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Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful: "Another issue relates to the negative external

by 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/...

hndamien 8y ago
I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.
- hudon 8y ago
  You’re proposing we fix energy production instead of fixing Bitcoin AFAIU. However, until we know how to do that OR until we have strong use cases for Bitcoin, why not put tight controls on proof-of-work mining to reduce electricity consumption? The “let the market find equilibrium” philosophy is reckless when we’re talking about global environmental concerns IMO.
  - hndamien 8y ago
    No, I am suggesting that the only problem here is accounting. If you have a price on carbon, the rest will sort itself out. The lack of this cost being accounted for creates the false equilibrium where we plunder the environment to efficiently meet our needs within an otherwise well designed economic system - that is only made better by Bitcoin.
    - notahacker 8y ago
      I think when you have a technology which creates the same amount of power demand as all the people and industry in Peru, and rewards people for locating this demand in the part of the world with the cheapest dirtiest coal fired power and zero energy tax, it's disingenuous in the extreme to pretend it's not a huge part of the problem because hypothetical global carbon taxes might solve wider problems. Crypto mining is part of the externalities accounting problem, and for that matter one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas...
      - hndamien 8y ago
        I think you will need a citation for "one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas". The chief motivating factor is a fair economic system. By your logic anything energy intensive industry should be stopped because of the pollution it causes. Say goodbye to the Steel industry, Aluminium industry, Chemical industry, Textile Industry, Copper industry. https://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015-electricity-costs-of-energy-intensive-industries.pdf https://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015... I guess this comes down to the fact you think it is more pragmatic, sensible, likely and beneficial to have Bitcoin miners stop mining. I think it is more pragmatic, sensible, likely and beneficial to have a price on carbon.
        notahacker 8y ago
        You're actually asking for citations for the idea that the theoretical point of Bitcoin is reducing government control of money and a large practical part of the BTC economy is regulatory evasion?! I'm going to go out on a limb and say that the steel industry, aluminium industry, chemical industry, textile industry and copper industry have done more for humanity than Bitcoin. Use less electricity though... YMMV, but I think it is more pragmatic, sensible, likely and beneficial to stop shitting on people's lawns than to evangelise wider adoption of a system for producing more shit, funnelling it more efficiently to lawns less likely to attract the attention of shit regulators, whilst insisting the real problem is that the lack of a global shit tax. (I'd have used a less fecal analogy like hazardous waste and clandestine disposal systems but that's a little too close to stuff I'm actually working on making more difficult in the day job!)

by hudon 8y ago

hndamien 8y ago

I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.

hudon 8y ago
You’re proposing we fix energy production instead of fixing Bitcoin AFAIU. However, until we know how to do that OR until we have strong use cases for Bitcoin, why not put tight controls on proof-of-work mining to reduce electricity consumption? The “let the market find equilibrium” philosophy is reckless when we’re talking about global environmental concerns IMO.
- hndamien 8y ago
  No, I am suggesting that the only problem here is accounting. If you have a price on carbon, the rest will sort itself out. The lack of this cost being accounted for creates the false equilibrium where we plunder the environment to efficiently meet our needs within an otherwise well designed economic system - that is only made better by Bitcoin.
  - notahacker 8y ago
    I think when you have a technology which creates the same amount of power demand as all the people and industry in Peru, and rewards people for locating this demand in the part of the world with the cheapest dirtiest coal fired power and zero energy tax, it's disingenuous in the extreme to pretend it's not a huge part of the problem because hypothetical global carbon taxes might solve wider problems. Crypto mining is part of the externalities accounting problem, and for that matter one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas...
    - hndamien 8y ago
      I think you will need a citation for "one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas". The chief motivating factor is a fair economic system. By your logic anything energy intensive industry should be stopped because of the pollution it causes. Say goodbye to the Steel industry, Aluminium industry, Chemical industry, Textile Industry, Copper industry. https://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015-electricity-costs-of-energy-intensive-industries.pdf https://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015... I guess this comes down to the fact you think it is more pragmatic, sensible, likely and beneficial to have Bitcoin miners stop mining. I think it is more pragmatic, sensible, likely and beneficial to have a price on carbon.
      - notahacker 8y ago
        You're actually asking for citations for the idea that the theoretical point of Bitcoin is reducing government control of money and a large practical part of the BTC economy is regulatory evasion?! I'm going to go out on a limb and say that the steel industry, aluminium industry, chemical industry, textile industry and copper industry have done more for humanity than Bitcoin. Use less electricity though... YMMV, but I think it is more pragmatic, sensible, likely and beneficial to stop shitting on people's lawns than to evangelise wider adoption of a system for producing more shit, funnelling it more efficiently to lawns less likely to attract the attention of shit regulators, whilst insisting the real problem is that the lack of a global shit tax. (I'd have used a less fecal analogy like hazardous waste and clandestine disposal systems but that's a little too close to stuff I'm actually working on making more difficult in the day job!)