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> Proof-of-work incentivizes cheap & renewable energy investment. Cheap yes, renewable no. Complete non sequitur there. > The endgame is that all energy comp

by brazzy 6y ago

> Proof-of-work incentivizes cheap & renewable energy investment. Cheap yes, renewable no. Complete non sequitur there. > The endgame is that all energy companies will primarily be Bitcoin mining companies, feeding their excess renewable energy into the grid to power homes, etc. Absolute insanity straight out of postapocalyptic SF. "The ancients destroyed their civilization by funelling an ever increasing share of resources towards some kind of elaborate game of numbers".

beaner 6y ago
I don't know why this seems so dystopian to some. To me, it seems like a financial incentive for a decentralized, robust, renewable future.
- brazzy 6y ago
  There is nothing particularly robust or renewable, or "future" about it.
  - beaner 6y ago
    Necessarily renewable because it is the cheapest possible energy long-term; you only need to pay for upkeep, not for resources to convert. Maybe this depends on whether you think renewables will become cheaper than coal/gas, and maybe you're pessimistic about that. I'm not. Robust because the phenomenon can begin detached from the energy grid by profit-seeking entities with capital to invest. Doesn't need permission, can be smaller, independent and eventually have something to offer back to the grid, but don't require it initially. Ability to bootstrap outside of regulation as a result. More nodes, more competition, shared excess. Fewer singular points of failure, more redundant, less fragile. "Future," because that's a great vision for the future.
    - The_Colonel 6y ago
      What has even higher potential to be cheap is nuclear energy - when you don't care as much about (operation, storage) safety, a lot of costs fall out ... Nuclear energy has high fixed costs but then scales pretty well. As crypto currencies with PoW become a major industry, it's not difficult to imagine it might be cost-effective to build huge nuclear plants in some corrupt African country. (Africa has also huge untapped uranium ore deposits)
      - SuoDuanDao 6y ago
        Cost of capital is higher in less stable countries though - the backers need insurance against unexpected outcomes either way, corrupt African countries (or some future equivalent) would require less community buy-in but what makes that true would cause other worries to the owners of capital. Nuclear works in stable, rules-following countries like France where its high energy paybacks subsidise good salaries for an army of bureaucrats enforcing the rules.
        nickik 6y ago
        Nuclear can and will work with far fewer rules and fix cost once you next generation reactors with totally different operational safety requirements. We are literally stuck with 50 year old technology in nuclear energy, as unfortunately progress has been slow. With the fuel cost being basically free (thorium), the and the operational cost low because the system runs with little human intervention energy should actually end up incredibly cheap once we engineer these system in a better way.
dmos62 6y ago
>> Proof-of-work incentivizes cheap & renewable energy investment. > Cheap yes, renewable no. Complete non sequitur there. That's the main point. There's no inherent incentive to use clean energy for mining. There's opposite stories about obsolete aluminum plants staying alive in China by just using their energy allocations to mine Bitcoin.
- no_wizard 6y ago
  I have to call this out as google didn’t back this claim up readily. Do you have a source? I Cabot believe an aluminum plant could make Enough money off of Bitcoin mining to subsidize its operations like that at first blush. I’m very interested in reading about it though
  - minitoar 6y ago
    I would imagine they stop making any significant amount of Aluminum at that point.
  - dmos62 6y ago
    This is what I've been referencing: https://blog.bitmex.com/mining-incentives-part-2-why-is-china-dominant-in-bitcoin-mining/ https://blog.bitmex.com/mining-incentives-part-2-why-is-chin... I've read it some time ago. I recalled it as less speculative than it seems now. The premise is that energy is a large part of aluminium production cost and the plants work on small margins. An over-investment into energy production provides cheap energy and allows the aluminium plants to improve their margins via crypto mining.
    - latchkey 6y ago
      Coinmint took over a very large, shut down, aluminum plant in upstate NY. This plant is powered by a dam that was built to provide power to that plant. These dams are built in such a way that they need to continue to provide power or the equipment starts to fail. It is also literally too expensive to build and maintain the lines to ship the power elsewhere. Alcoa was more than happy to lease their space to someone who was going to use the power going to their facilities. There isn't much industry at this point that would fit. All of the successful facilities that I know of (including my own) seek out cheap power... which happens to also be clean power. Hydropower. Most use existing facilities that were otherwise going to waste.
roenxi 6y ago
There is genuine value in that, a similar operation has been performed using silver & gold for thousands of years. Gold is an almost exactly the same in that respect - energy gets burned on the owners behalf, and they can prove it happened. The difference that I'm keeping an interested eye on is even if gold mining ceases, the energy required to produce a new gram of gold doesn't really change so a gram of gold still proves as much as it ever did. It isn't so clear yet that Bitcoin proves anything without an active mining network.
- SAI_Peregrinus 6y ago
  Without the miners bitcoin transactions are impossible. Its value is entirely due to the mining network's activity.
- shawnz 6y ago
  Why would gold mining cease if availability of gold hasn't changed? It would mean everyone is willingly choosing to leave money on the table. If Bitcoin mining becomes unprofitable, Bitcoin users could incentivize it through increased transaction fees.
  - kybernetikos 6y ago
    One of the wrinkles is that bitcoin mining is an adaptive system. If mining becomes entirely unprofitable, then miners will drop out, and mining will become easier. This process will continue until equilibrium is achieved where participating miners are making only a very small amount of money based on their energy costs. Of course, what you say about transaction fees is true too - if miners are receiving less in 'mined' bitcoins, then they are likely to demand more in fees. You can already see this happening - when I first used bitcoin, nobody charged any fees at all, relying only on the mining rewards for covering their mining costs.
- kybernetikos 6y ago
  > the energy required to produce a new gram of gold Gold is valuable because people buy it. People don't buy it because of some hypothetical amount of energy that went into producing it, they buy it mostly because it's shiny and rare (and sometimes because it doesn't corrode much or conducts well). The energy cost to produce is relevant to its price only in so far as it feeds into the supply / demand equation.
LAMike 6y ago
"The ancients destroyed their civilization by funelling an ever increasing share of resources towards some kind of elaborate game of numbers". People in 100 years will be saying this about social media, not Bitcoin
- EGreg 6y ago
  How about both
smoyer 6y ago
Please link the reference here ... this sounds like a book I'd definitely want to read (though if sounds somehow familiar).

by brazzy 6y ago

beaner 6y ago

I don't know why this seems so dystopian to some. To me, it seems like a financial incentive for a decentralized, robust, renewable future.

brazzy 6y ago
There is nothing particularly robust or renewable, or "future" about it.
- beaner 6y ago
  Necessarily renewable because it is the cheapest possible energy long-term; you only need to pay for upkeep, not for resources to convert. Maybe this depends on whether you think renewables will become cheaper than coal/gas, and maybe you're pessimistic about that. I'm not. Robust because the phenomenon can begin detached from the energy grid by profit-seeking entities with capital to invest. Doesn't need permission, can be smaller, independent and eventually have something to offer back to the grid, but don't require it initially. Ability to bootstrap outside of regulation as a result. More nodes, more competition, shared excess. Fewer singular points of failure, more redundant, less fragile. "Future," because that's a great vision for the future.
  - The_Colonel 6y ago
    What has even higher potential to be cheap is nuclear energy - when you don't care as much about (operation, storage) safety, a lot of costs fall out ... Nuclear energy has high fixed costs but then scales pretty well. As crypto currencies with PoW become a major industry, it's not difficult to imagine it might be cost-effective to build huge nuclear plants in some corrupt African country. (Africa has also huge untapped uranium ore deposits)
    - SuoDuanDao 6y ago
      Cost of capital is higher in less stable countries though - the backers need insurance against unexpected outcomes either way, corrupt African countries (or some future equivalent) would require less community buy-in but what makes that true would cause other worries to the owners of capital. Nuclear works in stable, rules-following countries like France where its high energy paybacks subsidise good salaries for an army of bureaucrats enforcing the rules.
      - nickik 6y ago
        Nuclear can and will work with far fewer rules and fix cost once you next generation reactors with totally different operational safety requirements. We are literally stuck with 50 year old technology in nuclear energy, as unfortunately progress has been slow. With the fuel cost being basically free (thorium), the and the operational cost low because the system runs with little human intervention energy should actually end up incredibly cheap once we engineer these system in a better way.

dmos62 6y ago

>> Proof-of-work incentivizes cheap & renewable energy investment. > Cheap yes, renewable no. Complete non sequitur there. That's the main point. There's no inherent incentive to use clean energy for mining. There's opposite stories about obsolete aluminum plants staying alive in China by just using their energy allocations to mine Bitcoin.

no_wizard 6y ago
I have to call this out as google didn’t back this claim up readily. Do you have a source? I Cabot believe an aluminum plant could make Enough money off of Bitcoin mining to subsidize its operations like that at first blush. I’m very interested in reading about it though
- minitoar 6y ago
  I would imagine they stop making any significant amount of Aluminum at that point.
- dmos62 6y ago
  This is what I've been referencing: https://blog.bitmex.com/mining-incentives-part-2-why-is-china-dominant-in-bitcoin-mining/ https://blog.bitmex.com/mining-incentives-part-2-why-is-chin... I've read it some time ago. I recalled it as less speculative than it seems now. The premise is that energy is a large part of aluminium production cost and the plants work on small margins. An over-investment into energy production provides cheap energy and allows the aluminium plants to improve their margins via crypto mining.
  - latchkey 6y ago
    Coinmint took over a very large, shut down, aluminum plant in upstate NY. This plant is powered by a dam that was built to provide power to that plant. These dams are built in such a way that they need to continue to provide power or the equipment starts to fail. It is also literally too expensive to build and maintain the lines to ship the power elsewhere. Alcoa was more than happy to lease their space to someone who was going to use the power going to their facilities. There isn't much industry at this point that would fit. All of the successful facilities that I know of (including my own) seek out cheap power... which happens to also be clean power. Hydropower. Most use existing facilities that were otherwise going to waste.

roenxi 6y ago

There is genuine value in that, a similar operation has been performed using silver & gold for thousands of years. Gold is an almost exactly the same in that respect - energy gets burned on the owners behalf, and they can prove it happened. The difference that I'm keeping an interested eye on is even if gold mining ceases, the energy required to produce a new gram of gold doesn't really change so a gram of gold still proves as much as it ever did. It isn't so clear yet that Bitcoin proves anything without an active mining network.

SAI_Peregrinus 6y ago
Without the miners bitcoin transactions are impossible. Its value is entirely due to the mining network's activity.
shawnz 6y ago
Why would gold mining cease if availability of gold hasn't changed? It would mean everyone is willingly choosing to leave money on the table. If Bitcoin mining becomes unprofitable, Bitcoin users could incentivize it through increased transaction fees.
- kybernetikos 6y ago
  One of the wrinkles is that bitcoin mining is an adaptive system. If mining becomes entirely unprofitable, then miners will drop out, and mining will become easier. This process will continue until equilibrium is achieved where participating miners are making only a very small amount of money based on their energy costs. Of course, what you say about transaction fees is true too - if miners are receiving less in 'mined' bitcoins, then they are likely to demand more in fees. You can already see this happening - when I first used bitcoin, nobody charged any fees at all, relying only on the mining rewards for covering their mining costs.
kybernetikos 6y ago
> the energy required to produce a new gram of gold Gold is valuable because people buy it. People don't buy it because of some hypothetical amount of energy that went into producing it, they buy it mostly because it's shiny and rare (and sometimes because it doesn't corrode much or conducts well). The energy cost to produce is relevant to its price only in so far as it feeds into the supply / demand equation.

LAMike 6y ago

"The ancients destroyed their civilization by funelling an ever increasing share of resources towards some kind of elaborate game of numbers". People in 100 years will be saying this about social media, not Bitcoin

EGreg 6y ago
How about both

smoyer 6y ago

Please link the reference here ... this sounds like a book I'd definitely want to read (though if sounds somehow familiar).