9 ms·

Delaying the Inevitable: Muir Glacier and the Ethereum Difficulty Bomb

90 points by cottenio 7y ago

Proven 7y ago
What a joke. VB is Ben Bernanke of crypto
majewsky 7y ago
> [With PoS, Ethereum would lose] the baggage of wasting the electricity of a small city to keep itself running. "Small city" sounds suspiciously small. Last time I checked, Bitcoin had the same electricity consumption as the entire country of Austria. I can believe that Ethereum has less miners, but by that over 2 magnitudes?
- wyldfire 7y ago
  > but by that over 2 magnitudes? Why do you question the claim? The power consumption doesn't scale between the two by the quanta of miners, it scales differently because the algorithms are different and thus the power consumed is different. I have no idea how the algorithms differ nor how the difficulty differs among the two, so I don't have an intuition about how to guess whether or not they should scale relative to each other. I suspect that ethereum's market cap would be lower and probably have lower mining rewards therefore less capital invested in its global mining pool. I suspect that ethereum's algorithm requires more energy per block than bitcoin's, but I have a hard time guessing how much. Especially since it's a little less mature, maybe fewer ASIC miners so even less efficient in practice.
  - 0xname 7y ago
    There’s also the fact that Ethereum has an almost completely different architecture including block times which affect the frequency of mining, different reward structures, etc. As far as I know its not necessarily the difference between Bitcoin’s SHA-256 vs Ethereum’s Ethash as much as it is about the architecture itself.
    - wyldfire 7y ago
      There's so many inputs that it's difficult to casually come up with an intuition-guided estimate. So it makes some sense to have faith in the empirically guided value. We hope that they took the time to validate their algorithm for extrapolating the energy consumption.
      - cottenio 7y ago
        The trinsicoin algorithm is really just a minimum bound based on the most efficient rigs known for a given algorithm and the cheapest industrial rates for electricity. The Litecoin Foundation actually helped out with some of the math and data resources.
  - CydeWeys 7y ago
    The total power consumption of any given crypto currency scales according to the ongoing value of new block rewards per fixed unit of time. You can ignore the rest of the factors (like algo, block time) for the most part. Miners run if they can make money for a given cost of electricity, and don't if they can't.
    - tromp 7y ago
      Indeed; see for example this screener showing daily issuance in dollars: https://messari.io/screener/play-around-074BC5B4 https://messari.io/screener/play-around-074BC5B4 from which we can infer that Bitcoin uses about 10x more electricity than Ethererum.
- dcolkitt 7y ago
  I can't comment specifically on the details, but one consideration is that Ethereum's mining hash is designed to be ASIC resistant. Bitcoin is entirely mined by dedicated hardware that's incapable of doing anything other than mining Bitcoin. Ethereum is mostly mined by GPUs that can obviously be repurposed for other applications if need be. If the electricity cost for Ethereum mining gets too out of control, the miners can just point their GPUs at some other task. Whereas Bitcoin miners are stuck with sunk cost of rapidly depreciating capital, and pretty much will never turn even during electricity price spikes.
  - sp332 7y ago
    But the ASICs are used because they are more efficient. Forcing miners to use less efficient hardware is going to drive up the average energy per hash calculated.
    - arcticbull 7y ago
      The system is meant to balance itself out one way or the other. You throw more efficient resources at it, and it becomes less efficient to maintain its 10-20 second block times. It's actively anti-efficient. The idea behind ASIC resistance is not efficiency, but rather to limit centralization. If you can use generic hardware that anyone can access it is intended to reduce capex required to become a cost-effective miner. Now of course, I don't think that makes sense, but that's the idea.
      - sp332 7y ago
        Ah, you're right. After having enough hashes to secure against attacks, they don't really do anything useful. People will just mine as many as they can with a given budget, which buys the same number of kWh no matter how efficient the hash calculations are.
    - imtringued 7y ago
      You're completely ignoring the difficulty mechanism in Bitcoin. When everyone has a 1TH/s miner that consumes 1kWh and suddenly a 10TH/s miner that consumes 1kWh comes out everyone is going to switch to the new miner. Because Bitcoin guarantees that a block is mined every 10 minutes it has to make the calculation 10x harder than before. The end result? The energy consumption didn't change. What makes Bitcoin more energy intensive then? The price of Bitcoin. When the price of Bitcoin doubles that also means the mining profit doubles. More miners (= more energy consumption) join the blockchain until the profit margin is back to the previous level. The price of a Bitcoin is 70x higher than the price of Ethereum so that suggests that Bitcoin should use 70x more energy.
- perennate 7y ago
  The article actually has a good link to https://www.trinsicoin.com/?focus=ETH https://www.trinsicoin.com/?focus=ETH where if you scroll down it breaks down the math. (You have to hover over Blockchain, Mining, and Energy to see the parameters.)
- auston 7y ago
  According to https://ethernodes.org/ https://ethernodes.org/ there are ~7.5k nodes & according to https://www.etherchain.org/charts/distinctMiners https://www.etherchain.org/charts/distinctMiners ~60 miners running ATM. Small city sounds a bit big in that context.
  - cottenio 7y ago
    This link to the list of Ethereum mining pools might help make more sense of that: https://www.poolwatch.io/coin/ethereum https://www.poolwatch.io/coin/ethereum As you can see there are ~570k workers contributing to ~79k mining addresses. A lot of the data you see about "distinct miners" might be pools rather than your loner GPU miner.
- samatman 7y ago
  Ethereum mines 2 ETH (exactly) per 10 seconds (approximately). Bitcoin mines 12.5 BTC (exactly) per 10 minutes (approximately). Normalizing the ETH rate against the BTC, we get 2 ETH * 6 * 10 = 120 ETH. So at current market rates, 120 ETH * $132 vs. 12.5 BTC * $7,341, $15,840 ETH for $91,792.5 BTC. This suggests that the BTC network should use roughly 5.8 times as much energy as ETH, to derive an equivalent profit per unit energy.
some1else 7y ago
Given that they keep postponing the transition to PoS, wouldn't it be smarter to remove the artificial difficulty increase and make the network more efficient?
- flarex 7y ago
  The reasoning is that somewhere down the line introducing an ice age may lead to a contentious hard fork. Better to include it upfront so that expectations are set that PoW on Ethereum is not a long term thing.
- DennisP 7y ago
  Fwiw the transition doesn't look that far off now. There's a working multi-client testnet for the new (separate) proof-of-stake chain, and a recent proposal by Vitalik to transition the old chain into it more quickly than previously expected: https://ethresear.ch/t/alternative-proposal-for-early-eth1-eth2-merge/6666 https://ethresear.ch/t/alternative-proposal-for-early-eth1-e...
quotha 7y ago
A number of blockchains already have proof of stake: https://tezos.com/ https://tezos.com/ for one is pretty cool
starpilot 7y ago
So Muir Glacier is not mentioned anywhere in the article text.
- cottenio 7y ago
  That is hilarious and I fixed that :P
arcticbull 7y ago
> A vibrant ecosystem of banking functions, asset management, trading exchanges, and more have sprung from this, requiring Ethereum to quickly respond to external events and triggers. That's a bit of a stretch isn't it? Other than speculation and money laundering, I don't think any dapps have gained any traction at all, let alone a vibrant ecosystem.
- flarex 7y ago
  Decentralised Finance (Defi) apps are starting to gain traction on Ethereum. Theres about half a billion in funds currently making use of them. https://defipulse.com https://defipulse.com
  - arcticbull 7y ago
    Even those are mostly exchanges (speculation), derivatives (extra speculation) and stable coins (to enable speculation on exchanges which want to avoid AML and KYC in the facilitation of money laundering).
    - flarex 7y ago
      Whether you agree with the use cases or traction they're gaining doesn't negate that there's a lot of others that do find them useful.
      - arcticbull 7y ago
        That's totally fair and I only call it out because in my original post I said "other than speculation and money laundering" (which I freely admit is a big use case) and you provided me a list dominated by speculation and money laundering.
        flarex 7y ago
        Maker and Compound both support interest and borrowing which are what you'd find in a traditional bank (at much worse rates). The money laundering argument could be applied to anything that can't be controlled by governments. Unfortunately there are many countries where monetary policy is oppressive so Defi finance is a legitimate alternative. Just because technology can be abused doesn't mean that it shouldn't be used. See the internet etc.
scribu 7y ago
As an outsider to the blockchain world, I would be more interested to know why proof-of-stake is not used by Ethereum yet. Found one article on the subject: https://medium.com/ibbc-io/the-beautiful-complexity-of-pos-338cfc340eaa https://medium.com/ibbc-io/the-beautiful-complexity-of-pos-3...
- Analemma_ 7y ago
  Proof-of-stake is cryptocurrency's fusion power: perpetually "less than a year away"; it's the technology of the future and always will be.
  - Semaphor 7y ago
    What are the problems with current PoS systems? Not being glib, seriously interested as there are at least a few that implement some kind of Pos (for example dPoS with Ark)
    - leppr 7y ago
      Permissioned networks are a very much easier setting to design a consensus protocol for than public ones. Describing a consensus algorithm as "Proof of Stake" simply means it uses some kind of stake to secure its decisions, this doesn't say anything about the assumptions it starts from. Existing "PoS" blockchains don't have the same decentralization goals as Ethereum.
      - yodsanklai 7y ago
        > Existing "PoS" blockchains don't have the same decentralization goals as Ethereum. What about Cardano and Tezos? aren't they decentralized PoS blockchains?
        ddrdrck_ 7y ago
        And Cosmos
      - 7y ago
derefr 7y ago
> Why? Because Ethereum isn’t just a store-of-value. The Ethereum network also contains smart contracts that execute native code on the blockchain. It's funny when things are presented this way. Ethereum was never intended to be a store of value. It's a distributed computer that needs its own token economy in order to charge "hosting costs" to the computational agents running on it, and to allow those agents to trade work done for other agents for transfer of "hosting costs." Ethereum would still be doing what it's designed to do, even if the price of ETH tanked. (In fact, dapp developers would probably prefer ETH to tank, since that'd mean transactions would be cheaper and less crowded by speculative traders and selfish miners.)
- deleted 7y ago
  [deleted]
- grubles 7y ago
  The other funny thing is the common misconception that Bitcoin does not have smart contracts. Bitcoin transactions are actually pretty programmable. You can have a coin be unspendable until a certain date, or have it require n cosigners to be spent, or have it become spendable only once a secret is revealed which matches a hash. Bitcoin most definitely has smart contracts.
  - saurik 7y ago
    This is true in the same sense that grep is extremely programmable, but comparing grep to C would be strange indeed. Ethereum is a Turing complete VM, allowing you to build extremely complex systems (we, for example, are trying to build a more transparent and distributed directory for a Tor-like service), while Bitcoin lets you sort of control transactions a bit with what amount to something closer to "rules" than "programs" (due to the explicit lack of looping control structure).

90 points by cottenio 7y ago

What a joke. VB is Ben Bernanke of crypto

> [With PoS, Ethereum would lose] the baggage of wasting the electricity of a small city to keep itself running. "Small city" sounds suspiciously small. Last time I checked, Bitcoin had the same electricity consumption as the entire country of Austria. I can believe that Ethereum has less miners, but by that over 2 magnitudes?

wyldfire 7y ago
> but by that over 2 magnitudes? Why do you question the claim? The power consumption doesn't scale between the two by the quanta of miners, it scales differently because the algorithms are different and thus the power consumed is different. I have no idea how the algorithms differ nor how the difficulty differs among the two, so I don't have an intuition about how to guess whether or not they should scale relative to each other. I suspect that ethereum's market cap would be lower and probably have lower mining rewards therefore less capital invested in its global mining pool. I suspect that ethereum's algorithm requires more energy per block than bitcoin's, but I have a hard time guessing how much. Especially since it's a little less mature, maybe fewer ASIC miners so even less efficient in practice.
- 0xname 7y ago
  There’s also the fact that Ethereum has an almost completely different architecture including block times which affect the frequency of mining, different reward structures, etc. As far as I know its not necessarily the difference between Bitcoin’s SHA-256 vs Ethereum’s Ethash as much as it is about the architecture itself.
  - wyldfire 7y ago
    There's so many inputs that it's difficult to casually come up with an intuition-guided estimate. So it makes some sense to have faith in the empirically guided value. We hope that they took the time to validate their algorithm for extrapolating the energy consumption.
    - cottenio 7y ago
      The trinsicoin algorithm is really just a minimum bound based on the most efficient rigs known for a given algorithm and the cheapest industrial rates for electricity. The Litecoin Foundation actually helped out with some of the math and data resources.
- CydeWeys 7y ago
  The total power consumption of any given crypto currency scales according to the ongoing value of new block rewards per fixed unit of time. You can ignore the rest of the factors (like algo, block time) for the most part. Miners run if they can make money for a given cost of electricity, and don't if they can't.
  - tromp 7y ago
    Indeed; see for example this screener showing daily issuance in dollars: https://messari.io/screener/play-around-074BC5B4 https://messari.io/screener/play-around-074BC5B4 from which we can infer that Bitcoin uses about 10x more electricity than Ethererum.
dcolkitt 7y ago
I can't comment specifically on the details, but one consideration is that Ethereum's mining hash is designed to be ASIC resistant. Bitcoin is entirely mined by dedicated hardware that's incapable of doing anything other than mining Bitcoin. Ethereum is mostly mined by GPUs that can obviously be repurposed for other applications if need be. If the electricity cost for Ethereum mining gets too out of control, the miners can just point their GPUs at some other task. Whereas Bitcoin miners are stuck with sunk cost of rapidly depreciating capital, and pretty much will never turn even during electricity price spikes.
- sp332 7y ago
  But the ASICs are used because they are more efficient. Forcing miners to use less efficient hardware is going to drive up the average energy per hash calculated.
  - arcticbull 7y ago
    The system is meant to balance itself out one way or the other. You throw more efficient resources at it, and it becomes less efficient to maintain its 10-20 second block times. It's actively anti-efficient. The idea behind ASIC resistance is not efficiency, but rather to limit centralization. If you can use generic hardware that anyone can access it is intended to reduce capex required to become a cost-effective miner. Now of course, I don't think that makes sense, but that's the idea.
    - sp332 7y ago
      Ah, you're right. After having enough hashes to secure against attacks, they don't really do anything useful. People will just mine as many as they can with a given budget, which buys the same number of kWh no matter how efficient the hash calculations are.
  - imtringued 7y ago
    You're completely ignoring the difficulty mechanism in Bitcoin. When everyone has a 1TH/s miner that consumes 1kWh and suddenly a 10TH/s miner that consumes 1kWh comes out everyone is going to switch to the new miner. Because Bitcoin guarantees that a block is mined every 10 minutes it has to make the calculation 10x harder than before. The end result? The energy consumption didn't change. What makes Bitcoin more energy intensive then? The price of Bitcoin. When the price of Bitcoin doubles that also means the mining profit doubles. More miners (= more energy consumption) join the blockchain until the profit margin is back to the previous level. The price of a Bitcoin is 70x higher than the price of Ethereum so that suggests that Bitcoin should use 70x more energy.
perennate 7y ago
The article actually has a good link to https://www.trinsicoin.com/?focus=ETH https://www.trinsicoin.com/?focus=ETH where if you scroll down it breaks down the math. (You have to hover over Blockchain, Mining, and Energy to see the parameters.)
auston 7y ago
According to https://ethernodes.org/ https://ethernodes.org/ there are ~7.5k nodes & according to https://www.etherchain.org/charts/distinctMiners https://www.etherchain.org/charts/distinctMiners ~60 miners running ATM. Small city sounds a bit big in that context.
- cottenio 7y ago
  This link to the list of Ethereum mining pools might help make more sense of that: https://www.poolwatch.io/coin/ethereum https://www.poolwatch.io/coin/ethereum As you can see there are ~570k workers contributing to ~79k mining addresses. A lot of the data you see about "distinct miners" might be pools rather than your loner GPU miner.
samatman 7y ago
Ethereum mines 2 ETH (exactly) per 10 seconds (approximately). Bitcoin mines 12.5 BTC (exactly) per 10 minutes (approximately). Normalizing the ETH rate against the BTC, we get 2 ETH * 6 * 10 = 120 ETH. So at current market rates, 120 ETH * $132 vs. 12.5 BTC * $7,341, $15,840 ETH for $91,792.5 BTC. This suggests that the BTC network should use roughly 5.8 times as much energy as ETH, to derive an equivalent profit per unit energy.

some1else 7y ago

Given that they keep postponing the transition to PoS, wouldn't it be smarter to remove the artificial difficulty increase and make the network more efficient?

flarex 7y ago
The reasoning is that somewhere down the line introducing an ice age may lead to a contentious hard fork. Better to include it upfront so that expectations are set that PoW on Ethereum is not a long term thing.
DennisP 7y ago
Fwiw the transition doesn't look that far off now. There's a working multi-client testnet for the new (separate) proof-of-stake chain, and a recent proposal by Vitalik to transition the old chain into it more quickly than previously expected: https://ethresear.ch/t/alternative-proposal-for-early-eth1-eth2-merge/6666 https://ethresear.ch/t/alternative-proposal-for-early-eth1-e...

quotha 7y ago

A number of blockchains already have proof of stake: https://tezos.com/ https://tezos.com/ for one is pretty cool

starpilot 7y ago

So Muir Glacier is not mentioned anywhere in the article text.

cottenio 7y ago
That is hilarious and I fixed that :P

arcticbull 7y ago

> A vibrant ecosystem of banking functions, asset management, trading exchanges, and more have sprung from this, requiring Ethereum to quickly respond to external events and triggers. That's a bit of a stretch isn't it? Other than speculation and money laundering, I don't think any dapps have gained any traction at all, let alone a vibrant ecosystem.

flarex 7y ago
Decentralised Finance (Defi) apps are starting to gain traction on Ethereum. Theres about half a billion in funds currently making use of them. https://defipulse.com https://defipulse.com
- arcticbull 7y ago
  Even those are mostly exchanges (speculation), derivatives (extra speculation) and stable coins (to enable speculation on exchanges which want to avoid AML and KYC in the facilitation of money laundering).
  - flarex 7y ago
    Whether you agree with the use cases or traction they're gaining doesn't negate that there's a lot of others that do find them useful.
    - arcticbull 7y ago
      That's totally fair and I only call it out because in my original post I said "other than speculation and money laundering" (which I freely admit is a big use case) and you provided me a list dominated by speculation and money laundering.
      - flarex 7y ago
        Maker and Compound both support interest and borrowing which are what you'd find in a traditional bank (at much worse rates). The money laundering argument could be applied to anything that can't be controlled by governments. Unfortunately there are many countries where monetary policy is oppressive so Defi finance is a legitimate alternative. Just because technology can be abused doesn't mean that it shouldn't be used. See the internet etc.

scribu 7y ago

As an outsider to the blockchain world, I would be more interested to know why proof-of-stake is not used by Ethereum yet. Found one article on the subject: https://medium.com/ibbc-io/the-beautiful-complexity-of-pos-338cfc340eaa https://medium.com/ibbc-io/the-beautiful-complexity-of-pos-3...

Analemma_ 7y ago
Proof-of-stake is cryptocurrency's fusion power: perpetually "less than a year away"; it's the technology of the future and always will be.
- Semaphor 7y ago
  What are the problems with current PoS systems? Not being glib, seriously interested as there are at least a few that implement some kind of Pos (for example dPoS with Ark)
  - leppr 7y ago
    Permissioned networks are a very much easier setting to design a consensus protocol for than public ones. Describing a consensus algorithm as "Proof of Stake" simply means it uses some kind of stake to secure its decisions, this doesn't say anything about the assumptions it starts from. Existing "PoS" blockchains don't have the same decentralization goals as Ethereum.
    - yodsanklai 7y ago
      > Existing "PoS" blockchains don't have the same decentralization goals as Ethereum. What about Cardano and Tezos? aren't they decentralized PoS blockchains?
      - ddrdrck_ 7y ago
        And Cosmos
    - 7y ago

derefr 7y ago

> Why? Because Ethereum isn’t just a store-of-value. The Ethereum network also contains smart contracts that execute native code on the blockchain. It's funny when things are presented this way. Ethereum was never intended to be a store of value. It's a distributed computer that needs its own token economy in order to charge "hosting costs" to the computational agents running on it, and to allow those agents to trade work done for other agents for transfer of "hosting costs." Ethereum would still be doing what it's designed to do, even if the price of ETH tanked. (In fact, dapp developers would probably prefer ETH to tank, since that'd mean transactions would be cheaper and less crowded by speculative traders and selfish miners.)

deleted 7y ago
[deleted]
grubles 7y ago
The other funny thing is the common misconception that Bitcoin does not have smart contracts. Bitcoin transactions are actually pretty programmable. You can have a coin be unspendable until a certain date, or have it require n cosigners to be spent, or have it become spendable only once a secret is revealed which matches a hash. Bitcoin most definitely has smart contracts.
- saurik 7y ago
  This is true in the same sense that grep is extremely programmable, but comparing grep to C would be strange indeed. Ethereum is a Turing complete VM, allowing you to build extremely complex systems (we, for example, are trying to build a more transparent and distributed directory for a Tor-like service), while Bitcoin lets you sort of control transactions a bit with what amount to something closer to "rules" than "programs" (due to the explicit lack of looping control structure).