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The problem is that with a competitive mining market, Bitcoin energy use will rise until the cost of mining a block is equal to the reward for that block (i.e.

by paulgb 9y ago

The problem is that with a competitive mining market, Bitcoin energy use will rise until the cost of mining a block is equal to the reward for that block (i.e. market equilibrium). So if the cost of energy goes down but the price of Bitcoin stays constant, the amount of energy expenditure will be (approximately) equal. Likewise, if the price of Bitcoin goes up, the amount of energy used will go up accordingly. The reward amount will decrease over time and mitigate this, but not enough by a long shot IMO.

nas 9y ago
This is a key observation. Now apply it to the "eco-friendly" and PoS schemes. The same economics apply. For Bram's coin and PoS systems, the costs spent will rise to equal the block reward. So, you are basically doing something more complicated to end up with the same amount of economic waste. In the proof of space version, maybe you will be building millions of hard drives, running them to failure and then throwing them away.
- mopierotti 9y ago
  This answer written by the Ethereum team addresses why cost spent won't necessarily rise to equal block reward in their PoS formulation. https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#doesnt-mc--mr-mean-that-all-consensus-algorithms-with-a-given-security-level-are-equally-efficient-or-in-other-words-equally-wasteful https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#doe...
placeybordeaux 9y ago
I haven't seen the hashrate drop when the price drops. We may be more limited by supply of ASICs than the price of electricity.
oppositelock 9y ago
Mining rewards will be gone in a couple of years, then all that's left are fees to pay for mining - meaning, for securing the blockchain. Higher energy costs mean higher transaction fees, which mean a disincentive to transact, and vice versa. The end state of bitcoin is a hash rate which corresponds to how much people are willing to pay for transactions. It may be a lot lower than it is today.

by paulgb 9y ago

nas 9y ago

This is a key observation. Now apply it to the "eco-friendly" and PoS schemes. The same economics apply. For Bram's coin and PoS systems, the costs spent will rise to equal the block reward. So, you are basically doing something more complicated to end up with the same amount of economic waste. In the proof of space version, maybe you will be building millions of hard drives, running them to failure and then throwing them away.

mopierotti 9y ago
This answer written by the Ethereum team addresses why cost spent won't necessarily rise to equal block reward in their PoS formulation. https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#doesnt-mc--mr-mean-that-all-consensus-algorithms-with-a-given-security-level-are-equally-efficient-or-in-other-words-equally-wasteful https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#doe...

placeybordeaux 9y ago

I haven't seen the hashrate drop when the price drops. We may be more limited by supply of ASICs than the price of electricity.

oppositelock 9y ago

Mining rewards will be gone in a couple of years, then all that's left are fees to pay for mining - meaning, for securing the blockchain. Higher energy costs mean higher transaction fees, which mean a disincentive to transact, and vice versa. The end state of bitcoin is a hash rate which corresponds to how much people are willing to pay for transactions. It may be a lot lower than it is today.