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This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary o

by hudon 8y ago

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange). Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing payment systems (Visa, PayPal, etc.) and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars. I'm all for "wait and see", but have we ever done that with a technology that is literally using more electricity than a medium sized nation? When are we going to ask crypto-fans to be accountable for the burned energy? We're asking Google and Facebook to treat our data fairly, can we ask proof-of-work miners to treat our planet fairly? At least wait until the blockchain can solve a real world problem before burning through the mines? [0] https://digiconomist.net/bitcoin-energy-consumption https://digiconomist.net/bitcoin-energy-consumption

hndamien 8y ago
You are focusing on the wrong thing. Energy production is the issue, not energy use. There is an equilibrium to be found in the free market based on the value of BTC that is provided and the economic expenditure to mine it with the cost of electricity used to get there. Oh wait! I found the link in the causal economic chain! We don't put a price on carbon! Put your energy into yelling there and not at yelling at Bitcoin. Maybe Bitcoin will help shed a light on this overtly obvious problem.
- deleted 8y ago
  [deleted]
- almostApatriot1 8y ago
  Chinese miners and other state subsidized miners will mine bitcoin at a loss to push out the competition and gain marketshare. An obvious problem, sure, but no easy solution.
- hudon 8y ago
  Nations and corporations already compete at finding means of cheap or sustainable energy production. How does Bitcoin provide an efficiency here? Furthermore, if we can't find a stable use case for the blockchain and there are no more greater fools investing--the bubble collapses and all the ASICs end up in landfills--does society suddenly stop innovating in energy production? Can you point me to any good literature on this? I don't understand the point.
  - hndamien 8y ago
    I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders). The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it costs to secure the network in relation to the reward paid for it. In these costs are electricity costs, for which miners will find the most efficient means such that they are profitable. The energy prices are determined by the economic actors producing it. The will charge what the market will bear such that they are profitable and competitive. All this is a wonderfully efficient system except for the fact that the externality you are worried about (pollution from energy production) is not accounted for anywhere in the system. In fact, it is almost incentivised, since it is likely that I can produce dirty power cheaper than I can clean power (although this is changing). If you did account for this, dirty power would become more expensive, miner using it would disappear or choose clean energy. Hence, the problem is not "It uses too much energy! So wasteful!!!!" The problem is "We don't account for externalities!!!! So bad!!!"
    - hudon 8y ago
      Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful: "Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that equilibrium capacity acquisition in proof-of-work mining is excessive. Second, proof-of-work mining generates greenhouse-effect negative externalities, whose order of magnitude is significant. As of January 2018, the electricity consumed for Bitcoin mining was equal to the electricity consumption of over 3,400,000 US households, with an average consumption per transaction of around 300 KWh. Pigovian taxation could curb overinvestment in mining, but it might also be difficult to put in place, given the international decentralisation of mining." source: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2017/wp_tse_817.pdf https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...
- jMyles 8y ago
  Somehow, I had never encountered this argument before. This makes great sense. It's not entirely clear how to put a price on carbon, though. And, bitcoin's censorship-resistance (which of course I laud as an amazing and important innovation) might make it harder to force everyone to account for externalities. Is someone doing serious research, writing, and thinking on the relationship between crypto-blockchain tech and the economics of environmental externalities?
  - hndamien 8y ago
    It isn't really crypto specific. It is energy producing utility economics. If we had a price on carbon it would effect this equilibrium everywhere. If you accept that we have to change, and sooner rather than later due to inevitability - see Elon's turd in a punchbowl reference, and you accept we aren't going to curtail the things that we find useful that cost us energy, then a price on carbon would bring this about much quicker than without it and is really the only sensible option. Compared with the status quo, burn more dirty fuel faster and cheaply to prevent the economics of green tech coming online, and then, hoping we can innovate our way out of the shitty punchbowl.
DINKDINK 8y ago
>I [...] worked as an engineer at a well-known Bitcoin company). >Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output You worked at a Bitcoin company and don't understand the value of proof of work? Being able to trustlessly settle shared stated across the entire globe is unproductive output? The globe spend billions of dollars each year blowing up mountains to sift for gold that then sit in central bank vaults to collect dust. At least bitcoin mining can absorb some of the curtailed renewable energy and make the payback on renewables faster.
- hudon 8y ago
  I understand the claims of proof-of-work. What I'm asking for is evidence. Do you have any scientific research indicating that Bitcoin will ultimately be an efficiency? Or is it a hunch? How much energy does Bitcoin need to consume before you demand evidence that it does as you claim?
- almostApatriot1 8y ago
  The "not as bad as" fallacy, also known as the fallacy of relative privation, asserts that: If something is worse than the problem currently being discussed, then The problem currently being discussed isn't that important at all. In order for the statement "A is not as bad as B," to suggest a fallacy there must be a fallacious conclusion such as: ignore A.[0] [0]https://rationalwiki.org/wiki/Not_as_bad_as https://rationalwiki.org/wiki/Not_as_bad_as
- jonny_eh 8y ago
  Has the growth in popularity of BTC affected the perceived value of gold? You seem to be asserting that crypto-coin popularity will save the planet by reducing gold mining, I'm very skeptical.
  - DINKDINK 8y ago
    Advantages of gold over bitcoin: If there's a total internet && computer && electricity apocalypse, a physical barter exchange with gold is more trustless than bitcoin. You can still transact bitcoin but there's trust involved. Advantages of Bitcoin over gold: No trusted third party (If you're moving sizable sums of gold, you're doing it with a trusted third party[TTP)) 99.99226%[1] transaction uptime (Your TTP keep business hours) No countries win the gold-geography lottery (Your country that has no gold reserves can still accumulate) Instantly assay the value (gold takes time) You can use latent renewable energy to mine bitcoin (the way that miners remain profitable is by using cheap hydro power that would be wasted if not consumed) No need to blow up mountains to sift for gold. Bitcoin is programmable value (People in places without functioning judicial/commercial systems can create contracts with each other) You cannot practically bring more bitcoin to market if the price increases (The price of gold dictates which gold fields are profitable to produce) Most importantly, it separates money that citizens use and the onus of financial obligations that the oligopoly (Banker's bailout 2008) and political class (Endless war) place on citizens. [1]http://bitcoinuptime.com/ http://bitcoinuptime.com/
mrb 8y ago
Don't refer to the Digiconomist BECI for electricity consumption figures. The author makes fundamentally flawed assumptions, causing him to overestimate the consumption by 1.5× to 2.8×, and likely by 2.2×. BECI starts with calculating average mining revenues based on a 439-day (variable) moving average of the Bitcoin and Bitcoin Cash prices. Then BECI assumes a fixed 60% share of these revenues are spent on electricity costing $0.05/kWh. That is it. There is nothing sophisticated about his model. His first error is that 60% is not representative of current hardware; real-world data shows the lifetime average percentage is between 6.3% and 38.6%. His second error is that the averaging period is excessively variable and poorly justified: it has increased from 60 and 439 days and changed by twofold his electricity consumption figures. For more info, see: http://blog.zorinaq.com/serious-faults-in-beci/ http://blog.zorinaq.com/serious-faults-in-beci/ In reality, Bitcoin's consumption is only a third of the power generated by the Three Gorges Dam as of 4 months ago: http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/
- hudon 8y ago
  He seems to support his 60% figure with a lot of evidence [0][1] and you have agreed in the past that if anything 60% is the number your model converges to as well... Anyway, the discussion is a good one and I'm glad at least 2 people are concerned about this. This is exactly the kind of thing we should be truth-seeking on, as well as finding use cases... not if Wall Street is finally allowing people who don't know any better to keep fueling the beast. [0] https://digiconomist.net/bitcoin-energy-consumption#validation https://digiconomist.net/bitcoin-energy-consumption#validati... [1] https://digiconomist.net/re-serious-faults-in-beci https://digiconomist.net/re-serious-faults-in-beci
  - mrb 8y ago
    [0] and [1] present zero evidence for supporting 60% as a current valid estimate. [0] even misrepresents the Morgan Stanley report (which actually supports my numbers, not his): http://blog.zorinaq.com/serious-faults-in-beci/#critic-6-author-misrepresents-morgan-stanleys-reports http://blog.zorinaq.com/serious-faults-in-beci/#critic-6-aut... Alex of Digiconomist is very good at writing long verbose paragraphs that "seem" to support his model, but when we look at his actual data and logic, it's full of holes, flaws, and poor assumptions. One of the things we both agree on is that in the future (1 year? 10 years?) the ratio will tend toward 40 to 60%. But that doesn't say anything about the ratio as of today.
doug3465 8y ago
Proof of Stake is the answer.
- lrvick 8y ago
  There is even -less- evidence this can actually work at large scale without becoming centralized. By design the rich get gradually richer via staking and once enough nodes/coins are controlled by a single party they can change the rules of the network. Maybe social dynamics work out to avoid this, but humans have a long history of trending towards various forms of plutocracies. One of the reasons Ethereum forked was to avoid a single party (the DAO thief) controlling far too large a portion of the total ether which has big consequences in a future with PoS. Are we going to continue fork networks every time one party gets too rich? We could. Unless of course that party is pretending to be many individuals and we can't tell. Hard to stop this without deanonymization and a loss of censorship resistance. To be fair PoW suffers similarly from mining power all clustering in cheap electricity areas and thus players like Bitmain have a scary amount of centralized control. I am skeptical of PoW long term without much better globally distributed use of renewalable energy. PoS by dropping this anchor to the physical world seems even crazier. I am however somewhat optimistic about Bram Cohen's "Proof of space and time" in his "Chia" project which attempts to move the PoW problem from proof of expended electricity to proof of burned disk space, which feels inherently greener and easier to geographically distribute. Or neither of these PoW alternatives work and the lessons learned from them empower as of yet unknown innovations. Exciting times to be sure.
  - Nursie 8y ago
    Greener? It's not free to manufacture hard drives, in terms of materials, energy, CO2 etc. Proof of space and time merely shifts the pressure away from compute power to storage. It has the potential to do for the storage market what PoW as done for the graphics card market - pump up prices and move useful tech out of the reach of most consumers.
    - lrvick 8y ago
      Graphics cards and ASICs are high up front cost and ongoing electricity cost that forces them to geographical areas with cheap electricity. Disk based systems are still up front cost, but substantially less cost to operate. Chia style nodes could be very low compute/electricity overhead and could potentially run off raspberry Pis on solar or using spare storage on mobile devices that are already powered on for other uses.
eof 8y ago
i have paid and been paid overseas in bitcoin. as have others.. how is this not valuable? no one judge can take it away from me, and i value that as others do. i fail to see how a decentralized store of value and exchange is nil value
- hudon 8y ago
  I think you're arguing for the remittance use case but this has been shown to be inefficient compared to other methods [0][1][2]. Maybe lightning network will change that but again, it is just a wild guess from crypto-fans right now... and that's my point: why are we spending so much on hunches? Why aren't we building this thing responsibly if we know it costs so much in electricity? [0] https://www.coindesk.com/why-bitcoins-remittance-disruption-slowed-to-a-crawl/ https://www.coindesk.com/why-bitcoins-remittance-disruption-... [1] https://medium.com/cryptonight/bitcoin-doesn-t-make-remittances-cheaper-eb5f437849fe https://medium.com/cryptonight/bitcoin-doesn-t-make-remittan... [2] https://www.saveonsend.com/blog/bitcoin-blockchain-money-transfer/ https://www.saveonsend.com/blog/bitcoin-blockchain-money-tra...
  - eof 8y ago
    i am not talking about remittances though that is also a legit use case. i just meant overseas business. i don't really see its electricity use as a big issue since market forces will inevitably reduce cost or increase supply. part of the reason though people will put a lot into an experiment like this is that the network effect is important to its success. needs to be very liquid. for me personally having a fungible electronic currency that cannot be taken away by law or inflation is itself valuable
VMG 8y ago
> Bitcoin's transaction throughput is dismally low compared How are you measuring "transaction throughput"?
cslarson 8y ago
> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but unfortunately the kind of throw away comment that gets voted to the top of an hn thread. what a sad place this is!
- jaredklewis 8y ago
  Some of those projects sound very interesting, but potential and actual productive output are very different things. They have potential. But you can't pretend like BAT, for example, is out there revolutionizing the ad industry, because it isn't yet. I can't even find Brave market share numbers, but I am confident they are miles away from even reaching 1%. It has potential, sure, but that's a long way from the real thing. Same for the others. Golem is a nice idea with a lot of potential, but as of right now, Azure, AWS, and GCE are where programmers go for rentable computer power. Maybe one day that place will be golem. Maybe not. Right now it is all just potential. I think part of the parent's point is the potential of crypt-currencies is often touted, but so far little has been shown in actual results. How long until there are actual results?
  - cslarson 8y ago
    Sure, if these projects were already blow away successes and completely disrupted their respective markets we wouldn't (hopefully!) be having this conversation. And I agree that skepticism is warranted here but at least with regard to Ethereum it is way overblown here on hn. Even if these projects haven't fully proven themselves yet what I think they do show is the strength and merit of the platform that has made them possible.
- hudon 8y ago
  I know of these projects and some of my friends are investing and/or building them. I commend the ambition and really hope they one day turn into something great. That's beside the point, though. Knowing that Ethereum and Bitcoin consume more energy than Iceland and Switzerland respectively, why don't we turn them off until they're providing actual use? I get that markets need time to figure out if a product is useful and useless things get built all the time, but has that discovery process ever been done at this scale before? For instance, if proof-of-work ends up spending as much electricity as the United States and we still can't use it for anything meaningful, shouldn't we be concerned? I know "turn them off" sounds silly, but you can tax the miners or impose energy consumption caps until there is a smart contract out there that is arguably benefiting society. If concern for humanity's wellbeing on this earth is a "throw away" concern to you, then maybe you can provide an argument for why everything's going to be OK? Have we fixed global warming and I just didn't get the memo?
BenoitP 8y ago
> Bitcoin's transaction throughput is dismally low A discussion on this cannot take place without a mention of the lightning network. The vast majority of transaction have a low stake. Most amounts are fairly low, people respect the fact they have parted from some value. Using such a highly price consensus seems like overkill. What you want is to concentrate on the litigious ones, on the higher amounts; while still securing the rest. This is exactly what is happening in the lightning network smart contract. Bitcoins are taken apart in a channel, and people can do their business as usual. The protocol concentrates the stakes in a single on-chain transaction; with a tremendous pressure in not settling on the last channel state. It sorts of changes the transaction representation space to its dual. From a white-list of all approved transactions -and nothing else- to a black-list of misbehaving business relations -all other consented transactions being allowed-. Bitcoin's 7 transactions per second is demultiplied by some order of magnitude here. That represents about 3 channels per second. 3 licenses to indefinitely transact up to a certain balance. The lightning network is about rationalizing the use of this high-priced consensus. ---- As for the electricity consumption, I'm of the opinion that the halvenings will take care of that; In 10 years, the reward will have diminished by about an order of magnitude. Bitcoin gained too much popularity too quickly if you ask me. I think a super-exponential difficulty adjustment would have been better suited (make it require an exp(x\^2) hash rate instead of exp(x)). The growth of Bitcoin is capped exponentially, as it is based on human adoption. Only something super-exponential can regulate this properly. But IMHO, this is only a slight inconvenience. We'll waste electricity but only in the next few years.
nonbel 8y ago
>"I'm all for "wait and see", but have we ever done that with a technology that is literally using more electricity than a medium sized nation? " I keep seeing these types of posts every few months and they always seem very poorly thought out and presented. Almost like people did the actual analysis but didnt like the results... Don't you need to compare this with the energy usage of the industries bitcoin is supposed to replace (banks, money transmitters, credit cards)? Also take into account the environmental benefits of a deflationary currency (people saving instead of buying crap they dont need)? What about running web pages that are >99% ads, tracking, and other unwanted content by kb? Also blocking all that unwanted content. Did anyone set out before hand to calculate the energy usage of that? It just seems so disingenuous to be concerned about the energy usage of this one thing (and its only possible because it happens to be particularly easy to estimate, an advantage!) every time I see it.
- smaddox 8y ago
  Deflationary currency disincentives investing in the future. There's nothing good about it.
  - chrisco255 8y ago
    Bitcoin is not an economic manipulation machine like the Federal Reserve. It's purpose is not to stimulate or incentivize anything.
  - nonbel 8y ago
    This argument makes no sense since by abstaining from consuming resources you are saving them for the future.
  - TimJRobinson 8y ago
    It gives less return on investments, however it also incentivizes those who don't invest (mostly middle and lower class) to hold onto their money instead of spending it immediately, because it's worth more in the future. Which could decrease consumption in the world and possibly create a more sustainable future. Deflation seems bad from our current mindset of growth at all costs, and especially bad if you're one of the upper class who's investments return more than inflation, ensuring you'll keep your status. But this could possibly bring a brighter future for humanity, where we tame the viral nature of capitalism and the rich getting richer at a far faster rate than the rest of society.
zigzag448 8y ago
The discussion about the energy consumption of bitcoin can only be discussed because we know how much energy it takes to produce one BTC. What we don’t know is how many banks there are in the world with all the computers and mainframes they use to keep track of all the fiat money. And then of course the energy to produce a hardcopy of that money like knocking down trees and mining metals. So in my opinion we only can have a useful discussion about energy consumption of BTC when we also know the current energy consumption of the banking system. Which I think is a lot more…….
- dmoy 8y ago
  I'm not sure I buy this. If we know definitively that btc uses more energy than all of Switzerland, and we know that Switzerland doesn't spend >100% (or likely even >30%) of its energy on banking, and we know that Swiss banks clear more money than Bitcoin, then we have a reasonable point of comparison.
  - daneyh 8y ago
    I understand what you're trying to say but this logic would only work if we knew that swiss bank operations 'based in switzerland' clear more money than bitcoin. Credit suisse/UBS main operations are in London.
    - dmoy 8y ago
      The domestic banking of a single small country is enough. You're talking about like 4m people getting paychecks every couple weeks at minimum. Paycheck deposits alone is more transactions than all of bitcoin. There is no way the numbers come out in bitcoins favor here, the scale just isn't there.
- hudon 8y ago
  As the article I linked to explains, 100,000 transactions on Visa uses considerably less electricity than 1 Bitcoin transaction. If we can’t find any benefit that Bitcoin brings, then there should be a cost threshold where we start applying the brakes. In other words, how much energy are we willing to spend without a beneficial use case? With Visa and banks, we already know they serve hundreds of millions of people on earth—if not billions.
throwawaylolx 8y ago
>At least wait until the blockchain can solve a real world problem before burning through the mines? What do you mean? Bitcoin already solves problems; e.g., https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-bitcoins-issues-are-tiny-compared-to-the-problems-with-banking-in-africa/ https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-...

by hudon 8y ago

hndamien 8y ago

You are focusing on the wrong thing. Energy production is the issue, not energy use. There is an equilibrium to be found in the free market based on the value of BTC that is provided and the economic expenditure to mine it with the cost of electricity used to get there. Oh wait! I found the link in the causal economic chain! We don't put a price on carbon! Put your energy into yelling there and not at yelling at Bitcoin. Maybe Bitcoin will help shed a light on this overtly obvious problem.

deleted 8y ago
[deleted]
almostApatriot1 8y ago
Chinese miners and other state subsidized miners will mine bitcoin at a loss to push out the competition and gain marketshare. An obvious problem, sure, but no easy solution.
hudon 8y ago
Nations and corporations already compete at finding means of cheap or sustainable energy production. How does Bitcoin provide an efficiency here? Furthermore, if we can't find a stable use case for the blockchain and there are no more greater fools investing--the bubble collapses and all the ASICs end up in landfills--does society suddenly stop innovating in energy production? Can you point me to any good literature on this? I don't understand the point.
- hndamien 8y ago
  I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders). The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it costs to secure the network in relation to the reward paid for it. In these costs are electricity costs, for which miners will find the most efficient means such that they are profitable. The energy prices are determined by the economic actors producing it. The will charge what the market will bear such that they are profitable and competitive. All this is a wonderfully efficient system except for the fact that the externality you are worried about (pollution from energy production) is not accounted for anywhere in the system. In fact, it is almost incentivised, since it is likely that I can produce dirty power cheaper than I can clean power (although this is changing). If you did account for this, dirty power would become more expensive, miner using it would disappear or choose clean energy. Hence, the problem is not "It uses too much energy! So wasteful!!!!" The problem is "We don't account for externalities!!!! So bad!!!"
  - hudon 8y ago
    Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful: "Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that equilibrium capacity acquisition in proof-of-work mining is excessive. Second, proof-of-work mining generates greenhouse-effect negative externalities, whose order of magnitude is significant. As of January 2018, the electricity consumed for Bitcoin mining was equal to the electricity consumption of over 3,400,000 US households, with an average consumption per transaction of around 300 KWh. Pigovian taxation could curb overinvestment in mining, but it might also be difficult to put in place, given the international decentralisation of mining." source: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2017/wp_tse_817.pdf https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...
jMyles 8y ago
Somehow, I had never encountered this argument before. This makes great sense. It's not entirely clear how to put a price on carbon, though. And, bitcoin's censorship-resistance (which of course I laud as an amazing and important innovation) might make it harder to force everyone to account for externalities. Is someone doing serious research, writing, and thinking on the relationship between crypto-blockchain tech and the economics of environmental externalities?
- hndamien 8y ago
  It isn't really crypto specific. It is energy producing utility economics. If we had a price on carbon it would effect this equilibrium everywhere. If you accept that we have to change, and sooner rather than later due to inevitability - see Elon's turd in a punchbowl reference, and you accept we aren't going to curtail the things that we find useful that cost us energy, then a price on carbon would bring this about much quicker than without it and is really the only sensible option. Compared with the status quo, burn more dirty fuel faster and cheaply to prevent the economics of green tech coming online, and then, hoping we can innovate our way out of the shitty punchbowl.

DINKDINK 8y ago

>I [...] worked as an engineer at a well-known Bitcoin company). >Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output You worked at a Bitcoin company and don't understand the value of proof of work? Being able to trustlessly settle shared stated across the entire globe is unproductive output? The globe spend billions of dollars each year blowing up mountains to sift for gold that then sit in central bank vaults to collect dust. At least bitcoin mining can absorb some of the curtailed renewable energy and make the payback on renewables faster.

hudon 8y ago
I understand the claims of proof-of-work. What I'm asking for is evidence. Do you have any scientific research indicating that Bitcoin will ultimately be an efficiency? Or is it a hunch? How much energy does Bitcoin need to consume before you demand evidence that it does as you claim?
almostApatriot1 8y ago
The "not as bad as" fallacy, also known as the fallacy of relative privation, asserts that: If something is worse than the problem currently being discussed, then The problem currently being discussed isn't that important at all. In order for the statement "A is not as bad as B," to suggest a fallacy there must be a fallacious conclusion such as: ignore A.[0] [0]https://rationalwiki.org/wiki/Not_as_bad_as https://rationalwiki.org/wiki/Not_as_bad_as
jonny_eh 8y ago
Has the growth in popularity of BTC affected the perceived value of gold? You seem to be asserting that crypto-coin popularity will save the planet by reducing gold mining, I'm very skeptical.
- DINKDINK 8y ago
  Advantages of gold over bitcoin: If there's a total internet && computer && electricity apocalypse, a physical barter exchange with gold is more trustless than bitcoin. You can still transact bitcoin but there's trust involved. Advantages of Bitcoin over gold: No trusted third party (If you're moving sizable sums of gold, you're doing it with a trusted third party[TTP)) 99.99226%[1] transaction uptime (Your TTP keep business hours) No countries win the gold-geography lottery (Your country that has no gold reserves can still accumulate) Instantly assay the value (gold takes time) You can use latent renewable energy to mine bitcoin (the way that miners remain profitable is by using cheap hydro power that would be wasted if not consumed) No need to blow up mountains to sift for gold. Bitcoin is programmable value (People in places without functioning judicial/commercial systems can create contracts with each other) You cannot practically bring more bitcoin to market if the price increases (The price of gold dictates which gold fields are profitable to produce) Most importantly, it separates money that citizens use and the onus of financial obligations that the oligopoly (Banker's bailout 2008) and political class (Endless war) place on citizens. [1]http://bitcoinuptime.com/ http://bitcoinuptime.com/

mrb 8y ago

Don't refer to the Digiconomist BECI for electricity consumption figures. The author makes fundamentally flawed assumptions, causing him to overestimate the consumption by 1.5× to 2.8×, and likely by 2.2×. BECI starts with calculating average mining revenues based on a 439-day (variable) moving average of the Bitcoin and Bitcoin Cash prices. Then BECI assumes a fixed 60% share of these revenues are spent on electricity costing $0.05/kWh. That is it. There is nothing sophisticated about his model. His first error is that 60% is not representative of current hardware; real-world data shows the lifetime average percentage is between 6.3% and 38.6%. His second error is that the averaging period is excessively variable and poorly justified: it has increased from 60 and 439 days and changed by twofold his electricity consumption figures. For more info, see: http://blog.zorinaq.com/serious-faults-in-beci/ http://blog.zorinaq.com/serious-faults-in-beci/ In reality, Bitcoin's consumption is only a third of the power generated by the Three Gorges Dam as of 4 months ago: http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/

hudon 8y ago
He seems to support his 60% figure with a lot of evidence [0][1] and you have agreed in the past that if anything 60% is the number your model converges to as well... Anyway, the discussion is a good one and I'm glad at least 2 people are concerned about this. This is exactly the kind of thing we should be truth-seeking on, as well as finding use cases... not if Wall Street is finally allowing people who don't know any better to keep fueling the beast. [0] https://digiconomist.net/bitcoin-energy-consumption#validation https://digiconomist.net/bitcoin-energy-consumption#validati... [1] https://digiconomist.net/re-serious-faults-in-beci https://digiconomist.net/re-serious-faults-in-beci
- mrb 8y ago
  [0] and [1] present zero evidence for supporting 60% as a current valid estimate. [0] even misrepresents the Morgan Stanley report (which actually supports my numbers, not his): http://blog.zorinaq.com/serious-faults-in-beci/#critic-6-author-misrepresents-morgan-stanleys-reports http://blog.zorinaq.com/serious-faults-in-beci/#critic-6-aut... Alex of Digiconomist is very good at writing long verbose paragraphs that "seem" to support his model, but when we look at his actual data and logic, it's full of holes, flaws, and poor assumptions. One of the things we both agree on is that in the future (1 year? 10 years?) the ratio will tend toward 40 to 60%. But that doesn't say anything about the ratio as of today.

doug3465 8y ago

Proof of Stake is the answer.

lrvick 8y ago
There is even -less- evidence this can actually work at large scale without becoming centralized. By design the rich get gradually richer via staking and once enough nodes/coins are controlled by a single party they can change the rules of the network. Maybe social dynamics work out to avoid this, but humans have a long history of trending towards various forms of plutocracies. One of the reasons Ethereum forked was to avoid a single party (the DAO thief) controlling far too large a portion of the total ether which has big consequences in a future with PoS. Are we going to continue fork networks every time one party gets too rich? We could. Unless of course that party is pretending to be many individuals and we can't tell. Hard to stop this without deanonymization and a loss of censorship resistance. To be fair PoW suffers similarly from mining power all clustering in cheap electricity areas and thus players like Bitmain have a scary amount of centralized control. I am skeptical of PoW long term without much better globally distributed use of renewalable energy. PoS by dropping this anchor to the physical world seems even crazier. I am however somewhat optimistic about Bram Cohen's "Proof of space and time" in his "Chia" project which attempts to move the PoW problem from proof of expended electricity to proof of burned disk space, which feels inherently greener and easier to geographically distribute. Or neither of these PoW alternatives work and the lessons learned from them empower as of yet unknown innovations. Exciting times to be sure.
- Nursie 8y ago
  Greener? It's not free to manufacture hard drives, in terms of materials, energy, CO2 etc. Proof of space and time merely shifts the pressure away from compute power to storage. It has the potential to do for the storage market what PoW as done for the graphics card market - pump up prices and move useful tech out of the reach of most consumers.
  - lrvick 8y ago
    Graphics cards and ASICs are high up front cost and ongoing electricity cost that forces them to geographical areas with cheap electricity. Disk based systems are still up front cost, but substantially less cost to operate. Chia style nodes could be very low compute/electricity overhead and could potentially run off raspberry Pis on solar or using spare storage on mobile devices that are already powered on for other uses.

eof 8y ago

i have paid and been paid overseas in bitcoin. as have others.. how is this not valuable? no one judge can take it away from me, and i value that as others do. i fail to see how a decentralized store of value and exchange is nil value

hudon 8y ago
I think you're arguing for the remittance use case but this has been shown to be inefficient compared to other methods [0][1][2]. Maybe lightning network will change that but again, it is just a wild guess from crypto-fans right now... and that's my point: why are we spending so much on hunches? Why aren't we building this thing responsibly if we know it costs so much in electricity? [0] https://www.coindesk.com/why-bitcoins-remittance-disruption-slowed-to-a-crawl/ https://www.coindesk.com/why-bitcoins-remittance-disruption-... [1] https://medium.com/cryptonight/bitcoin-doesn-t-make-remittances-cheaper-eb5f437849fe https://medium.com/cryptonight/bitcoin-doesn-t-make-remittan... [2] https://www.saveonsend.com/blog/bitcoin-blockchain-money-transfer/ https://www.saveonsend.com/blog/bitcoin-blockchain-money-tra...
- eof 8y ago
  i am not talking about remittances though that is also a legit use case. i just meant overseas business. i don't really see its electricity use as a big issue since market forces will inevitably reduce cost or increase supply. part of the reason though people will put a lot into an experiment like this is that the network effect is important to its success. needs to be very liquid. for me personally having a fungible electronic currency that cannot be taken away by law or inflation is itself valuable

VMG 8y ago

> Bitcoin's transaction throughput is dismally low compared How are you measuring "transaction throughput"?

cslarson 8y ago

> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but unfortunately the kind of throw away comment that gets voted to the top of an hn thread. what a sad place this is!

jaredklewis 8y ago
Some of those projects sound very interesting, but potential and actual productive output are very different things. They have potential. But you can't pretend like BAT, for example, is out there revolutionizing the ad industry, because it isn't yet. I can't even find Brave market share numbers, but I am confident they are miles away from even reaching 1%. It has potential, sure, but that's a long way from the real thing. Same for the others. Golem is a nice idea with a lot of potential, but as of right now, Azure, AWS, and GCE are where programmers go for rentable computer power. Maybe one day that place will be golem. Maybe not. Right now it is all just potential. I think part of the parent's point is the potential of crypt-currencies is often touted, but so far little has been shown in actual results. How long until there are actual results?
- cslarson 8y ago
  Sure, if these projects were already blow away successes and completely disrupted their respective markets we wouldn't (hopefully!) be having this conversation. And I agree that skepticism is warranted here but at least with regard to Ethereum it is way overblown here on hn. Even if these projects haven't fully proven themselves yet what I think they do show is the strength and merit of the platform that has made them possible.
hudon 8y ago
I know of these projects and some of my friends are investing and/or building them. I commend the ambition and really hope they one day turn into something great. That's beside the point, though. Knowing that Ethereum and Bitcoin consume more energy than Iceland and Switzerland respectively, why don't we turn them off until they're providing actual use? I get that markets need time to figure out if a product is useful and useless things get built all the time, but has that discovery process ever been done at this scale before? For instance, if proof-of-work ends up spending as much electricity as the United States and we still can't use it for anything meaningful, shouldn't we be concerned? I know "turn them off" sounds silly, but you can tax the miners or impose energy consumption caps until there is a smart contract out there that is arguably benefiting society. If concern for humanity's wellbeing on this earth is a "throw away" concern to you, then maybe you can provide an argument for why everything's going to be OK? Have we fixed global warming and I just didn't get the memo?

BenoitP 8y ago

> Bitcoin's transaction throughput is dismally low A discussion on this cannot take place without a mention of the lightning network. The vast majority of transaction have a low stake. Most amounts are fairly low, people respect the fact they have parted from some value. Using such a highly price consensus seems like overkill. What you want is to concentrate on the litigious ones, on the higher amounts; while still securing the rest. This is exactly what is happening in the lightning network smart contract. Bitcoins are taken apart in a channel, and people can do their business as usual. The protocol concentrates the stakes in a single on-chain transaction; with a tremendous pressure in not settling on the last channel state. It sorts of changes the transaction representation space to its dual. From a white-list of all approved transactions -and nothing else- to a black-list of misbehaving business relations -all other consented transactions being allowed-. Bitcoin's 7 transactions per second is demultiplied by some order of magnitude here. That represents about 3 channels per second. 3 licenses to indefinitely transact up to a certain balance. The lightning network is about rationalizing the use of this high-priced consensus. ---- As for the electricity consumption, I'm of the opinion that the halvenings will take care of that; In 10 years, the reward will have diminished by about an order of magnitude. Bitcoin gained too much popularity too quickly if you ask me. I think a super-exponential difficulty adjustment would have been better suited (make it require an exp(x\^2) hash rate instead of exp(x)). The growth of Bitcoin is capped exponentially, as it is based on human adoption. Only something super-exponential can regulate this properly. But IMHO, this is only a slight inconvenience. We'll waste electricity but only in the next few years.

nonbel 8y ago

>"I'm all for "wait and see", but have we ever done that with a technology that is literally using more electricity than a medium sized nation? " I keep seeing these types of posts every few months and they always seem very poorly thought out and presented. Almost like people did the actual analysis but didnt like the results... Don't you need to compare this with the energy usage of the industries bitcoin is supposed to replace (banks, money transmitters, credit cards)? Also take into account the environmental benefits of a deflationary currency (people saving instead of buying crap they dont need)? What about running web pages that are >99% ads, tracking, and other unwanted content by kb? Also blocking all that unwanted content. Did anyone set out before hand to calculate the energy usage of that? It just seems so disingenuous to be concerned about the energy usage of this one thing (and its only possible because it happens to be particularly easy to estimate, an advantage!) every time I see it.

smaddox 8y ago
Deflationary currency disincentives investing in the future. There's nothing good about it.
- chrisco255 8y ago
  Bitcoin is not an economic manipulation machine like the Federal Reserve. It's purpose is not to stimulate or incentivize anything.
- nonbel 8y ago
  This argument makes no sense since by abstaining from consuming resources you are saving them for the future.
- TimJRobinson 8y ago
  It gives less return on investments, however it also incentivizes those who don't invest (mostly middle and lower class) to hold onto their money instead of spending it immediately, because it's worth more in the future. Which could decrease consumption in the world and possibly create a more sustainable future. Deflation seems bad from our current mindset of growth at all costs, and especially bad if you're one of the upper class who's investments return more than inflation, ensuring you'll keep your status. But this could possibly bring a brighter future for humanity, where we tame the viral nature of capitalism and the rich getting richer at a far faster rate than the rest of society.

zigzag448 8y ago

The discussion about the energy consumption of bitcoin can only be discussed because we know how much energy it takes to produce one BTC. What we don’t know is how many banks there are in the world with all the computers and mainframes they use to keep track of all the fiat money. And then of course the energy to produce a hardcopy of that money like knocking down trees and mining metals. So in my opinion we only can have a useful discussion about energy consumption of BTC when we also know the current energy consumption of the banking system. Which I think is a lot more…….

dmoy 8y ago
I'm not sure I buy this. If we know definitively that btc uses more energy than all of Switzerland, and we know that Switzerland doesn't spend >100% (or likely even >30%) of its energy on banking, and we know that Swiss banks clear more money than Bitcoin, then we have a reasonable point of comparison.
- daneyh 8y ago
  I understand what you're trying to say but this logic would only work if we knew that swiss bank operations 'based in switzerland' clear more money than bitcoin. Credit suisse/UBS main operations are in London.
  - dmoy 8y ago
    The domestic banking of a single small country is enough. You're talking about like 4m people getting paychecks every couple weeks at minimum. Paycheck deposits alone is more transactions than all of bitcoin. There is no way the numbers come out in bitcoins favor here, the scale just isn't there.
hudon 8y ago
As the article I linked to explains, 100,000 transactions on Visa uses considerably less electricity than 1 Bitcoin transaction. If we can’t find any benefit that Bitcoin brings, then there should be a cost threshold where we start applying the brakes. In other words, how much energy are we willing to spend without a beneficial use case? With Visa and banks, we already know they serve hundreds of millions of people on earth—if not billions.

throwawaylolx 8y ago

>At least wait until the blockchain can solve a real world problem before burning through the mines? What do you mean? Bitcoin already solves problems; e.g., https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-bitcoins-issues-are-tiny-compared-to-the-problems-with-banking-in-africa/ https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-...