a problem if the cost to the world is higher but the person paying the bill doesn't see that. In terms of bitcoin, if the electricity to mine one costs X on the miner's power bill, and that bitcoin can be sold for 2X, then the miner will keep on doing it even if the total cost of that electricity including damage to the planet and other such things is 3X. If you price in the externalities so that the power bill actually says 3X, then the miner will stop. You don't actually need to use the extra money to counteract the externalities.
      - Dylan16807 9y ago
        But as some miners stop, the efficiency of mining goes up again. In a general sense, the amount of money spent on mining will stay constant. If you make electricity 3x as expensive, then maybe 1/3 as much electricity will be wasted, but it's still fundamentally a waste. If you don't use that extra money to undo the externalities, then the world is still getting more polluted just so bitcoin can spin in place. This isn't something like a power plant where charging $X per ton of CO2 released will make them cut emissions to 0. You would need a per-bitcoin fee to stop waste. Charging per-kWh has a limited effect, because people will always buy [bitcoin price] * [bitcoins per day] worth of electricity.
        mikeash 9y ago
        If pricing in externalities increases the price goes up by a factor of three and bitcoin mining continues at 1/3rd the energy usage then it's no longer a waste. As long as you've done it correctly so that the price is accurate, then people will only use that energy if the benefit it creates is greater. Using energy for some benefit is fine, and bitcoin clearly has some benefit. There's only a problem when the benefit is lower than the cost of the energy, and that only happens when the energy's price doesn't reflect its cost.
JohnJamesRambo 9y ago
That isn't how a blockchain works. The decentralization comes with penalties, such as if 51% of the participants say something is true it is. You have to provide some way to insure that doesn't happen due to a malicious attack. Proof of work systems do that buy making the cost and resources to achieve 51% astronomical.
- mikeash 9y ago
  I don't understand what you think I'm getting wrong here. All of what you say seems completely consistent with the point I'm making.
- UncleMeat 9y ago
  Yes we know. We are questioning whether the orders of magnitude increase in energy usage is worth the decentralization.
  - Jach 9y ago
    Unless there is a world government that dictates "no" I don't see why arguing with the market that clearly is saying "yes" is worthwhile. Even if externalities like "damage to the planet" were properly priced in by each country and energy source chain that still wouldn't guarantee the energy usage would go down, it just might be slightly less profitable. (From my standpoint there's currently no such thing as energy waste through human activity since the vast, vast majority of local energy in our solar system is not being used for any purpose, "wasteful" purpose or no.)
    - mikeash 9y ago
      The whole idea is that if the price of electricity reflects its full cost, including externalities, then you'll no longer waste it. If people keep mining bitcoins in that environment, then it's because bitcoin mining actually provides more value than the cost of the energy it consumes. If the fact that we're eight light-minutes away from a zero-maintenance 400YW fusion reactor makes it hard for you to consider human energy usage to be waste, just think of it in terms of CO2 pointlessly added to the atmosphere instead.