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The proof of work needs to be “useless” in order for it to protect the blockchain (there are proposals that dispute this, and I won’t claim to be an expert, but
by baddox 9y ago
The proof of work needs to be “useless” in order for it to protect the blockchain (there are proposals that dispute this, and I won’t claim to be an expert, but that’s the fundamental idea behind Bitcoin).
When you say that the net value is negative even if the network itself has some positive benefit, what is the negative component there? The only negative component of all that electricity usage is externalities, which apply equally to each unit of energy regardless of what it is used for. Pricing externalities into the cost of electricity is obviously something I approve of, but that’s a separate issue, and I doubt the externalities of electricity usage are anywhere near the magnitude of the positive impact of bitcoin.
- vec 9y agoElectricity isn't free. In the US it's about $0.12/kWh. If I spend a kWh of electricity mining Bitcoin, I owe the electric company in my town another $0.12. Presumably the electric company uses most of that $0.12 on the fuel and maintenance costs necessary to generate and provide me a kWh, costs which they would not have incurred but for my choice to mine Bitcoin. Incidentally, this is (as far as I understand) where most of the transaction fees ultimately end up. They're paid out to the miner who actually commits a transaction. Mining's a relatively competitive field so people aren't going to be able to charge much of a premium. The miners then have to turn around and use those fees to cover their costs, which in practice means their hardware costs and their electrical bills.