11 ms·

Concerns about Bitcoin's energy use are overblown

66 points by w-ll 9y ago

apendleton 9y ago
> Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources My sense was that this was only the case in countries that have effective environmental regulation, and that coal was cheaper in countries where you could legally operate super-dirty plants. Is this no longer the case?
- eberkund 9y ago
  Well China is no longer allowing energy plants to sell power to miners which is probably a majority portion of the problem you are referring to.
  - lightbyte 9y ago
    How does a plant know the person it is selling power to is using it to mine?
    - agumonkey 9y ago
      maybe it's obvious relatively to the history of a plan. if one residential building takes N times more than others 24/7 you can assume mining
    - derefr 9y ago
      Usually, when a regulator imposes a constraint, it's up to the constrained party to (figure out how to) gather the intelligence required to follow the constraint. It may turn out that there are other regulations (e.g. privacy regulations) preventing a company from gathering that information about individuals, though. At which point the power company would probably have to stop selling to individuals altogether (i.e. provide no residential power service any more, just private commercial/industrial service to other companies, because companies have a lot fewer privacy protections so it's easy enough to figure out whether they're mining.)
  - pbhjpbhj 9y ago
    How do they stop them?
    - nicky0 9y ago
      Law enforcement?
- dmurray 9y ago
  The marginal cost of hydro energy is nearly nothing. If you build a dam but the local city or factory no longer needs the energy, it costs you nothing to keep sending the water down the turbines. The coal plant might have been cheaper to build, but to produce electricity you need to keep on mining coal for it. An even better scenario is if the government subsidizes the building of the hydro plant - then you get cheaper up front cost and cheaper recurring costs. This is the case in Austria, according to HydroMiner[0]. [0]https://www.hydrominer.org/faq/ https://www.hydrominer.org/faq/
tanto 9y ago
The author sounds like a story teller with no idea what he is talking about. With the current transaction costs bitcoin doesn't even have a real world usage for the common man anymore.
- paulgb 9y ago
  The author is a woman.
- Frogolocalypse 9y ago
  There are lot of people that can't understand the use-case of bitcoin, and can't understand why it has value if it doesn't meet theirs, yes.
  - tanto 9y ago
    As you replied to my comment and you indicate that I don't understand it please elaborate. What is the use-case of bitcoin for the common man? Please only count the ones where using classical monetary systems (cash, credit card, etc.) are worse.
    - Frogolocalypse 9y ago
      Decentralized censorship and inflation resistant savings account.
ajross 9y ago
> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. That's bad analysis. Bitcoin energy usage is bounded very closely by the value of the coins mined at whatever the most efficient method is at the time. That is, it's worth it to spend electricity mining as long as the coins are worth a little bit more than the energy input. So bitcoin growth has absolutely nothing to do with hardware efficiencies, and is entirely a function of the outrageously inflated growth bubble it is experiencing. Basically: cleaner energy and more efficient computing hardware won't save us from this monster. But thankfully the coming crash will.
- nlperguiy 9y ago
  The amount of energy used on heating and cooling is several magnitudes larger than whole mining for bitcoin. It's not a monster, it just sounds ridiculously big, but Internet uses more. Airplanes use magnitudes more, even cow farts are much bigger than CO2 footprint of Bitcoin.
  - ajross 9y ago
    The point is that bitcoin valuation is driven as a bubble. Inbound coin purchasers are expecting another hundredfold increase over the next two years. So there goes your "several orders of magnitude" right there. Again, it will crash, so this won't happen. But the community expectation (even if the community doesn't realize it) of bitcoin absolutely is that it will eat all the world's electricity.
    - Frogolocalypse 9y ago
      There is a lot of certainty in your statement for a bunch of guesses.
    - gfodor 9y ago
      People have been saying it will crash for almost a decade now. You need a catalyst for a crash. You need a reason for the majority of market participants to throw their hands up and say "you know what, this bitcoin thing is never going to be useful." We've been waiting for a long time for that catalyst, and if anything I think it's been receding further off into the distance as bitcoin becomes more, not less, established as a mainstream technology.
cwyers 9y ago
TL;DR Bitcoin uses over 75% of the energy used to mint and print all the fiat money in the world for about a percentage point of the transaction volume, but it's okay!
- desertrider12 9y ago
  The computation has nothing to do with minting. The computation allows every Bitcoin user to “vote” on the correct sequence of transactions in the last block, and the reward for solving a block is just to make sure that people keep hashing. You can’t have a blockchain without a large number of people doing some kind of easily verifiable computation.
- colemannugent 9y ago
  Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up. While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.
  - tinus_hn 9y ago
    Are you in the universe where no Bitcoin got stolen, ever? Because I surely am not.
  - bad_user 9y ago
    > Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up. That's unfair. A more reasonable comparison is with credit card transactions. Several European countries are positioned to go cashless you know. > While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well. That's a really stupid argument to make, but while you're at it, factor in the cost of Bitcoin robberies of people getting hacked, more and more every day. There's even a story around of a guy robbed at gunpoint. The more popular it gets, the bigger as a target it becomes ;-)
  - cwyers 9y ago
    Add in all the costs of the Bitcoin infrastructure to Bitcoin's usage, too - exchanges and so on. And then you still have an instrument so unstable that you can't actually buy anything with it; Steam discontinued BTC purchasing recently because the system is unusable for retail. So you still need that fiat money infrastructure to, you know, pay for anything.
roberttod 9y ago
But how much energy will it use when scaled to the throughput of physical currency? Probably still not as bad but Bitcoin is still far less efficient than credit/debit transactions at that scale. There are some great crypto alternatives that would use magnitudes less power also.
- infogulch 9y ago
  Bitcoin as it is currently envisioned cannot scale to the throughput of either cards or cash of any major economy, let alone all of them combined. There are data limits on bitcoin that make it literally impossible, and even given big technical changes that significantly lift limits it would still not even be close. Bitcoin would have to go through an enormous transformation to be able to scale to that many transactions.
partycoder 9y ago
If the dollar can be grossly overvalued for decades, so can bitcoin. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege At least the bitcoin blockchain can be audited, unlike the US Federal Reserve, an institution accountable to no one.
GhostVII 9y ago
Stopped reading once they tried to say Bitcoin is green because it uses less energy than modern money production. Bitcoin handles many orders of magnitude fewer transactions that pretty much every other monetary system - the fact that the energy usage is even comparable shows how much energy Bitcoin truly uses.
- aquadrop 9y ago
  On the other hand bitcoin doesn't need to be reprinted every few years and same coins can be reused millions of times, especially if transaction rate goes higher in the future. I still don't know if that comparison is something to care about.
  - arcticfox 9y ago
    There still need to be miners to process transactions, they will simply collect on fees instead
  - roywiggins 9y ago
    Transacting with bitcoin requires mining. Mining is what validates blocks of transactions. Mining does create coins, but that's sort of a side-effect. Eventually the mining reward will go away, but the energy costs of transacting will remain.
  - wz1000 9y ago
    The same is true of all electronic payment systems, fiat included. Bitcoin adds nothing to the equation.
  - kimsk112 9y ago
    Most money in the world exists only in digital form, so I don't think bitcoin has any benefit in this regard.
  - GhostVII 9y ago
    The energy usage comparisons were taking into account the energy requirements of reprinting money every few years.
brndnmtthws 9y ago
Let's also acknowledge that the "sky is falling" proclamations around Bitcoin mining energy use are based on numbers that aren't even close to accurate. Current network hash rate is about 12EH/s, and an Antminer S9 does about 14TH/s at 1372W. Thus, (12000000THs / 14THs) * 1372W = 1,176,000,000W Which is about 1.176GW. The article cites 8.27TW, which is off by several orders of magnitude. QED. Edit: numbers maybe not so far off after all, as it appears to say 8.27TWh/year now.
- tedivm 9y ago
  Those Antminer numbers don't actually take into account cooling, other than the fan on the system. Those are the "at the wall" numbers. Since these machines dump their heat into the datacenter presumably if you're running any significant number of them you'll need a cooling system. You're also operating under the assumption that every miner is already using these systems, which I don't believe is the case. Lots of people are likely running older systems, and as the price of bitcoin gets higher older less efficient machines become more profitable to turn back on. I think reading the original source of their power consumption numbers will give a much better insight to where those numbers came from- http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/
  - brndnmtthws 9y ago
    Even if you double the estimate, it's significantly less than the BS numbers being tossed around. By a lot.
    - arcticfox 9y ago
      Which of these assumptions leads you to be different than them by 4-5 orders of magnitude? Their numbers are only 3x higher total hashrate estimate and 3x less efficient GH/s over the cutting edge Antminer, which seems reasonable. I'm confused where you diverge so much. https://digiconomist.net/bitcoin-energy-consumption#assumptions https://digiconomist.net/bitcoin-energy-consumption#assumpti...
    - 9y ago
wz1000 9y ago
> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. Not long ago, the Department of Energy was predicting that their electricity use would double every five years, and Google was getting slammed for consuming enough to power 200,0000 homes. In recent years, though, the centers’ total electricity use has flattened even as their number has kept growing. As it turned out, better cooling and power management technology improved efficiency. Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources. This is just flat out wrong and shows the author has no idea what she is talking about. The rate of BTC production is fixed, so "efficiency" has no impact on the dollar cost of electricity it is using. If a BTC can sell for $X, it is profitable for the network to spend any amount upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs) mining bitcoin. At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a day and still remain profitable. Furthermore, comparing Bitcoin to physical currency is disingenuous even if you completely discount the (gargantuan)scale difference. You would get rid of that energy consumption even if could get everyone to switch to electronic (fiat) money instead of paper currency, and presumably have it be much greener than having them switch to bitcoin.
- Klathmon 9y ago
  But just because it's profitable doesn't mean it can't be more profitable right? If I'm going to set up a mining operation, wouldn't it make financial sense to set it up near a hydroelectric plant where my electric cost is 1/10th of what it is in my home in PA? Any cost reduction is an increase in profit, so there's still motivation to reduce costs, a pretty large one.
  - wz1000 9y ago
    As long as there is a non trivial profit margin, more miners will keep entering the game until the the margin shrinks to a small enough figure that nobody else wants to start mining.
pinarello 9y ago
Replace cash and coins? It has moved in completely other area in the last few years. Sad that all those good goals set in the beginning were crushed with it's success
paulgb 9y ago
As a thought experiment, if you took out the mining rewards tomorrow and had only transaction costs, the energy put into each block would be much lower and be a function of the value actually provided in each transaction. Plus the value of existing Bitcoin would go up because of even more scarcity. I'm not saying Bitcoin should do that, but as proof-by-construction that a more green coin with the same properties could exist.
gfodor 9y ago
All these articles seem to imply that bitcoin transactions "cost" energy. My understanding: mining costs energy, the transactions are a side effect of the energy. More transactions does not necessarily mean more energy consumption. What causes higher energy consumption is higher USD/BTC price which drives further investment in mining and increases mining difficulty. Transaction volume may or may not be correlated to USD/BTC, but it seems extremely disingenuous to take the total miner energy consumption and divide it by the # of transactions to put an energy cost per transaction, as if that were a thing.
- The_Double 9y ago
  My understanding is that Bitcoin would fail if the energy costs would be low, the huge costs are what protects it from an adversary acquiring >50% of the "voting rights" on what transactions are valid. At some point the mining rewards will stop, and transaction fees will be the only reward. The price will be driven by demand, but will need to be kept high.
StringyBob 9y ago
So, something I've never quite understood: I believe the computational effort (and energy cost) to mine a coin keeps going up - by design. * If there is a sudden insta-crash in bitcoin value, is there a point where miners just won't bother anymore? If the mining energy cost is higher than the value of the bitcoin mined, doesn't it become un-economical and the whole block-chain seizes up? 'Someone will invent a more efficient method' doesn't seem a reasonable justification. If a major crash occurs would the route out be a fork to a variant where mining is reset to be easier/cheaper? *edit - aha I see the mining difficulty can go up or down over time: https://en.bitcoin.it/wiki/Difficulty https://en.bitcoin.it/wiki/Difficulty edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for mining a block will halve over time, but not necessarily the difficulty or value of the bitcoin. https://www.coindesk.com/making-sense-bitcoins-halving/ https://www.coindesk.com/making-sense-bitcoins-halving/
- Bluecobra 9y ago
  Bitcoin is designed to produce a block every 10 minutes. The difficulty will scale back down if a bunch of miners dropped offline.
- mikeash 9y ago
  As you note, the difficulty adjusts based on the amount of computational power being used. However, there's a really fun corner case failure mode. The difficulty is supposed to adjust about once every two weeks to make for a roughly 10 minute interval between blocks. If more power is added to the network such that the interval is, say, 9 minutes, then when the next adjustment hits, the difficulty will be bumped up by 11%. But! That "every two weeks" thing is based on the block interval. The actual adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that works out to two weeks. If they're mined faster, the network adjusts faster. If they're mined slower, the network adjusts slower. When the changes in hash rate are slow, this is fine. But what happens if there's a sudden massive change in the hash rate? Like, what happens if the hash rate somehow changes by a factor of a thousand in a brief period? If it goes up by a factor of a thousand, then the network will start mining blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block interval will hit and the difficulty will also go up by a factor of 1000, then everything continues as usual. No problem. The problem is if the hash rate goes down by a factor of a thousand. Then the network will start mining blocks roughly once a week. The difficulty will readjust to bring that back down to 10 minutes... eventually. But the interval to the next readjustment is measured in blocks! Let's say you're halfway through the adjustment period when this crash happens, so you have 1008 blocks to go before the next adjustment. That would have taken about a week, but now it will take about twenty years! Unless you can get the hash rate back up substantially, the network will be in extreme slow mode for a long time.
abalone 9y ago
Opinion piece written by "a blockchain engineer at... a financial technology company in San Francisco." The premise is simply that Bitcoin uses less energy than physical cash production. Obviously this implies that Bitcoin will replace cash. If it doesn't -- if say the primary use case for Bitcoin remains currency speculation -- then the argument falls apart.
BLanen 9y ago
Man... The author has no idea how any of this works. Other comments explain it well but damn.
aussieguy1234 9y ago
It's using alot of energy now because of miners mining coins. There is a finite supply of Bitcoins, how much energy will the network use once there are no more coins to mine?

66 points by w-ll 9y ago

> Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources My sense was that this was only the case in countries that have effective environmental regulation, and that coal was cheaper in countries where you could legally operate super-dirty plants. Is this no longer the case?

eberkund 9y ago
Well China is no longer allowing energy plants to sell power to miners which is probably a majority portion of the problem you are referring to.
- lightbyte 9y ago
  How does a plant know the person it is selling power to is using it to mine?
  - agumonkey 9y ago
    maybe it's obvious relatively to the history of a plan. if one residential building takes N times more than others 24/7 you can assume mining
  - derefr 9y ago
    Usually, when a regulator imposes a constraint, it's up to the constrained party to (figure out how to) gather the intelligence required to follow the constraint. It may turn out that there are other regulations (e.g. privacy regulations) preventing a company from gathering that information about individuals, though. At which point the power company would probably have to stop selling to individuals altogether (i.e. provide no residential power service any more, just private commercial/industrial service to other companies, because companies have a lot fewer privacy protections so it's easy enough to figure out whether they're mining.)
- pbhjpbhj 9y ago
  How do they stop them?
  - nicky0 9y ago
    Law enforcement?
dmurray 9y ago
The marginal cost of hydro energy is nearly nothing. If you build a dam but the local city or factory no longer needs the energy, it costs you nothing to keep sending the water down the turbines. The coal plant might have been cheaper to build, but to produce electricity you need to keep on mining coal for it. An even better scenario is if the government subsidizes the building of the hydro plant - then you get cheaper up front cost and cheaper recurring costs. This is the case in Austria, according to HydroMiner[0]. [0]https://www.hydrominer.org/faq/ https://www.hydrominer.org/faq/

tanto 9y ago

The author sounds like a story teller with no idea what he is talking about. With the current transaction costs bitcoin doesn't even have a real world usage for the common man anymore.

paulgb 9y ago
The author is a woman.
Frogolocalypse 9y ago
There are lot of people that can't understand the use-case of bitcoin, and can't understand why it has value if it doesn't meet theirs, yes.
- tanto 9y ago
  As you replied to my comment and you indicate that I don't understand it please elaborate. What is the use-case of bitcoin for the common man? Please only count the ones where using classical monetary systems (cash, credit card, etc.) are worse.
  - Frogolocalypse 9y ago
    Decentralized censorship and inflation resistant savings account.

ajross 9y ago

> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. That's bad analysis. Bitcoin energy usage is bounded very closely by the value of the coins mined at whatever the most efficient method is at the time. That is, it's worth it to spend electricity mining as long as the coins are worth a little bit more than the energy input. So bitcoin growth has absolutely nothing to do with hardware efficiencies, and is entirely a function of the outrageously inflated growth bubble it is experiencing. Basically: cleaner energy and more efficient computing hardware won't save us from this monster. But thankfully the coming crash will.

nlperguiy 9y ago
The amount of energy used on heating and cooling is several magnitudes larger than whole mining for bitcoin. It's not a monster, it just sounds ridiculously big, but Internet uses more. Airplanes use magnitudes more, even cow farts are much bigger than CO2 footprint of Bitcoin.
- ajross 9y ago
  The point is that bitcoin valuation is driven as a bubble. Inbound coin purchasers are expecting another hundredfold increase over the next two years. So there goes your "several orders of magnitude" right there. Again, it will crash, so this won't happen. But the community expectation (even if the community doesn't realize it) of bitcoin absolutely is that it will eat all the world's electricity.
  - Frogolocalypse 9y ago
    There is a lot of certainty in your statement for a bunch of guesses.
  - gfodor 9y ago
    People have been saying it will crash for almost a decade now. You need a catalyst for a crash. You need a reason for the majority of market participants to throw their hands up and say "you know what, this bitcoin thing is never going to be useful." We've been waiting for a long time for that catalyst, and if anything I think it's been receding further off into the distance as bitcoin becomes more, not less, established as a mainstream technology.

cwyers 9y ago

TL;DR Bitcoin uses over 75% of the energy used to mint and print all the fiat money in the world for about a percentage point of the transaction volume, but it's okay!

desertrider12 9y ago
The computation has nothing to do with minting. The computation allows every Bitcoin user to “vote” on the correct sequence of transactions in the last block, and the reward for solving a block is just to make sure that people keep hashing. You can’t have a blockchain without a large number of people doing some kind of easily verifiable computation.
colemannugent 9y ago
Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up. While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well.
- tinus_hn 9y ago
  Are you in the universe where no Bitcoin got stolen, ever? Because I surely am not.
- bad_user 9y ago
  > Now factor in all the costs of moving bills to and from ATMs, banks, and businesses and see how the numbers stack up. That's unfair. A more reasonable comparison is with credit card transactions. Several European countries are positioned to go cashless you know. > While we're at it, factor in the cost of robberies where the robbers take cash, as Bitcoin eliminates those costs as well. That's a really stupid argument to make, but while you're at it, factor in the cost of Bitcoin robberies of people getting hacked, more and more every day. There's even a story around of a guy robbed at gunpoint. The more popular it gets, the bigger as a target it becomes ;-)
- cwyers 9y ago
  Add in all the costs of the Bitcoin infrastructure to Bitcoin's usage, too - exchanges and so on. And then you still have an instrument so unstable that you can't actually buy anything with it; Steam discontinued BTC purchasing recently because the system is unusable for retail. So you still need that fiat money infrastructure to, you know, pay for anything.

roberttod 9y ago

But how much energy will it use when scaled to the throughput of physical currency? Probably still not as bad but Bitcoin is still far less efficient than credit/debit transactions at that scale. There are some great crypto alternatives that would use magnitudes less power also.

infogulch 9y ago
Bitcoin as it is currently envisioned cannot scale to the throughput of either cards or cash of any major economy, let alone all of them combined. There are data limits on bitcoin that make it literally impossible, and even given big technical changes that significantly lift limits it would still not even be close. Bitcoin would have to go through an enormous transformation to be able to scale to that many transactions.

partycoder 9y ago

If the dollar can be grossly overvalued for decades, so can bitcoin. https://en.wikipedia.org/wiki/Exorbitant_privilege https://en.wikipedia.org/wiki/Exorbitant_privilege At least the bitcoin blockchain can be audited, unlike the US Federal Reserve, an institution accountable to no one.

GhostVII 9y ago

Stopped reading once they tried to say Bitcoin is green because it uses less energy than modern money production. Bitcoin handles many orders of magnitude fewer transactions that pretty much every other monetary system - the fact that the energy usage is even comparable shows how much energy Bitcoin truly uses.

aquadrop 9y ago
On the other hand bitcoin doesn't need to be reprinted every few years and same coins can be reused millions of times, especially if transaction rate goes higher in the future. I still don't know if that comparison is something to care about.
- arcticfox 9y ago
  There still need to be miners to process transactions, they will simply collect on fees instead
- roywiggins 9y ago
  Transacting with bitcoin requires mining. Mining is what validates blocks of transactions. Mining does create coins, but that's sort of a side-effect. Eventually the mining reward will go away, but the energy costs of transacting will remain.
- wz1000 9y ago
  The same is true of all electronic payment systems, fiat included. Bitcoin adds nothing to the equation.
- kimsk112 9y ago
  Most money in the world exists only in digital form, so I don't think bitcoin has any benefit in this regard.
- GhostVII 9y ago
  The energy usage comparisons were taking into account the energy requirements of reprinting money every few years.

brndnmtthws 9y ago

Let's also acknowledge that the "sky is falling" proclamations around Bitcoin mining energy use are based on numbers that aren't even close to accurate. Current network hash rate is about 12EH/s, and an Antminer S9 does about 14TH/s at 1372W. Thus, (12000000THs / 14THs) * 1372W = 1,176,000,000W Which is about 1.176GW. The article cites 8.27TW, which is off by several orders of magnitude. QED. Edit: numbers maybe not so far off after all, as it appears to say 8.27TWh/year now.

tedivm 9y ago
Those Antminer numbers don't actually take into account cooling, other than the fan on the system. Those are the "at the wall" numbers. Since these machines dump their heat into the datacenter presumably if you're running any significant number of them you'll need a cooling system. You're also operating under the assumption that every miner is already using these systems, which I don't believe is the case. Lots of people are likely running older systems, and as the price of bitcoin gets higher older less efficient machines become more profitable to turn back on. I think reading the original source of their power consumption numbers will give a much better insight to where those numbers came from- http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/
- brndnmtthws 9y ago
  Even if you double the estimate, it's significantly less than the BS numbers being tossed around. By a lot.
  - arcticfox 9y ago
    Which of these assumptions leads you to be different than them by 4-5 orders of magnitude? Their numbers are only 3x higher total hashrate estimate and 3x less efficient GH/s over the cutting edge Antminer, which seems reasonable. I'm confused where you diverge so much. https://digiconomist.net/bitcoin-energy-consumption#assumptions https://digiconomist.net/bitcoin-energy-consumption#assumpti...
  - 9y ago

wz1000 9y ago

> What’s more, bitcoin’s consumption won’t necessarily keep rising as it has. Data centers, for example, have gotten a lot better. Not long ago, the Department of Energy was predicting that their electricity use would double every five years, and Google was getting slammed for consuming enough to power 200,0000 homes. In recent years, though, the centers’ total electricity use has flattened even as their number has kept growing. As it turned out, better cooling and power management technology improved efficiency. Bitcoin miners are no less motivated by profit, so it stands to reason that they will seek to become more efficient and employ the cheapest energy available, which generally means hydroelectric plants and other renewable sources. This is just flat out wrong and shows the author has no idea what she is talking about. The rate of BTC production is fixed, so "efficiency" has no impact on the dollar cost of electricity it is using. If a BTC can sell for $X, it is profitable for the network to spend any amount upto $12.5*X every 10 minutes on electricity(ignoring hardware/fixed costs) mining bitcoin. At $15,000 a BTC, this means it can consume $27,000,000 worth of electricity a day and still remain profitable. Furthermore, comparing Bitcoin to physical currency is disingenuous even if you completely discount the (gargantuan)scale difference. You would get rid of that energy consumption even if could get everyone to switch to electronic (fiat) money instead of paper currency, and presumably have it be much greener than having them switch to bitcoin.

Klathmon 9y ago
But just because it's profitable doesn't mean it can't be more profitable right? If I'm going to set up a mining operation, wouldn't it make financial sense to set it up near a hydroelectric plant where my electric cost is 1/10th of what it is in my home in PA? Any cost reduction is an increase in profit, so there's still motivation to reduce costs, a pretty large one.
- wz1000 9y ago
  As long as there is a non trivial profit margin, more miners will keep entering the game until the the margin shrinks to a small enough figure that nobody else wants to start mining.

pinarello 9y ago

Replace cash and coins? It has moved in completely other area in the last few years. Sad that all those good goals set in the beginning were crushed with it's success

paulgb 9y ago

As a thought experiment, if you took out the mining rewards tomorrow and had only transaction costs, the energy put into each block would be much lower and be a function of the value actually provided in each transaction. Plus the value of existing Bitcoin would go up because of even more scarcity. I'm not saying Bitcoin should do that, but as proof-by-construction that a more green coin with the same properties could exist.

gfodor 9y ago

All these articles seem to imply that bitcoin transactions "cost" energy. My understanding: mining costs energy, the transactions are a side effect of the energy. More transactions does not necessarily mean more energy consumption. What causes higher energy consumption is higher USD/BTC price which drives further investment in mining and increases mining difficulty. Transaction volume may or may not be correlated to USD/BTC, but it seems extremely disingenuous to take the total miner energy consumption and divide it by the # of transactions to put an energy cost per transaction, as if that were a thing.

The_Double 9y ago
My understanding is that Bitcoin would fail if the energy costs would be low, the huge costs are what protects it from an adversary acquiring >50% of the "voting rights" on what transactions are valid. At some point the mining rewards will stop, and transaction fees will be the only reward. The price will be driven by demand, but will need to be kept high.

StringyBob 9y ago

So, something I've never quite understood: I believe the computational effort (and energy cost) to mine a coin keeps going up - by design. * If there is a sudden insta-crash in bitcoin value, is there a point where miners just won't bother anymore? If the mining energy cost is higher than the value of the bitcoin mined, doesn't it become un-economical and the whole block-chain seizes up? 'Someone will invent a more efficient method' doesn't seem a reasonable justification. If a major crash occurs would the route out be a fork to a variant where mining is reset to be easier/cheaper? *edit - aha I see the mining difficulty can go up or down over time: https://en.bitcoin.it/wiki/Difficulty https://en.bitcoin.it/wiki/Difficulty edit2 - I was thinking of 'halving'. The reward (in number of bitcoins) for mining a block will halve over time, but not necessarily the difficulty or value of the bitcoin. https://www.coindesk.com/making-sense-bitcoins-halving/ https://www.coindesk.com/making-sense-bitcoins-halving/

Bluecobra 9y ago
Bitcoin is designed to produce a block every 10 minutes. The difficulty will scale back down if a bunch of miners dropped offline.
mikeash 9y ago
As you note, the difficulty adjusts based on the amount of computational power being used. However, there's a really fun corner case failure mode. The difficulty is supposed to adjust about once every two weeks to make for a roughly 10 minute interval between blocks. If more power is added to the network such that the interval is, say, 9 minutes, then when the next adjustment hits, the difficulty will be bumped up by 11%. But! That "every two weeks" thing is based on the block interval. The actual adjustment period is 2016 blocks. When blocks are mined every 10 minutes, that works out to two weeks. If they're mined faster, the network adjusts faster. If they're mined slower, the network adjusts slower. When the changes in hash rate are slow, this is fine. But what happens if there's a sudden massive change in the hash rate? Like, what happens if the hash rate somehow changes by a factor of a thousand in a brief period? If it goes up by a factor of a thousand, then the network will start mining blocks roughly every 0.6 seconds. Within about 20 minutes, the 2016 block interval will hit and the difficulty will also go up by a factor of 1000, then everything continues as usual. No problem. The problem is if the hash rate goes down by a factor of a thousand. Then the network will start mining blocks roughly once a week. The difficulty will readjust to bring that back down to 10 minutes... eventually. But the interval to the next readjustment is measured in blocks! Let's say you're halfway through the adjustment period when this crash happens, so you have 1008 blocks to go before the next adjustment. That would have taken about a week, but now it will take about twenty years! Unless you can get the hash rate back up substantially, the network will be in extreme slow mode for a long time.

abalone 9y ago

Opinion piece written by "a blockchain engineer at... a financial technology company in San Francisco." The premise is simply that Bitcoin uses less energy than physical cash production. Obviously this implies that Bitcoin will replace cash. If it doesn't -- if say the primary use case for Bitcoin remains currency speculation -- then the argument falls apart.

BLanen 9y ago

Man... The author has no idea how any of this works. Other comments explain it well but damn.

aussieguy1234 9y ago

It's using alot of energy now because of miners mining coins. There is a finite supply of Bitcoins, how much energy will the network use once there are no more coins to mine?