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As a Bitcoin proponent who is also concerned about it's long term sustainability, this post is an embarrassing read. The author clearly has a very poor underst

As a Bitcoin proponent who is also concerned about it's long term sustainability, this post is an embarrassing read. The author clearly has a very poor understanding of what value Bitcoin currently has in our current macro-economic situation, and why investors (and corporations) are choosing to allocate larger parts of their portfolios in cryptocurrencies. Calling out the BTC network on its energetic inefficiency completely misses the point that the work put into the network is exactly the scarce digital asset, and hence the store of value.

grey-area 6y ago
Let me relate for you how Bitcoin has been sold to me at various times in the past, because its entire history at this point seems to have been forgotten by bitcoin proponents. First it was a revolutionary currency, which would replace fiat with a deflationary alternative. Then it was a revolutionary payment network which would displace evil incumbents (despite being fundamentally unsuited to this task). Then it was for micropayments. Then it was for selling drugs and doing things governments don't want you to do. Then there was the lightning network which would make it super fast and super distributed at the same time, solving all known problems by this time next year (in 2015). Then it was for transferring money across borders. Then it was a revolutionary technology called blockchain for building apps on top of, who cares about the currency. Then it was for tracing assets and proving ownership of every asset in the world with blockchains. Then it was for smart contracts - we're going to replace the law with the blockchain. Then it was going to the moon (in 2017), and who cares what it is used for, or even if anyone is using it, because it's going to make us all rich baby - we still appear to in that last phase because nobody seems to know or care about the value of it, only the price. With apologies to Oscar Wilde, we currently seem to know the price of everything, but the value of nothing, and the rising price is what is driving current interest in Bitcoin, nothing else.
- pseudozach 6y ago
  Your grasp of bitcoin seems to be similar to a casual newspaper reader commenting on middle east peace without knowing any of the complex cultural differences. No worries it's the norm online. Even tech enthusiasts can be ignorant, after all bitcoin is a complex phenomenon a complex mix of social, economic and technical concepts. Bitcoin never tried to be law, that's eth and other similar centralized scam blockchains. Being as it's "only" 12 year old money, Bitcoin does evolve and adjust as its users govern it via running their own nodes. Until 2017, major companies (miners/payment processors) tried to fit all kinds of narratives on it (as you mention) but it became clear that they COULD not make bitcoin what they wanted it to do. Meanwhile users did a soft fork with segwit and kept the blockchain as small as possible while allowing Lightning to be developed on it. This means the decentralized network wanted to keep being sound money, keep being censorship resistant, decentralized and still be scalable. Lightning Network is a very solid success, used amongst early adopters, major exchanges joining (Bitfinex, Kraken, OKCoin), multiple VISA backed startups building rewards programs and remittance applications on it. Unlike a typical tech startup Bitcoin does not need to trick everyone to use it and get as many investors as soon as possible and figure out something later. It is what it is. It does not force anyone to join it or spend a single thought on it unless they choose to. It's completely voluntary. While I understand the skepticism (which just comes across as "salty" as they say) one should consider a simple web search to see how Bitcoin adds value to financially underserved people, allows politically censored organizations to take donations anywhere in the world and protect tens of millions of people from rampant inflation in most of the developing world.
kybernetikos 6y ago
> the work put into the network is exactly the scarce digital asset Not even a little. The scarce digital asset is the slot on the distributed ledger. That you currently need a load of energy to reassign digital ledger slots is an accident of history - because it was the first way that anyone worked out how to run a secure distributed database across mutually distrusting nodes where you don't need to know the participants in advance. The work is not the scarce asset. If you doubt this, consider: the 'work' required to mine a block (and so 'create' the block reward) changes based on how much hash power the network has, and varies quite substantially between the early blocks and now, yet the bitcoins mined then are worth the same as bitcoins mined now. If lots of miners stop mining BTC, then the amount of work required to mine the next blocks will reduce, yet the bitcoins created with the lower work requirement will be worth exactly the same as bitcoins created with higher work requirements. Obviously, in a PoW blockchain, the work is extremely important, since a PoW blockchain can't remain secure without significantly more work being done by the network than an adversary can marshal to attack the network, but that's an entirely separate thing. You can take a valuable painting, burn it down to ash and use the ash to make ink to do a stick figure drawing. The stick figure drawing doesn't magically become 'a store of value' because you destroyed a valuable painting to make it.
ForHackernews 6y ago
> the work put into the network is exactly the scarce asset that is being invested in. No! No it isn't! Gah! I'm sorry but it is so frustrating to hear this nonsense repeated over and over. Bitcoin is not valuable just because you wasted shedloads of energy to make a bitcoin! It's valuable because somebody else will exchange something of value for it. It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. [0] https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_theory_of_value [1] https://en.wikipedia.org/wiki/Red_Queen%27s_race https://en.wikipedia.org/wiki/Red_Queen%27s_race
- Melting_Harps 6y ago
  > It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. What's also maddening is how subjective the term 'value' has on it's intended usecase that some can be so completely oblviius to make coax it into a specific farmework: cocoa beans and shells were also equally valuable to it's respective communities, but your forcing of modernity to this matter is equally marred by illogical and quite frankly lazy conclusions. Bitcoin (lower case b, as in the token) does require a great deal of hashing power, but this model, proof of work, is what is required to ensure Bitcoin's immutability (the network capital B). And that is the cost of such a system which, if you aren't aware, is mainly operating on renewable energy [0]. That is just the cost of entry if you want to incentivize keep everyone honest and play by the rules, the fiat World is littered with countless stories of failed currencies and failed societies and cultures because man's inherit nature: greed and corruption. 0: https://bitcoinmagazine.com/articles/study-74-percent-of-bitcoin-mining-powered-with-renewable-energy https://bitcoinmagazine.com/articles/study-74-percent-of-bit...
- CryptoUnchained 6y ago
  I disagree, sunk cost fallacy and just plain miners needing to ROI their equipment, facilities, and energy costs sets a base psychological minimum price that is rising every year as the hash rises. Now that we've hit a wall at the 5nm process it's anyone's guess what kind of effect that will have on new entrants. I imagine China will take an even larger slice of the pie as energy costs will be the main deciding factor of profitability.
powerapple 6y ago
The scarcity has nothing to do with the complexity in proof of work. The complexity made it costly to attack it. The scarcity comes with the idea of the number of bitcoins will be available is a hard limit.
- mettamage 6y ago
  There's a second order effect IMO: people put specialized resources into mining it. Thus people have a sunk cost. In general, people also have a sunk cost fallacy which means that the sunk cost will stay into the object/subject it was sunk in. Due to the sunk cost fallacy, Bitcoin has more value. I know this means I'm relying on the irrationality of humans, but why wouldn't I? It's more predictive than assuming humans will be rational with regards to this subject.
tsimionescu 6y ago
> Calling out the BTC network on its energetic inefficiency completely misses the point that the work put into the network is exactly the scarce digital asset, and hence the store of value. Why would that matter? The problem is the huge amount of greenhouse gases getting released because of this store of value. Whether it makes some economic sense or not is irrelevant to the discussion of whether it should be allowed to continue on environmental grounds.
- CryptoUnchained 6y ago
  You're so angry about the greenhouse gases that you're completely missing the logic behind an energy currency. You complain that the energy and dollars are spent speculating because you're flat out ignoring that miners are re-investing their profits to become more efficient and productive. Bitcoin mining is a rat race to develop efficiency in technology and energy deliverance. Oil companies capturing the wasted natural gas, Hydro dams capturing the wasted water energy, etc. Bitcoin is a battery or energy credit where areas with abundant energy can benefit from their standing in the world and benefit the people of the region. Bitcoin has its ebbs and flows but eventually balances to where your typical american household cannot afford to mine bitcoin and profit.
  - tsimionescu 6y ago
    > Bitcoin mining is a rat race to develop efficiency in technology and energy deliverance. The cloud computing companies and EV companies and every other company that spends large amounts of its budget on buying electricity is doing the same thing. The difference is that (at least some of) cloud computing or driving is doing useful work with the energy being consumed, whereas 100% of energy going into bitcoin mining is simply getting converted to bitcoin, a speculative asset, and heat. And the greenhouse gases are the largest problem the civilized world has ever faced, they are not some small aside. We need to figure out ways to produce less energy while still powering the important parts of our economy (transport, production of goods, research etc). Bitcoin is doing the opposite - it is creating a need for more energy production to create and exchange money, when we already have much more efficient ways of creating and exchanging money (the whole banking infrastructure of the world consumes less electrical energy than bitcoin, while doing orders of magnitude more transactions per second than bitcoin can hande in a year).
jonhendry18 6y ago
"Calling out the BTC network on its energetic inefficiency completely misses the point that the work put into the network is exactly the scarce digital asset, and hence the store of value." That's no excuse for the obscene waste of resources.
- inter_netuser 6y ago
  It's much cheaper than maintenance of a nuclear arsenal to enforce the USD reserve status around the globe. What's the CO2 footprint of standing armies around the world? Have you tried cancelling that?
  - tsimionescu 6y ago
    It would be great to get rid of the armies of the world, but that's neither here nor there. Armies and military spending wouldn't go away if people dealt in Bitcoin. Oh, the purpose of the US army and nuclear arsenal is not to "enforce the USD reserve status", it is to advance America's imperial goals, which vary a lot. The status of the US dollar is a second-order consequence of America's power.
  - cycomanic 6y ago
    So I just looked this up the 2017 footprint of the US army which I think accounts for more than half the worldwide military budget around the world was ~60 M tonnes. The numbers for bitcoin vary between 20 M and 60M per year (and are increasing). So both bitcoin and the US military are on the same order of magnitude. Now regarding you imply that we should worry more about the emissions from armies than bitcoin, why is that an either or question? Yes we should worry about both wastes, but they are on the same order of magnitude. Moreover there is no evidence that bitcoin does reduce military spending or emissions, so again not making this an either or question.
fakedang 6y ago
As someone who made most of his wealth from BTC (really early proponent), I strongly believe there is no value to Bitcoin apart from the value people ascribe to it. There is no value in mining it and spending energy, just as there is no value in mining coal in a 100% green economy. If I put "work" to go into the bowels of the earth, only to mine a clump of dirt, does that make it valuable in spite of the amount of extraordinary effort it took? If BTC were somehow linked to and used to solve some of the world's most pressing problems such as modelling protein folding or some equally significant problem, then that would make it partly energy efficient. I don't know of any such crypto, and I think I've heard of only one such crypto that's somewhat like that. And as recent evidence goes, no crypto gives you respite from the law - on the contrary, it will bind you in constant avoidance of the law.
- mk4p 6y ago
  > And as recent evidence goes, no crypto gives you respite from the law - on the contrary, it will bind you in constant avoidance of the law. Even Monero?
  - fakedang 6y ago
    I suspect Monero is too privacy oriented to become a mainstream investment product like BTC. Tbh, I believe that, although it doesn't hurt you to hold it, any crypto currency only has actual fiat equivalence in a darknet market (elsewhere there is a nice substitute called cash/credit), which is the sole market that demands privacy by nature. All other markets solely use BTC as an investment class and explicitly require that you forgo your privacy in some form or the other. Monero's focus on the former might make it bitter-tasting for the regulators of the latter.

grey-area 6y ago

Let me relate for you how Bitcoin has been sold to me at various times in the past, because its entire history at this point seems to have been forgotten by bitcoin proponents. First it was a revolutionary currency, which would replace fiat with a deflationary alternative. Then it was a revolutionary payment network which would displace evil incumbents (despite being fundamentally unsuited to this task). Then it was for micropayments. Then it was for selling drugs and doing things governments don't want you to do. Then there was the lightning network which would make it super fast and super distributed at the same time, solving all known problems by this time next year (in 2015). Then it was for transferring money across borders. Then it was a revolutionary technology called blockchain for building apps on top of, who cares about the currency. Then it was for tracing assets and proving ownership of every asset in the world with blockchains. Then it was for smart contracts - we're going to replace the law with the blockchain. Then it was going to the moon (in 2017), and who cares what it is used for, or even if anyone is using it, because it's going to make us all rich baby - we still appear to in that last phase because nobody seems to know or care about the value of it, only the price. With apologies to Oscar Wilde, we currently seem to know the price of everything, but the value of nothing, and the rising price is what is driving current interest in Bitcoin, nothing else.

pseudozach 6y ago
Your grasp of bitcoin seems to be similar to a casual newspaper reader commenting on middle east peace without knowing any of the complex cultural differences. No worries it's the norm online. Even tech enthusiasts can be ignorant, after all bitcoin is a complex phenomenon a complex mix of social, economic and technical concepts. Bitcoin never tried to be law, that's eth and other similar centralized scam blockchains. Being as it's "only" 12 year old money, Bitcoin does evolve and adjust as its users govern it via running their own nodes. Until 2017, major companies (miners/payment processors) tried to fit all kinds of narratives on it (as you mention) but it became clear that they COULD not make bitcoin what they wanted it to do. Meanwhile users did a soft fork with segwit and kept the blockchain as small as possible while allowing Lightning to be developed on it. This means the decentralized network wanted to keep being sound money, keep being censorship resistant, decentralized and still be scalable. Lightning Network is a very solid success, used amongst early adopters, major exchanges joining (Bitfinex, Kraken, OKCoin), multiple VISA backed startups building rewards programs and remittance applications on it. Unlike a typical tech startup Bitcoin does not need to trick everyone to use it and get as many investors as soon as possible and figure out something later. It is what it is. It does not force anyone to join it or spend a single thought on it unless they choose to. It's completely voluntary. While I understand the skepticism (which just comes across as "salty" as they say) one should consider a simple web search to see how Bitcoin adds value to financially underserved people, allows politically censored organizations to take donations anywhere in the world and protect tens of millions of people from rampant inflation in most of the developing world.

kybernetikos 6y ago

> the work put into the network is exactly the scarce digital asset Not even a little. The scarce digital asset is the slot on the distributed ledger. That you currently need a load of energy to reassign digital ledger slots is an accident of history - because it was the first way that anyone worked out how to run a secure distributed database across mutually distrusting nodes where you don't need to know the participants in advance. The work is not the scarce asset. If you doubt this, consider: the 'work' required to mine a block (and so 'create' the block reward) changes based on how much hash power the network has, and varies quite substantially between the early blocks and now, yet the bitcoins mined then are worth the same as bitcoins mined now. If lots of miners stop mining BTC, then the amount of work required to mine the next blocks will reduce, yet the bitcoins created with the lower work requirement will be worth exactly the same as bitcoins created with higher work requirements. Obviously, in a PoW blockchain, the work is extremely important, since a PoW blockchain can't remain secure without significantly more work being done by the network than an adversary can marshal to attack the network, but that's an entirely separate thing. You can take a valuable painting, burn it down to ash and use the ash to make ink to do a stick figure drawing. The stick figure drawing doesn't magically become 'a store of value' because you destroyed a valuable painting to make it.

ForHackernews 6y ago

> the work put into the network is exactly the scarce asset that is being invested in. No! No it isn't! Gah! I'm sorry but it is so frustrating to hear this nonsense repeated over and over. Bitcoin is not valuable just because you wasted shedloads of energy to make a bitcoin! It's valuable because somebody else will exchange something of value for it. It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. [0] https://en.wikipedia.org/wiki/Labor_theory_of_value https://en.wikipedia.org/wiki/Labor_theory_of_value [1] https://en.wikipedia.org/wiki/Red_Queen%27s_race https://en.wikipedia.org/wiki/Red_Queen%27s_race

Melting_Harps 6y ago
> It's incredibly maddening how so many crypto-libertarians suddenly turn into believers in some Marxist "labor theory of value"[0] when you press them on bitcoin's incredibly wasteful Red Queen's race[1] of ever-escalating wasted energy. What's also maddening is how subjective the term 'value' has on it's intended usecase that some can be so completely oblviius to make coax it into a specific farmework: cocoa beans and shells were also equally valuable to it's respective communities, but your forcing of modernity to this matter is equally marred by illogical and quite frankly lazy conclusions. Bitcoin (lower case b, as in the token) does require a great deal of hashing power, but this model, proof of work, is what is required to ensure Bitcoin's immutability (the network capital B). And that is the cost of such a system which, if you aren't aware, is mainly operating on renewable energy [0]. That is just the cost of entry if you want to incentivize keep everyone honest and play by the rules, the fiat World is littered with countless stories of failed currencies and failed societies and cultures because man's inherit nature: greed and corruption. 0: https://bitcoinmagazine.com/articles/study-74-percent-of-bitcoin-mining-powered-with-renewable-energy https://bitcoinmagazine.com/articles/study-74-percent-of-bit...
CryptoUnchained 6y ago
I disagree, sunk cost fallacy and just plain miners needing to ROI their equipment, facilities, and energy costs sets a base psychological minimum price that is rising every year as the hash rises. Now that we've hit a wall at the 5nm process it's anyone's guess what kind of effect that will have on new entrants. I imagine China will take an even larger slice of the pie as energy costs will be the main deciding factor of profitability.

powerapple 6y ago

The scarcity has nothing to do with the complexity in proof of work. The complexity made it costly to attack it. The scarcity comes with the idea of the number of bitcoins will be available is a hard limit.

mettamage 6y ago
There's a second order effect IMO: people put specialized resources into mining it. Thus people have a sunk cost. In general, people also have a sunk cost fallacy which means that the sunk cost will stay into the object/subject it was sunk in. Due to the sunk cost fallacy, Bitcoin has more value. I know this means I'm relying on the irrationality of humans, but why wouldn't I? It's more predictive than assuming humans will be rational with regards to this subject.

tsimionescu 6y ago

> Calling out the BTC network on its energetic inefficiency completely misses the point that the work put into the network is exactly the scarce digital asset, and hence the store of value. Why would that matter? The problem is the huge amount of greenhouse gases getting released because of this store of value. Whether it makes some economic sense or not is irrelevant to the discussion of whether it should be allowed to continue on environmental grounds.

CryptoUnchained 6y ago
You're so angry about the greenhouse gases that you're completely missing the logic behind an energy currency. You complain that the energy and dollars are spent speculating because you're flat out ignoring that miners are re-investing their profits to become more efficient and productive. Bitcoin mining is a rat race to develop efficiency in technology and energy deliverance. Oil companies capturing the wasted natural gas, Hydro dams capturing the wasted water energy, etc. Bitcoin is a battery or energy credit where areas with abundant energy can benefit from their standing in the world and benefit the people of the region. Bitcoin has its ebbs and flows but eventually balances to where your typical american household cannot afford to mine bitcoin and profit.
- tsimionescu 6y ago
  > Bitcoin mining is a rat race to develop efficiency in technology and energy deliverance. The cloud computing companies and EV companies and every other company that spends large amounts of its budget on buying electricity is doing the same thing. The difference is that (at least some of) cloud computing or driving is doing useful work with the energy being consumed, whereas 100% of energy going into bitcoin mining is simply getting converted to bitcoin, a speculative asset, and heat. And the greenhouse gases are the largest problem the civilized world has ever faced, they are not some small aside. We need to figure out ways to produce less energy while still powering the important parts of our economy (transport, production of goods, research etc). Bitcoin is doing the opposite - it is creating a need for more energy production to create and exchange money, when we already have much more efficient ways of creating and exchanging money (the whole banking infrastructure of the world consumes less electrical energy than bitcoin, while doing orders of magnitude more transactions per second than bitcoin can hande in a year).

jonhendry18 6y ago

"Calling out the BTC network on its energetic inefficiency completely misses the point that the work put into the network is exactly the scarce digital asset, and hence the store of value." That's no excuse for the obscene waste of resources.

inter_netuser 6y ago
It's much cheaper than maintenance of a nuclear arsenal to enforce the USD reserve status around the globe. What's the CO2 footprint of standing armies around the world? Have you tried cancelling that?
- tsimionescu 6y ago
  It would be great to get rid of the armies of the world, but that's neither here nor there. Armies and military spending wouldn't go away if people dealt in Bitcoin. Oh, the purpose of the US army and nuclear arsenal is not to "enforce the USD reserve status", it is to advance America's imperial goals, which vary a lot. The status of the US dollar is a second-order consequence of America's power.
- cycomanic 6y ago
  So I just looked this up the 2017 footprint of the US army which I think accounts for more than half the worldwide military budget around the world was ~60 M tonnes. The numbers for bitcoin vary between 20 M and 60M per year (and are increasing). So both bitcoin and the US military are on the same order of magnitude. Now regarding you imply that we should worry more about the emissions from armies than bitcoin, why is that an either or question? Yes we should worry about both wastes, but they are on the same order of magnitude. Moreover there is no evidence that bitcoin does reduce military spending or emissions, so again not making this an either or question.

fakedang 6y ago

As someone who made most of his wealth from BTC (really early proponent), I strongly believe there is no value to Bitcoin apart from the value people ascribe to it. There is no value in mining it and spending energy, just as there is no value in mining coal in a 100% green economy. If I put "work" to go into the bowels of the earth, only to mine a clump of dirt, does that make it valuable in spite of the amount of extraordinary effort it took? If BTC were somehow linked to and used to solve some of the world's most pressing problems such as modelling protein folding or some equally significant problem, then that would make it partly energy efficient. I don't know of any such crypto, and I think I've heard of only one such crypto that's somewhat like that. And as recent evidence goes, no crypto gives you respite from the law - on the contrary, it will bind you in constant avoidance of the law.

mk4p 6y ago
> And as recent evidence goes, no crypto gives you respite from the law - on the contrary, it will bind you in constant avoidance of the law. Even Monero?
- fakedang 6y ago
  I suspect Monero is too privacy oriented to become a mainstream investment product like BTC. Tbh, I believe that, although it doesn't hurt you to hold it, any crypto currency only has actual fiat equivalence in a darknet market (elsewhere there is a nice substitute called cash/credit), which is the sole market that demands privacy by nature. All other markets solely use BTC as an investment class and explicitly require that you forgo your privacy in some form or the other. Monero's focus on the former might make it bitter-tasting for the regulators of the latter.