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I'll repost the same comment I made previously on an Etherium thread. I think We're really under appreciating the pandora's box we've opened. Energy is one of t

I'll repost the same comment I made previously on an Etherium thread. I think We're really under appreciating the pandora's box we've opened. Energy is one of the most important items for societal progress. And the fact we've now designed an industry to get rich quick for throwing it away is a societal burden we'll never get rid of. > Almost all of society functions on energy, some of the largest breakthroughs in society have been on sudden abundance of cheap energy and the machines, vehicles products they can create. Entire economies can be crippled by rising costs in energy (oil shocks of the 70s) and boom by sudden drops in cost of energy. So we've created an "industry" where you are essentially paid by comverting energy to waste. Paid to perform extremely intense difficult (ie wasteful) operations to back a useful technology (digital currency). Assuming it catches on, energy will never be cheap, there will always be a higher floor now due to options for "mining". As we get better at it and it becomes less wasteful, the digital system will simply raise the reward so people are incentivised to once again waste it. Ignore the short term for the moment, and which ever currency you're backing. We've created a long term societal motivation/reward to harvest every joule produce by the sun and use it to calculate hashes. I'm not talking about the next decade obviously, but we have incentivised that behavior. If there is anything technologists should understand is that whatever your beautiful perfect technology is, it will instead be used based on whatever has been incentivised. Regardless of the technology it powers, this is a terrible societal incentive - and one that will be around a lot longer than people are considering.

sillysaurus3 9y ago
If Bitcoin reaches a 2 trillion market cap, it will require less than 1% additional world energy output. Is less than 1% additional energy usage worth a 2 trillion cap? Well, I'm sure people can find a way to argue that it's not, but the point is that bitcoin isn't this enormous threat to energy usage that people try to argue it is.
- kafkaesq 9y ago
  If Bitcoin reaches a 2 trillion market cap, it will require less than 1% additional world energy output. The key question raised in the parent comment, which your own riposte artfully dodges, is once again - who stands to benefit from this N% increase in global energy usage?
  - uncoder0 9y ago
    Not the poster but, I assume the beneficiaries are the users of the bitcoin network by the added security from the increases hash-rate/ energy consumption.
  - sillysaurus3 9y ago
    Those who hold Bitcoin. If you own 2% of all bitcoin in existence, and BTC reaches 2 trillion, you'll have $40B. As far as a justification goes, I think that if BTC reaches 2 trillion, it will have gone mainstream. Meaning either existing transactions should become easier, or people find it a good store of value. This isn't just theoretical. The marijuana industry faces immense hurdles dealing with the traditional financial system, because marijuana is technically still illegal at the federal level. This makes it a nightmare to do any of the normal banking operations we take for granted. Bitcoin sidesteps this problem while also letting you be legal: As long as you declare your taxes properly, Uncle Sam probably won't come knocking. That's just one example of an industry that benefits. There are many more.
- danmaz74 9y ago
  What did you base this 1% estimate on? And also, why 2 trillion, and not more - considering that the total value of the currencies used in the World, by a quick google, is around 80 trillion USD?
- cjlars 9y ago
  Humanity spends about $6 Trillion on energy annually, so 1% is no small figure [1]. Is a proper crypto-currency worth $60BN in maintenance costs per year? No idea, but it's likely to be more expensive than the alternative of traditional fiat currency. For reference, the federal reserve produces about $70BN in interest fees for taxpayers each year [2]. [1] https://en.wikipedia.org/wiki/World_energy_consumption https://en.wikipedia.org/wiki/World_energy_consumption [2] https://www.thedailybeast.com/the-insanely-profitable-federal-reserve https://www.thedailybeast.com/the-insanely-profitable-federa...
- kllrnohj 9y ago
  Market cap is a bad metric. A better one would be transactions. According to https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption bitcoin is on track to consume 19 TWh this year. That puts it at .1% of the global power consumption already NASDAQ does 10 million trades a day, roughly. So if bitcoin scales to just handle NASDAQ alone it would consume ~850 TWh/year, which is 3.5% of the total world's electricity generation (to say nothing of Visa's 150 million transactions a day) The reason bitcoin isn't currently an enormous threat is because it's basically barely used by comparison. 300,000 trades/day is a tiny number in the world of financial transactions.
  - clarkmoody 9y ago
    But that is not how Bitcoin will scale. Rather, transactions will go off-chain. Edit: mining effort is dominated by difficulty anyway, not throughput.
buttershakes 9y ago
I think this is incredibly overblown. How much does the existing financial system cost to operate? How much do ATMs, Private financial networks, money security, transportation, staff, legal, etc, etc. Comparing per transaction cost does not even begin to account for the energy costs of the current financial system. Even with the escalating cost of mining we are getting a deal compared to the way things are now. Hopefully research will yield significantly better incentive structures than pure proof-of-work, but in the mean time it has proven to be remarkably effective.
- JumpCrisscross 9y ago
  > Comparing per transaction cost does not even begin to account for the energy costs of the current financial system Finance is about 7.3% of U.S. GDP [1]. The U.S. produces about 1,000 gigawatts of energy per year [2]. A first-order estimation thus yields 73 Gigawatts for finance. So about 150 times Bitcoin’s 500 megawatts. About $700 million of BTC change hands every day [3]. That’s $250 billion a year. U.S. non-cash transaction volume is like $180 trillion a year [4]. So about 720 times the size of the Bitcoin economy. Bitcoin thus appears about 5 times less efficient than the non-cash status quo. Given finance is less energy intensive than most of the U.S. economy, this is likely a lower-bound estimate. [1] https://www.selectusa.gov/financial-services-industry-united-states https://www.selectusa.gov/financial-services-industry-united... [2] https://en.m.wikipedia.org/wiki/Electricity_sector_of_the_United_States https://en.m.wikipedia.org/wiki/Electricity_sector_of_the_Un... [3] https://www.quandl.com/data/BCHAIN/ETRVU-Bitcoin-Estimated-Transaction-Volume-USD https://www.quandl.com/data/BCHAIN/ETRVU-Bitcoin-Estimated-T... [4] https://www.federalreserve.gov/newsevents/press/other/2016-payments-study-20161222.pdf https://www.federalreserve.gov/newsevents/press/other/2016-p...
  - nnfy 9y ago
    You simply cannot justify that first order approximation. There is no reason so believe that the financial industry takes power in proportion to it's relative size of GDP. In fact I would expect the financial industry to require a higher proportion of power to keep servers/ATMs/staff computers running.
deleted 9y ago
[deleted]
virtuexru 9y ago
> So we've created an "industry" where you are essentially paid by comverting energy to waste. Paid to perform extremely intense difficult (ie wasteful) operations to back a useful technology (digital currency). https://hackernoon.com/bitcoin-doesnt-waste-electricity-649694ea3605 https://hackernoon.com/bitcoin-doesnt-waste-electricity-6496...
- deadmetheny 9y ago
  >This is very different to electricity, because physical resources are consumed that the consumer did not ask for or need This entire article is glossing over the fact that the vast majority of electricity produced is from converting a physical resource into the electricity being wasted. Excessive wasteful packaging is stupid, and so is using excessive amounts of power to make Dunning-Krugerrands. You could certainly place your miners near energy sources such as hydro, solar, or geothermal, but that doesn't change the fact that Bitcoin mining is, by definition, a measure of wasted electricity.
- s73ver_ 9y ago
  From the article: "Whatever use you choose to put the electricity you pay for to, if you are satisfied, then the electricity has not been wasted." That is far too selfish of a view for the author to take. Electricity is a finite resource; only so much of it can be generated and available at a given time.
  - sillysaurus3 9y ago
    Selfish or not, it appears that it's going to happen. We're on course for that, anyway.
- r2dnb 9y ago
  Not taking side on the issue but this article sort of misses the point. The first half of it is focused on demonstrating that unlike packaged goods, producing electricity does not result in packages needing to be put in the trash which is a fact nobody ever challenged to the best of my knowledge. I never even heard of this interpretation of the waste criticism. But the author goes on and opens the Webster's dictionary at the "Wasteful" page to continue his argument. The other half is an augmentation of the line that the electricity used for mining is actually used by the mining computer, and very little of it evaporates as heat. Moreover heat inefficiencies are not intended by miners. As a result mining is as legitimate as any other business activity and mining bitcoins should not be considered a waste of energy. While in this case an opponent may possibly exist, I am left unconvinced by this demonstration. The real discussion is that as of today, the raw materials required to produce electricity are in limited supply and in decreasing amount. Provided this limited supply and this decreasing amount, a structural increase on the demand will result in a pressure on price which may have a negative impact on society and the economy. An other concern is that as of today, efforts are made to decrease energy consumption because energy production has a negative impact on environment with the current state of the art technologies. The waste discussion comes from the fact that the energy footprint of the bitcoin network may seem unnecessary to some since alternatives exist to transfer value. The author fails to consider the issue from the other side of the table and does not even know who or what he argues against. He misunderstands what the opposing view is. Throughout the article a lot of energy is spent defending positions that nobody ever challenged and this for sure is a waste.
golemotron 9y ago
> Entire economies can be crippled by rising costs in energy (oil shocks of the 70s) and boom by sudden drops in cost of energy. The important thing to know is that the current administration considers energy a top priority [1] so we are well poised to continue building blockchain infrastructure. [1] https://www.whitehouse.gov/america-first-energy https://www.whitehouse.gov/america-first-energy
- JBReefer 9y ago
  People on HN being pro-Trump's energy plan so they can get rich off of Bitcoin. That's really surprising and really sad. Boiling the ocean for a bit more personal wealth for the top 5% of income earners that make up the userbase of this site is ... a lot.
acchow 9y ago
> We've created a long term societal motivation/reward to harvest every joule produce by the sun and use it to calculate hashes The blockchain doesn't have the economics to incentivize limitless energy consumption. The upper bound is exactly how much people are willing to pay for the bitcoin you mine.
- nas 9y ago
  Correct. This is the same reason why Proof-of-Stake (PoS) cannot work as people hope. Due to fundamental economics, people will always spend according to the value of the new currency issued by mining. Switching to PoS just means they will spend in some other way in order to get those new coins. This also means that as the Bitcoin mining reward diminishes, the money "wasted" on energy is going to decrease, unless the transaction fees rise enough to match what the reward was paying. In that case, because people are willing to pay those fees, it seems quite logical that the cost of the mining is providing a value equal to its cost. Otherwise, people would not be paying those fees. I really don't know if the Bitcoin experiment is going to work but a lot of criticisms of it are based on some really poor logic.
- TheDong 9y ago
  That is not true. The upper bound is the combination of how much people will pay you for the bitcoins they mine, how much people value being able to transact (transaction fees), and the value of existing held bitcoin. Since mining is what prevents attackers from stealing bitcoin,the total value of all bitcoin in existence actually has a bearing in this. If no one were transacting and no coins were rewarded for mining, people would still mine just so that their existing coins remain secure.
solotronics 9y ago
I don't think this is a real concern. How much electricity is used by movie theaters, arcades, and other entertainment? How much energy is used by mining for gold and silver?
thadjo 9y ago
Not to sound like a free market idealist here, but don't market forces keep this in check? In general, miners won't mine unless there is a financial incentive to do so. as Bitcoin matures, that financial incentive maps closely to an overall demand for a store of value (plus the nifty features of crypto). I would see your point more clearly if miners really were wasting energy–using energy to calculate hashes that weren't financially valuable–but I don't see that happening right now.
- BoiledCabbage 9y ago
  > I would see your point more clearly if miners really were wasting energy–using energy to calculate hashes that weren't financially valuable–but I don't see that happening right now. For every river you pollute I'll print another $10 bill and hand it to you. Clearly this isn't wasteful because it's financially valuable. /s This logic doesn't hold up to reason.
loceng 9y ago
I think an issue competing for top problem relating to these cryptocurrencies is that for security to exist the mining capability must be distributed. In order to protect against this, every nation or person who has interest would need to or should increase their capability in order to try to prevent a takeover.
brulez 9y ago
Something like bitcoin may actually result in lower overall energy costs by providing a guaranteed base level of income for new power generation. Building a new plant is much less risky if there is guaranteed off-peak demand. New plants also tend to me more environmentally friendly.
B1FF_PSUVM 9y ago
> harvest every joule produce by the sun and use it to calculate hashes. Paperclipping - https://wiki.lesswrong.com/wiki/Paperclip_maximizer https://wiki.lesswrong.com/wiki/Paperclip_maximizer

sillysaurus3 9y ago

If Bitcoin reaches a 2 trillion market cap, it will require less than 1% additional world energy output. Is less than 1% additional energy usage worth a 2 trillion cap? Well, I'm sure people can find a way to argue that it's not, but the point is that bitcoin isn't this enormous threat to energy usage that people try to argue it is.

kafkaesq 9y ago
If Bitcoin reaches a 2 trillion market cap, it will require less than 1% additional world energy output. The key question raised in the parent comment, which your own riposte artfully dodges, is once again - who stands to benefit from this N% increase in global energy usage?
- uncoder0 9y ago
  Not the poster but, I assume the beneficiaries are the users of the bitcoin network by the added security from the increases hash-rate/ energy consumption.
- sillysaurus3 9y ago
  Those who hold Bitcoin. If you own 2% of all bitcoin in existence, and BTC reaches 2 trillion, you'll have $40B. As far as a justification goes, I think that if BTC reaches 2 trillion, it will have gone mainstream. Meaning either existing transactions should become easier, or people find it a good store of value. This isn't just theoretical. The marijuana industry faces immense hurdles dealing with the traditional financial system, because marijuana is technically still illegal at the federal level. This makes it a nightmare to do any of the normal banking operations we take for granted. Bitcoin sidesteps this problem while also letting you be legal: As long as you declare your taxes properly, Uncle Sam probably won't come knocking. That's just one example of an industry that benefits. There are many more.
danmaz74 9y ago
What did you base this 1% estimate on? And also, why 2 trillion, and not more - considering that the total value of the currencies used in the World, by a quick google, is around 80 trillion USD?
cjlars 9y ago
Humanity spends about $6 Trillion on energy annually, so 1% is no small figure [1]. Is a proper crypto-currency worth $60BN in maintenance costs per year? No idea, but it's likely to be more expensive than the alternative of traditional fiat currency. For reference, the federal reserve produces about $70BN in interest fees for taxpayers each year [2]. [1] https://en.wikipedia.org/wiki/World_energy_consumption https://en.wikipedia.org/wiki/World_energy_consumption [2] https://www.thedailybeast.com/the-insanely-profitable-federal-reserve https://www.thedailybeast.com/the-insanely-profitable-federa...
kllrnohj 9y ago
Market cap is a bad metric. A better one would be transactions. According to https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption bitcoin is on track to consume 19 TWh this year. That puts it at .1% of the global power consumption already NASDAQ does 10 million trades a day, roughly. So if bitcoin scales to just handle NASDAQ alone it would consume ~850 TWh/year, which is 3.5% of the total world's electricity generation (to say nothing of Visa's 150 million transactions a day) The reason bitcoin isn't currently an enormous threat is because it's basically barely used by comparison. 300,000 trades/day is a tiny number in the world of financial transactions.
- clarkmoody 9y ago
  But that is not how Bitcoin will scale. Rather, transactions will go off-chain. Edit: mining effort is dominated by difficulty anyway, not throughput.

buttershakes 9y ago

I think this is incredibly overblown. How much does the existing financial system cost to operate? How much do ATMs, Private financial networks, money security, transportation, staff, legal, etc, etc. Comparing per transaction cost does not even begin to account for the energy costs of the current financial system. Even with the escalating cost of mining we are getting a deal compared to the way things are now. Hopefully research will yield significantly better incentive structures than pure proof-of-work, but in the mean time it has proven to be remarkably effective.

JumpCrisscross 9y ago
> Comparing per transaction cost does not even begin to account for the energy costs of the current financial system Finance is about 7.3% of U.S. GDP [1]. The U.S. produces about 1,000 gigawatts of energy per year [2]. A first-order estimation thus yields 73 Gigawatts for finance. So about 150 times Bitcoin’s 500 megawatts. About $700 million of BTC change hands every day [3]. That’s $250 billion a year. U.S. non-cash transaction volume is like $180 trillion a year [4]. So about 720 times the size of the Bitcoin economy. Bitcoin thus appears about 5 times less efficient than the non-cash status quo. Given finance is less energy intensive than most of the U.S. economy, this is likely a lower-bound estimate. [1] https://www.selectusa.gov/financial-services-industry-united-states https://www.selectusa.gov/financial-services-industry-united... [2] https://en.m.wikipedia.org/wiki/Electricity_sector_of_the_United_States https://en.m.wikipedia.org/wiki/Electricity_sector_of_the_Un... [3] https://www.quandl.com/data/BCHAIN/ETRVU-Bitcoin-Estimated-Transaction-Volume-USD https://www.quandl.com/data/BCHAIN/ETRVU-Bitcoin-Estimated-T... [4] https://www.federalreserve.gov/newsevents/press/other/2016-payments-study-20161222.pdf https://www.federalreserve.gov/newsevents/press/other/2016-p...
- nnfy 9y ago
  You simply cannot justify that first order approximation. There is no reason so believe that the financial industry takes power in proportion to it's relative size of GDP. In fact I would expect the financial industry to require a higher proportion of power to keep servers/ATMs/staff computers running.

deleted 9y ago

[deleted]

virtuexru 9y ago

> So we've created an "industry" where you are essentially paid by comverting energy to waste. Paid to perform extremely intense difficult (ie wasteful) operations to back a useful technology (digital currency). https://hackernoon.com/bitcoin-doesnt-waste-electricity-649694ea3605 https://hackernoon.com/bitcoin-doesnt-waste-electricity-6496...

deadmetheny 9y ago
>This is very different to electricity, because physical resources are consumed that the consumer did not ask for or need This entire article is glossing over the fact that the vast majority of electricity produced is from converting a physical resource into the electricity being wasted. Excessive wasteful packaging is stupid, and so is using excessive amounts of power to make Dunning-Krugerrands. You could certainly place your miners near energy sources such as hydro, solar, or geothermal, but that doesn't change the fact that Bitcoin mining is, by definition, a measure of wasted electricity.
s73ver_ 9y ago
From the article: "Whatever use you choose to put the electricity you pay for to, if you are satisfied, then the electricity has not been wasted." That is far too selfish of a view for the author to take. Electricity is a finite resource; only so much of it can be generated and available at a given time.
- sillysaurus3 9y ago
  Selfish or not, it appears that it's going to happen. We're on course for that, anyway.
r2dnb 9y ago
Not taking side on the issue but this article sort of misses the point. The first half of it is focused on demonstrating that unlike packaged goods, producing electricity does not result in packages needing to be put in the trash which is a fact nobody ever challenged to the best of my knowledge. I never even heard of this interpretation of the waste criticism. But the author goes on and opens the Webster's dictionary at the "Wasteful" page to continue his argument. The other half is an augmentation of the line that the electricity used for mining is actually used by the mining computer, and very little of it evaporates as heat. Moreover heat inefficiencies are not intended by miners. As a result mining is as legitimate as any other business activity and mining bitcoins should not be considered a waste of energy. While in this case an opponent may possibly exist, I am left unconvinced by this demonstration. The real discussion is that as of today, the raw materials required to produce electricity are in limited supply and in decreasing amount. Provided this limited supply and this decreasing amount, a structural increase on the demand will result in a pressure on price which may have a negative impact on society and the economy. An other concern is that as of today, efforts are made to decrease energy consumption because energy production has a negative impact on environment with the current state of the art technologies. The waste discussion comes from the fact that the energy footprint of the bitcoin network may seem unnecessary to some since alternatives exist to transfer value. The author fails to consider the issue from the other side of the table and does not even know who or what he argues against. He misunderstands what the opposing view is. Throughout the article a lot of energy is spent defending positions that nobody ever challenged and this for sure is a waste.

golemotron 9y ago

> Entire economies can be crippled by rising costs in energy (oil shocks of the 70s) and boom by sudden drops in cost of energy. The important thing to know is that the current administration considers energy a top priority [1] so we are well poised to continue building blockchain infrastructure. [1] https://www.whitehouse.gov/america-first-energy https://www.whitehouse.gov/america-first-energy

JBReefer 9y ago
People on HN being pro-Trump's energy plan so they can get rich off of Bitcoin. That's really surprising and really sad. Boiling the ocean for a bit more personal wealth for the top 5% of income earners that make up the userbase of this site is ... a lot.

acchow 9y ago

> We've created a long term societal motivation/reward to harvest every joule produce by the sun and use it to calculate hashes The blockchain doesn't have the economics to incentivize limitless energy consumption. The upper bound is exactly how much people are willing to pay for the bitcoin you mine.

nas 9y ago
Correct. This is the same reason why Proof-of-Stake (PoS) cannot work as people hope. Due to fundamental economics, people will always spend according to the value of the new currency issued by mining. Switching to PoS just means they will spend in some other way in order to get those new coins. This also means that as the Bitcoin mining reward diminishes, the money "wasted" on energy is going to decrease, unless the transaction fees rise enough to match what the reward was paying. In that case, because people are willing to pay those fees, it seems quite logical that the cost of the mining is providing a value equal to its cost. Otherwise, people would not be paying those fees. I really don't know if the Bitcoin experiment is going to work but a lot of criticisms of it are based on some really poor logic.
TheDong 9y ago
That is not true. The upper bound is the combination of how much people will pay you for the bitcoins they mine, how much people value being able to transact (transaction fees), and the value of existing held bitcoin. Since mining is what prevents attackers from stealing bitcoin,the total value of all bitcoin in existence actually has a bearing in this. If no one were transacting and no coins were rewarded for mining, people would still mine just so that their existing coins remain secure.

solotronics 9y ago

I don't think this is a real concern. How much electricity is used by movie theaters, arcades, and other entertainment? How much energy is used by mining for gold and silver?

thadjo 9y ago

Not to sound like a free market idealist here, but don't market forces keep this in check? In general, miners won't mine unless there is a financial incentive to do so. as Bitcoin matures, that financial incentive maps closely to an overall demand for a store of value (plus the nifty features of crypto). I would see your point more clearly if miners really were wasting energy–using energy to calculate hashes that weren't financially valuable–but I don't see that happening right now.

BoiledCabbage 9y ago
> I would see your point more clearly if miners really were wasting energy–using energy to calculate hashes that weren't financially valuable–but I don't see that happening right now. For every river you pollute I'll print another $10 bill and hand it to you. Clearly this isn't wasteful because it's financially valuable. /s This logic doesn't hold up to reason.

loceng 9y ago

I think an issue competing for top problem relating to these cryptocurrencies is that for security to exist the mining capability must be distributed. In order to protect against this, every nation or person who has interest would need to or should increase their capability in order to try to prevent a takeover.

brulez 9y ago

Something like bitcoin may actually result in lower overall energy costs by providing a guaranteed base level of income for new power generation. Building a new plant is much less risky if there is guaranteed off-peak demand. New plants also tend to me more environmentally friendly.

B1FF_PSUVM 9y ago

> harvest every joule produce by the sun and use it to calculate hashes. Paperclipping - https://wiki.lesswrong.com/wiki/Paperclip_maximizer https://wiki.lesswrong.com/wiki/Paperclip_maximizer