8 ms·

It's incredible that people on HN, a technical readership, still don't understand why the energetic or computational "waste" of proof-of-work is needed. There

by mrb 7y ago

It's incredible that people on HN, a technical readership, still don't understand why the energetic or computational "waste" of proof-of-work is needed. There is simply no other known way of implementing a decentralized, censorship-resistant, robust digital currency. Without PoW you lose one of these properties. Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. There are many other unsolved problems. That's why Ethereum is years behind schedule in designing and deploying PoS. Replacing PoW with a useful algorithm (eg. protein folding) loses decentralization (a central trusted authority must verify/sample who performs the work correctly). Trust-based systems (Stellar, Libra) lose censorship-resistance. A "dumb" PoW is literally the only practical solution. If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful.

ackbar03 7y ago
Yes but for what? Is this proof of stake worth how many dollars spent in energy consumption?
danmaz74 7y ago
If the only way to have a decentralized, trustless, robust digital currency is to waste an inordinate amount of energy and increase our global warming and pollution problems, then we'll have to do without that kind of digital currency. It's a matter of priorities.
- mrb 7y ago
  "inordinate amount of energy" It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Don't fall prey to the scary comparisons BECI employs to mislead its readers. Global warming is critical, but there are other energy wasters much, much bigger than Bitcoin miners. Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. A recent paper by Stoll et al. estimated CO2 emissions as being comparable to what a single city like Las Vegas emits: https://mobile.twitter.com/zorinaq/status/1139439068570193921 https://mobile.twitter.com/zorinaq/status/113943906857019392...
  - danmaz74 7y ago
    Right now the share of the world economy running on Bitcoin is negligible, yet its energy consumption is relevant. If that share became consistent, the price of Bitcoin would increase by many orders of magnitude, and mining bitcoin would become more and more competitive in relation to other uses of energy, and would increase in tune - that's why I say inordinate. PoW is just unsustainable by design.
    - trickstra 7y ago
      Bitcoin's energy consumption is also by design self balancing - increase the price of electricity, less electricity will be used. With the same benefits for the network.
      - arcticbull 7y ago
        Not really, it's self-balancing with respect to the efficiency of the technology around it. As tech gets better, Bitcoin gets worse to compensate.
  - _Microft 7y ago
    > It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Which happens to be one of, if not the largest hydroelectric dam in the world. > Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. Which means that this renewable energy is no longer available for other uses.
- trickstra 7y ago
  It's not a "waste" if the result is a decentralized, trustless, robust digital currency. And the global warming argument is a many times debunked hoax - if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable. Except in the other cases, the benefits go to the single entity that owns the business, whereas with cryptocurrency every participant benefits from the stronger network. Global warming is caused by using fossil fuels to make electricity, mining crypto doesn't require fossil fuels. There are other ways to make electricity, let's focus on them.
  - danmaz74 7y ago
    > if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable I'm sorry, but you got this backwards. If bitcoin becomes a relevant part of the world economy, then it HAS to use a relevant part of the world energy, because consuming energy for PoW is the only limiting factor against a 51% attack. So, either Bitcoin is irrelevant - and thus its power usage is a literal waste - or it's relevant, and then its power usage has to become relevant in terms of global warming.
    - trickstra 7y ago
      From the point of view of the miner, they have a supply of electricity at a certain price and can decide what to do with it. They might run their TV, computer, heating, industrial machinery, datacenter, or a bitcoin miner. They have to compute what profits can each of the options give them. If running bitcoin miners at that electricity cost and at that profit they can get from selling the bitcoins is more profitable than the others, then it's logical to do that. If on the other hand the price of bitcoin goes down, or the price of electricity goes up, or people start paying more for server hosting, then the decision changes. The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
      - ben_w 7y ago
        If bitcoin is the dominant currency, another option exists: 51% attack, double-spend to get free electricity. This is useful even when it makes an apparent loss by damaging trust in the currency: If you are, say, the USA president and you’re at war with Iraq, and Iraq uses bitcoin, you can outspend on energy until they surrender. Unless the whole world uses bitcoin, but then the first few nations individually face the same problem, regardless of who else actually uses bitcoin — gotta keep the USA and China happy at the same time! (The EU isn’t integrated enough to do that sort of thing yet, but is a similar sized group). Right now, 51% needs the cost of one very large power station from when you start until when you win — large nations, the sort with global ambitions, can spare a lot more. In the previous example, that’s close to all the power Iraq produces, but 5.4% of the USA’s output. Then there’s the fact that most countries like being in charge of their own currencies as the ability to create or destroy units is a useful economic lever. > The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services. Or it’s speculation, like so many other things before and probably yet to come.
- toxik 7y ago
  Said the man living one of the most privileged lives possible on this planet. Bitcoin has a very clear use to the oppressed people of the world, and for that exact reason it’s popular among criminals.
- krageon 7y ago
  From a position of power it is easy to do without, because you derive no security or finances from this solution. After all, the status quo is paying you just fine. Why is what you say relevant for most people, who to varying degrees definitely don't have all the things that you apparently take for granted?
  - danmaz74 7y ago
    Is having food on the table and a roof on their head relevant to "most people"? Because, when we're talking about climate change, that's what is at risk for hundreds of millions of people.
ssutch3 7y ago
Disregarding the energy cost, couldn't a "dumb" PoW be more computationally complex than Sha256, such that a relatively larger number of computers could compete in the consensus algorithm, thereby increasing decentralization? To me, Bitcoin doesn't seem that decentralized, considering the ASIC chip manufacturers control the majority mining stake. Intel has even gotten into the game.
- tromp 7y ago
  More complex PoW, such as a memory hard one requiring several GB of memory to solve efficiently, can lower the efficiency gap between GPUs and ASICs to about one order of magnitude, but not much less. That means that ultimately, only ASICs can mine profitably (and only if they have access to very cheap power).
dx034 7y ago
Once we have enough green energy I'd totally agree with you. But currently, I don't think we can afford adding that much CO² for a currency that isn't widely used anywhere in the world.
- mrb 7y ago
  «isn't widely used anywhere» Bitcoin processes 10 million transactions a month (300k/day) and it's generally been growing over the years: https://bitinfocharts.com/comparison/bitcoin-transactions.html https://bitinfocharts.com/comparison/bitcoin-transactions.ht...
  - aidanlister 7y ago
    But how many useful transactions? Isn’t the vast majority of that trading and not economically useful activity?
    - trickstra 7y ago
      Who is the global arbiter of usefulness? My transactions have always been useful for me and for my counterparty, if that's what you are asking.
  - _Microft 7y ago
    Which is negligible compared to the number of credit card transactions in the US (> 300 times as many per month) or bank transfers in Germany alone (50 times as many per month). And that's not even counting other ways or countries.
- trickstra 7y ago
  https://www.coindesk.com/bitcoin-miners-send-message-at-fidelity-we-run-on-clean-energy-not-dirty-coal https://www.coindesk.com/bitcoin-miners-send-message-at-fide...
k_bx 7y ago
> Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. Where can I get best details on this? Which papers? Thank you!
TeMPOraL 7y ago
> If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful. But they aren't, and the whole exercise is comparable to trying to repeatedly solve ever-larger NP-complete problems by brute force. Something no technical person in their sane mind would consider a correct course of action. And just like we use good enough polynomial approximations to get near-best solutions to NP-complete problems, we can do the same for running economy. Trust is not a liability. Trust is what makes economy efficient.
hesk 7y ago
> If the social benefits of a cryptocurrency are worth the computational power ... They are not.
xtracto 7y ago
I am not that old and still I remember Ring networks (before ethernet), they were highly impractical and rudimentary, but they filled a purpose at their time. Then Ethernet came. Anyone remembers the dumb hubs? when a computer wanted to send a message, the hub actually broadcasted it to all computers in the network... so inefficient, and yet, it served its purpose. Later, came the network protocols. There was this protocol used for discussion groups/news, remember NNTP? wasteful, because nodes had to download / replicate the full history of posts. But still... served its purpose for its time. Then came a messaging protocol, SMTP, very useful for sending "electronic mail", very convenient. But people started sending binary data files on it... by converting it to text (UUEncoding anyone?) so wasteful and inefficient. But it is still being used. So, bitcoin for me is just that early system, that early test that shows a way to do decentralized, censorship-resistant, digital currency. Humanity will find more efficient ways to do it (and maybe they won't be used, as with Email) or at some point in the distant future, the power side of the equation won't be relevant (renewable energy? nuclear? who knows). But for me, that does not change the fact that bitcoin proposition is a stepping stone for society that sooner or later will change the way people transfer value.
- DonHopkins 7y ago
  SMTP came a long time before NNTP.
  - xtracto 7y ago
    I invoke Cunningham's Law.
    - DonHopkins 7y ago
      I invoke Zawinski's Law of Software Envelopment, and predict that Bitcoin will be replaced by artificially intelligent spam filtering software that can read mail. https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles Zawinski's law of software envelopment (also known as Zawinski's law) comments on the phenomenon of software bloating with popular features: Every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.

by mrb 7y ago

ackbar03 7y ago

Yes but for what? Is this proof of stake worth how many dollars spent in energy consumption?

danmaz74 7y ago

If the only way to have a decentralized, trustless, robust digital currency is to waste an inordinate amount of energy and increase our global warming and pollution problems, then we'll have to do without that kind of digital currency. It's a matter of priorities.

mrb 7y ago
"inordinate amount of energy" It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Don't fall prey to the scary comparisons BECI employs to mislead its readers. Global warming is critical, but there are other energy wasters much, much bigger than Bitcoin miners. Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. A recent paper by Stoll et al. estimated CO2 emissions as being comparable to what a single city like Las Vegas emits: https://mobile.twitter.com/zorinaq/status/1139439068570193921 https://mobile.twitter.com/zorinaq/status/113943906857019392...
- danmaz74 7y ago
  Right now the share of the world economy running on Bitcoin is negligible, yet its energy consumption is relevant. If that share became consistent, the price of Bitcoin would increase by many orders of magnitude, and mining bitcoin would become more and more competitive in relation to other uses of energy, and would increase in tune - that's why I say inordinate. PoW is just unsustainable by design.
  - trickstra 7y ago
    Bitcoin's energy consumption is also by design self balancing - increase the price of electricity, less electricity will be used. With the same benefits for the network.
    - arcticbull 7y ago
      Not really, it's self-balancing with respect to the efficiency of the technology around it. As tech gets better, Bitcoin gets worse to compensate.
- _Microft 7y ago
  > It's comparable to what a single hydro dam like the Three Gorges Dam can produce. Which happens to be one of, if not the largest hydroelectric dam in the world. > Besides, as it's been said many times, miners tend to use renewables since they have become cheaper than fossil fuel power plants. Which means that this renewable energy is no longer available for other uses.
trickstra 7y ago
It's not a "waste" if the result is a decentralized, trustless, robust digital currency. And the global warming argument is a many times debunked hoax - if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable. Except in the other cases, the benefits go to the single entity that owns the business, whereas with cryptocurrency every participant benefits from the stronger network. Global warming is caused by using fossil fuels to make electricity, mining crypto doesn't require fossil fuels. There are other ways to make electricity, let's focus on them.
- danmaz74 7y ago
  > if anyone has better use of that electricity, they are welcome to use it, which will make mining cryptocurrency unprofitable I'm sorry, but you got this backwards. If bitcoin becomes a relevant part of the world economy, then it HAS to use a relevant part of the world energy, because consuming energy for PoW is the only limiting factor against a 51% attack. So, either Bitcoin is irrelevant - and thus its power usage is a literal waste - or it's relevant, and then its power usage has to become relevant in terms of global warming.
  - trickstra 7y ago
    From the point of view of the miner, they have a supply of electricity at a certain price and can decide what to do with it. They might run their TV, computer, heating, industrial machinery, datacenter, or a bitcoin miner. They have to compute what profits can each of the options give them. If running bitcoin miners at that electricity cost and at that profit they can get from selling the bitcoins is more profitable than the others, then it's logical to do that. If on the other hand the price of bitcoin goes down, or the price of electricity goes up, or people start paying more for server hosting, then the decision changes. The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services.
    - ben_w 7y ago
      If bitcoin is the dominant currency, another option exists: 51% attack, double-spend to get free electricity. This is useful even when it makes an apparent loss by damaging trust in the currency: If you are, say, the USA president and you’re at war with Iraq, and Iraq uses bitcoin, you can outspend on energy until they surrender. Unless the whole world uses bitcoin, but then the first few nations individually face the same problem, regardless of who else actually uses bitcoin — gotta keep the USA and China happy at the same time! (The EU isn’t integrated enough to do that sort of thing yet, but is a similar sized group). Right now, 51% needs the cost of one very large power station from when you start until when you win — large nations, the sort with global ambitions, can spare a lot more. In the previous example, that’s close to all the power Iraq produces, but 5.4% of the USA’s output. Then there’s the fact that most countries like being in charge of their own currencies as the ability to create or destroy units is a useful economic lever. > The fact that miners are now mining, means it's currently most rational to do that, given what society (users, participants) are willing to pay for the services. Or it’s speculation, like so many other things before and probably yet to come.
toxik 7y ago
Said the man living one of the most privileged lives possible on this planet. Bitcoin has a very clear use to the oppressed people of the world, and for that exact reason it’s popular among criminals.
krageon 7y ago
From a position of power it is easy to do without, because you derive no security or finances from this solution. After all, the status quo is paying you just fine. Why is what you say relevant for most people, who to varying degrees definitely don't have all the things that you apparently take for granted?
- danmaz74 7y ago
  Is having food on the table and a roof on their head relevant to "most people"? Because, when we're talking about climate change, that's what is at risk for hundreds of millions of people.

ssutch3 7y ago

Disregarding the energy cost, couldn't a "dumb" PoW be more computationally complex than Sha256, such that a relatively larger number of computers could compete in the consensus algorithm, thereby increasing decentralization? To me, Bitcoin doesn't seem that decentralized, considering the ASIC chip manufacturers control the majority mining stake. Intel has even gotten into the game.

tromp 7y ago
More complex PoW, such as a memory hard one requiring several GB of memory to solve efficiently, can lower the efficiency gap between GPUs and ASICs to about one order of magnitude, but not much less. That means that ultimately, only ASICs can mine profitably (and only if they have access to very cheap power).

dx034 7y ago

Once we have enough green energy I'd totally agree with you. But currently, I don't think we can afford adding that much CO² for a currency that isn't widely used anywhere in the world.

mrb 7y ago
«isn't widely used anywhere» Bitcoin processes 10 million transactions a month (300k/day) and it's generally been growing over the years: https://bitinfocharts.com/comparison/bitcoin-transactions.html https://bitinfocharts.com/comparison/bitcoin-transactions.ht...
- aidanlister 7y ago
  But how many useful transactions? Isn’t the vast majority of that trading and not economically useful activity?
  - trickstra 7y ago
    Who is the global arbiter of usefulness? My transactions have always been useful for me and for my counterparty, if that's what you are asking.
- _Microft 7y ago
  Which is negligible compared to the number of credit card transactions in the US (> 300 times as many per month) or bank transfers in Germany alone (50 times as many per month). And that's not even counting other ways or countries.
trickstra 7y ago
https://www.coindesk.com/bitcoin-miners-send-message-at-fidelity-we-run-on-clean-energy-not-dirty-coal https://www.coindesk.com/bitcoin-miners-send-message-at-fide...

k_bx 7y ago

> Proof-of-stake doesn't work. It isn't robust. Eg. PoS cryptocurrencies can't resolved which chain is correct after a network split. Where can I get best details on this? Which papers? Thank you!

TeMPOraL 7y ago

> If the social benefits of a cryptocurrency are worth the computational power, and if PoW is the only technical solution to implement it, then by definition PoW isn't wasteful. But they aren't, and the whole exercise is comparable to trying to repeatedly solve ever-larger NP-complete problems by brute force. Something no technical person in their sane mind would consider a correct course of action. And just like we use good enough polynomial approximations to get near-best solutions to NP-complete problems, we can do the same for running economy. Trust is not a liability. Trust is what makes economy efficient.

hesk 7y ago

> If the social benefits of a cryptocurrency are worth the computational power ... They are not.

xtracto 7y ago

I am not that old and still I remember Ring networks (before ethernet), they were highly impractical and rudimentary, but they filled a purpose at their time. Then Ethernet came. Anyone remembers the dumb hubs? when a computer wanted to send a message, the hub actually broadcasted it to all computers in the network... so inefficient, and yet, it served its purpose. Later, came the network protocols. There was this protocol used for discussion groups/news, remember NNTP? wasteful, because nodes had to download / replicate the full history of posts. But still... served its purpose for its time. Then came a messaging protocol, SMTP, very useful for sending "electronic mail", very convenient. But people started sending binary data files on it... by converting it to text (UUEncoding anyone?) so wasteful and inefficient. But it is still being used. So, bitcoin for me is just that early system, that early test that shows a way to do decentralized, censorship-resistant, digital currency. Humanity will find more efficient ways to do it (and maybe they won't be used, as with Email) or at some point in the distant future, the power side of the equation won't be relevant (renewable energy? nuclear? who knows). But for me, that does not change the fact that bitcoin proposition is a stepping stone for society that sooner or later will change the way people transfer value.

DonHopkins 7y ago
SMTP came a long time before NNTP.
- xtracto 7y ago
  I invoke Cunningham's Law.
  - DonHopkins 7y ago
    I invoke Zawinski's Law of Software Envelopment, and predict that Bitcoin will be replaced by artificially intelligent spam filtering software that can read mail. https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles https://en.wikipedia.org/wiki/Jamie_Zawinski#Principles Zawinski's law of software envelopment (also known as Zawinski's law) comments on the phenomenon of software bloating with popular features: Every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can.