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At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges

At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery. That's 350km/220 miles of range per charge. In total 1050km or 660 miles of driving. So basically if you want to transfer money and the recipient is closer than 660 miles from you it's more efficient to just get a bunch of bills, drive there with a Tesla rather than send a Bitcoin transaction. Or alternatively 330 miles roundtrip. For each single transaction. It is hilariously inefficient system. It is literally better to drive a full car and give things physically than use Bitcoin. A small addenum: Visa apparently uses 146kWh for 100000 transactions. Coming at 1.46wH per transaction. That can drive a Tesla for 9 meters (0.4 seconds of driving at 80km/h) or alternatively keep a nice led lamp lit for an hour. And that includes everything the company does, not just the actual transaction but the upkeep of their offices etc divided by the amount of transactions they perform per year. EDIT: Apparently on 2020 it was 741kWh per transaction in practice and/or I made a tiny error in my calculation. Either way it's even better! https://www.statista.com/statistics/881541/bitcoin-energy-consumption-transaction-comparison-visa/ https://www.statista.com/statistics/881541/bitcoin-energy-co... That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip.

Taek 6y ago
The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. It also pays for the security of all the value stored in the rest of the system, and that's actually where most of the revenue for mining comes from - inflation, not fees. But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems. But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin. If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.
- totheloop 6y ago
  You mean deflation, incidentally.
  - rspeele 6y ago
    No, I do think he means inflation. He's talking about the block reward, the Bitcoin "minted" through mining, being larger than the fees. Currently it's 6.25 BTC minted per block and the fees only add up to between 1 and 2 BTC. We don't really see this as inflation because of the value of Bitcoin going up, but it is a tiny tiny tax on all the people HODLING their coins, as it dilutes the value (again, by a miniscule amount). In theory if BTC is still being used in 2150 or whenever the block reward goes to zero, all the cost of mining will be borne by those actually exchanging BTC, and the people just holding it will be free-riding, with the security of the network paid for entirely by people transacting on it. Not sure how well this will work.
  - krupan 6y ago
    Bitcoin supply is scheduled to increase for the next 100 years or so. So yes, inflation.
- xur17 6y ago
  > The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. No energy "goes into a Bitcoin transaction". A block with 0 transactions and a block with 100 transactions will both take the same amount of energy to generate.
  - 3np 6y ago
    You just repeated why they said
amackera 6y ago
The downside of driving your tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
- Nursie 6y ago
  Many would see that as an upside. Irreversible transactions are not very desirable to a lot of folks, particularly where it comes to the consumer side of things.
  - ecommerceguy 6y ago
    As such thus regulations will occur once normal folks can't get a refund for whatever broken trinket they purchase with Dogecoin or EROS or ETH or ETHC or BSV or Ripple or Stellar or, or do I need to continue?... I'm off to play in the penny stock section of Yahoo... /s
  - amackera 6y ago
    In that case, write them a cheque? If you don't want irreversible transactions, you don't want bitcoin. My point is that claiming bitcoin is or isn't inefficient relative to other systems is nonsense. There's simply no comparable system that has the same guarantees as bitcoin, presently or throughout history. As far as we know, the power cost of bitcoin may very well be the minimum required energy to run an irreversible proof-of-work distributed ledger. Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal? I really don't know.
    - notahacker 6y ago
      If we can conclude it's nonsense to say that other systems are more efficient than BTC because other systems aren't proof of work distributed ledgers, maybe it's also nonsense to say that Teslas are more energy efficient than something with a 6 litre V12 engine, because they don't have a throaty growl or run on petrol. Back in the world of actual use cases, we can probably put a ceiling on the value of circumventing AML laws without using a non-POW altcoin at well below BTC's current energy cost.
reedf1 6y ago
And the cost of an off-chain transaction? Actually, you're right, that's not worth mentioning because that doesn't fit with your argument.
- Nursie 6y ago
  Well that would be double, as you have to set up and tear down the lightning channel with a transaction for each operation...
  - reedf1 6y ago
    ...and the cost of those operations?
  - chill1 6y ago
    Your comment is so obviously disingenuous. It makes absolutely no sense to open a Lightning Network channel to send one transaction and then immediately close it.
    - Nursie 6y ago
      It was a joke. OTOH lightning is IMHO a joke as well, for many reasons. Funds need to be tied up, nodes generally need to be online, routing is a (mathematically) hard issue, and the channel open and close transactions (or 'add funds') would certainly become an issue on the main chain if lightning became popular.
    - UncleMeat 6y ago
      Why? If I want to send money to Bob in Venezuela I need a connection to him. And I'm not interested in sending further transactions to him. And he is in Venezuela and cannot rely on institutions (this is the real scenario that advocates keep bringing up). How am I going to pull this off without an on-chain transaction?
      - j3th9n 6y ago
        You both use your lightning app connected to a LN payment processor which already has the necessary channels open with other nodes and/or payment processors.
acec 6y ago
Nobody ever said that Bitcoin was a efficient system. It has other qualities that worth it.
- newswasboring 6y ago
  Every time anyone brings up a problem with Bitcoin someone says this. It seems like bitcoin is not designed for anything but existing.
  - wickoff 6y ago
    Exactly right. All needs to do is outlast everything else. This where the store of value narrative comes from.
    - kgwgk 6y ago
      And when it goes down 75% in a few months it doesn't matter because if your intention was not to "store value" until the end of time you're doing it wrong. HODL!
- hshshs2 6y ago
  couldn’t it be replaced with something that’s not terribly broken? then we can save the energy expended in all these mental gymnastics too
- anigbrowl 6y ago
  Indeed it does, but generally in industry and technology one goes from inefficient prototype that serves as proof of concept to a more efficient one. Do other cryptocurrencies not improve on Bitcoin in some way? If so, why does it continue to have value despite its agreed-upon flaws? If not, why do they have any value?
beckingz 6y ago
With a fancy tesla it might even be faster.
j3th9n 6y ago
What about all those Lightning Network transactions on top of Bitcoin?
- sharpneli 6y ago
  https://bitcoinvisuals.com/lightning https://bitcoinvisuals.com/lightning No information on actual transactions performed. But in practice the lightning network is tiny and stagnant. If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.
  - j3th9n 6y ago
    That's because of the nature of the Lightning Network. You can only see transactions going through your own LN node, if you run one. Only the opened LN channels are visible for everyone.
    - sharpneli 6y ago
      Sure. But the amount of channels gives an indication on the potential users. And it's way way less than on the main network, basically a footnote at this point. Yeah it _might_ grow in the future. But until it does it doesn't work as an argument. Also in order to get into Visa levels of efficiency one would have to have (assuming the 741kWh in the main network) 500k TX per second in the lightning network with 0 energy cost. Visa handles around 1700 per second. So basically if we'd have all the worlds economy in Lightning network we might get close to those numbers (assuming 8 billion people each doing one transaction per 4 hours, that's super high but ah well, whatever). And that's assuming the mining energy consumption doesn't change at all which it definitely would not do in case of the whole world relying on Bitcoin.
      - j3th9n 6y ago
        The amount of channels doesn't give any indication on the potential users. For example a bitcoin exchange can have one LN channel open with the rest of the network and allow many transactions per second for all its users. And I believe LN will grow much bigger than VISA, because not only people will make transactions, also programs who will send many micro-transactions to eachother, something which is far from possible with the VISA network.
z3t4 6y ago
Energy is the ultimate currency. A bitcoin transfer is cheap considering the amount of energy it takes, and its also cheaper then a bank transfer. Visa is overcharging if it takes such little energy.
3np 6y ago
It's misrepresentative to represent it just in quantities of number of on-chain transactions. First, let's look at the actual transacted value: last 24h ~90 billion USD. Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well. One estimate of the current market cap of Bitcoin is ~800 billion USD. Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions. Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country? If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.
pawsed 6y ago
This isn't exactly an rebuttal to your argument, but 74% of energy that Bitcoin used to power it's network was renewable energy [1], that's more than you can say for most countries. While the network itself is inefficient, I think the philosophy of "why bitcoin", is always amiss in these arguments. Everything can be made more efficient. Edit: 39% of energy used is renewable, not really sure how that doesn't matter. [1] https://www.finextra.com/newsarticle/36672/renewable-energy-not-as-prominent-in-cryptocurrency-mining-as-previously-claimed#:~:text=Wind%20and%20solar%20energy%20meanwhile,renewable%20energy%20at%20any%20point https://www.finextra.com/newsarticle/36672/renewable-energy-....
- xirbeosbwo1234 6y ago
  Doesn't matter, really. Bitcoin is secured by waste. Maybe the money is burned in coal-fired power plants, maybe it's burned buying "mining" equipment, maybe it's burned building wind turbines. All of those things are polluting and all of them use manpower and natural resources. If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
- newswasboring 6y ago
  Read two paragraphs below what in your own link. >However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables. > Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
  - fastball 6y ago
    Yes, but only because electricity from those sources is cheaper. Green up the grid (pls nuclear) and no problems.
    - newswasboring 6y ago
      Bitcoin people keep trying to score points and if they can't they move the goal post. You tried to get the green energy point but when you can't get it its like "yeah... duh nobody else can either". The what are you good for and why do people constantly bring up this false stat.
frongpik 6y ago
Are you saying that if I send you $100 worth of bitcoins, the network would spend 700 kWh? I find that hard to believe.
- aakilfernandes 6y ago
  Analyses like this just take the energy cost of each block of transactions and divide it by the amount of transactions in the block. If the number of transactions in a block doubles, the average energy cost per transaction is halved. Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
  - MereInterest 6y ago
    Except that there is a maximum number of transactions per block. Across the entire network, by design, there can never be more than 5 transactions per second. This is stupidly small. If people received their biweekly paychecks in bitcoin, only 6 million people could be paid without going over that transaction limit, assuming that absolutely nothing else is done using bitcoin. The marginal energy usage being zero is another way of saying that Bitcoin wastes the tremendous amount of energy that it does even if nobody is using it at the time.
  - rcxdude 6y ago
    Yes, but the number of transactions in 'bitcoin' as it's currently defined is severely limited (blocks are already full at a $15 per transaction cost). Conceptually, making something which increases the transaction count involves forking bitcoin, and a fork which aimed to do exactly that was denounced heavily by the community and rejected by the markets. The marginal cost may be small but the cost per transaction is high, by design, and by design which has extremely heavy resistance to even small and simple changes.
  - UncleMeat 6y ago
    But the number of transactions in a block is fixed. We went through this with BTC/BCH. The BTC folks did not want to increase block size.
- 6y ago
rattlesnakedave 6y ago
You are leaving out significant amounts of energy consumed in the legacy financial system. Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc. I’m not sure that any of this is meaningful in any way.
- slg 6y ago
  Which is also true on the opposite side or did your mining rig magically materialize out of nowhere? The difference is that a lot of the infrastructure for the traditional system is already built out which reduces the marginal energy costs to a degree that isn't the case for cryptocurrencies.
- newswasboring 6y ago
  The mining equipment needed to be produced. The mining rig needed to be installed, many factories needed to be produced. There are workers in these mines, did they spend energy driving a car? Did they use a gym bag? Where did that come from? BTC is not magic dude, it has externalities too.
- choward 6y ago
  This "legacy financial system" comparison isn't fair. I use standard banking and haven't been to a bank in years. I think a more reasonable comparison is with online only banks. Our current system doesn't actually need physical cash. You just need banks keeping score for individual accounts and a central bank keeping score of the banks' accounts.
- UncleMeat 6y ago
  How many people go speak to a bank teller to transfer funds? My bank can give me a mortgage for my home. The banking system is doing way way way more than counting how much people own and shifting that around. If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
  - bingbong70 6y ago
deleted 6y ago
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xirbeosbwo1234 6y ago
I have often seen people saying things like "Bitcoin is orders of magnitude less efficient than Visa". While true, it's kind of like saying "the Atlantic Ocean is orders of magnitude bigger than my swimming pool". Bitcoin is six orders of magnitude less efficient than Visa. Six. And it's getting worse every day.
moonbug 6y ago
> It is hilariously inefficient system I think you mean "morally reprehensible"
deleted 6y ago
[deleted]
nulbyte 6y ago
> That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip. It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.
snickms 6y ago
True - and even with this tremendous waste, it pays for itself. We have never looked beyond monetary return to justify the existence of anything and i fear we are doomed to stay that way. Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that. All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.
andreygrehov 6y ago
Super pessimistic. I don't know why this comment is at the top. The analogy and calculations are fun, but nothing more than that. You are basically suggesting that we all should buy Teslas, right? 330 miles roundtrip is about 5-6 hours of non-stop driving. Not the best UX. I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn. People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin. Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).
- rspeele 6y ago
  In your estimation, how much Bitcoin is purchased in hopes of gaining freedom from the existing banking system, and how much Bitcoin is purchased in hopes of making money when it goes up?
  - andreygrehov 6y ago
    > In your estimation, how much Bitcoin is purchased in hopes of gaining freedom Not a lot, but it's definitely a thing. Speaking about majority, these days, most people and companies are accumulating Bitcoin only because in 5-10 years it'll worth much, much more. And that makes a lot of sense if you think about it. The shift to a digital form of currency will eventually happen anyway. I do not believe Bitcoin will ever become a global currency, but I strongly believe that it's going to stay with us for quite a long while. The blockchain technology is in its infancy and is experiencing a lot of research on all fronts.
- imtringued 6y ago
  >You are basically suggesting that we all should buy Teslas, right? Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim. In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable. It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.
jude- 6y ago
Bitcoin transactions take negligible amounts of electricity to produce and validate. The fact that you can spin up a Bitcoin node on a Raspberry Pi is trivial proof of this. Block production, on the other hand, takes as much energy as the market will bear.
- minsc__and__boo 6y ago
  Bitcoin transactions are worthless unless put into blocks, and blocks have a cap for transactions.
  - jude- 6y ago
    The parent was talking about the cost per transaction being high. In reality, that number is basically 0. The entire cost of Bitcoin mining is in block production, no matter how many or few transactions there are. If you're going to get mad about the energy use, at least direct it towards the right target.
    - kaba0 6y ago
      As others have written, a block can handle at most (I think 100, but the exact number doesn’t matter) transactions, so to get an lower bound on consumption per transaction we could divide the block’s energy requirements by this number.
      - jude- 6y ago
        If there were _zero_ transactions, Bitcoin would take the same amount of energy. The proof-of-work calculation is _completely decoupled_ from how many transactions there are.
        minsc__and__boo 6y ago
        You're missing the point. The point isn't that there are zero transactions, it's that there is an upper limit to the transactions allowed on blocks (a very famous limit) which allows for these types cost calculations.
ad31mar 6y ago
https://www.coindesk.com/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...
lacker 6y ago
At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery. This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units. It varies but over the past couple months a Bitcoin transaction has cost from $7-$20. source: https://ycharts.com/indicators/bitcoin_average_transaction_fee https://ycharts.com/indicators/bitcoin_average_transaction_f... That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-) It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient. Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.
paulsutter 6y ago
Bitcoin uses electricity for security, not transactions. The transaction rate for bitcoin is basically independent of the hashrate
- rspeele 6y ago
  This is like saying my car's engine uses oil as lubricant, not as fuel. It's true, but I still have to change the oil every 5,000 miles. So I can still calculate the cost of oil changes into each mile. Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
  - paulsutter 6y ago
    It's quite different: the energy represents the market cost of securing the network. The value of the network supports that cost otherwise nobody would be performing mining. If this were taxpayer supported I could understand the objection, but the people buying the energy to run the system are doing so as a commercial activity to make a profit. How is this commercial use of energy inherently worse than other commercial activities?
raziel2701 6y ago
This is amazing and absolutely crazy! Thanks for the analysis. It's still not going to convince the cultists that are hodling it unfortunately.
KorematsuFred 6y ago
Without a doubt it is inefficient. Now US government can arm twist wist Visa and Mastercard to stop serving companies they dont like (Po*nhub). They can not do that to Bitcoin. This is the value the inefficiency adds.
centimeter 6y ago
Now include the environmental impact of all visa employees. You can’t divorce the effects of the people who run the system (which are relatively very insignificant for Bitcoin) from the effects of the system itself.
nostrademons 6y ago
Say you want to transfer a billion dollars 3000 miles. A billion dollars is 10 million Benjamins, which weighs 10 tons. You're not fitting that in a Tesla. More likely, you'll put it in an armored car and hire a few armed guards to go along with it. If you need to transport it overseas, you need a freighter (and a week) too. Now the energy cost of that Bitcoin transaction doesn't seem so bad. The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to. (Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)
- perseusprime11 6y ago
  Correct. Ultimately, we will end up using Bitcoin as an asset and less for transactions. It is a better version of Gold.
- EastSmith 6y ago
  I can see smaller bitcoin transactions running on an alternative networks like Stellar, where assets (like bitcoin, USD, etc) can be issued by a trusted 3rd party.
- volgar1x 6y ago
  Deutsche Marks do not exist anymore.
  - 6y ago
tippytippytango 6y ago
The people making the transactions pay for that energy. At 10 cents a kWh that's $16.5 , right in line with the current transaction price. Some people are getting enough value from the transaction to purchase that volume of energy. Who are we to tell them how to use the energy they purchase?
- Symbiote 6y ago
  > Who are we to tell them how to use the energy they purchase? Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on. Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.
Geee 6y ago
That comparison is flawed. Visa is not money. The purpose of mining is to protect the value of the currency. Protecting the value of the US dollar requires a huge economy with politics and military power.
- benlivengood 6y ago
  Visa is literally money created by issuing credit just like all the other money in the economy. No one spends specie.
  - Geee 6y ago
    It's credit that is backed by the US dollar. Similarly Visa could use Bitcoin as their base currency, and they probably will.
- perfunctory 6y ago
  Wouldn't you eventually need military power to protect your bitcoin mining rig?
  - mateuszf 6y ago
    No if it's decentralized enough.
willmadden 6y ago
The 4 transactions per second is an artificial cap that is not associated with the power consumption of Bitcoin. The answer was, and is, to increase the maximum block size parameter, preferably making it dynamic.
mrb 6y ago
«a single Bitcoin transaction consumes 165kWh» This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same. People have this wrong idea that more transactions imply more energy consumption. That's just not true.
- deleted 6y ago
  [deleted]
- ctz 6y ago
  > The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same. There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
  - rodiger 6y ago
    Also worth noting though that "extra" energy per-tx increases the security of that tx. You aren't just paying for the system to function, you're paying for the system to be resistant to bad actors.
    - PragmaticPulp 6y ago
      Only so far as the majority of the miners are not coordinated. With the current concentration of mining capacity in China, that's not exactly a sure thing any more.
      - shawnz 6y ago
        The point is that the energy they are spending on mining disincentivizes them from doing anything except using it to earn Bitcoins legitimately. If they waste that energy attacking the network instead, it would be less profitable.
ketamine__ 6y ago
The team that works on it isn't interested in making any upgrades. It's pure religion at this point. They would argue that a chunk of the energy is renewable -- so that makes it better.
- rawtxapp 6y ago
  That is not true, when you have billions of dollars at stake you need to be a lot more careful with the changes you're going to implement, otherwise, it would jeopardize the whole network. There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
  - ketamine__ 6y ago
    And the outcome has been exactly what in terms of TPS?
    - rawtxapp 6y ago
      1) TPS isn't the only thing that matters, 2) TPS on L2 such as lightning is both extremely fast and very cheap. Ethereum is also going to have an L2 because it makes a lot of sense.
      - ketamine__ 6y ago
        > 1) TPS isn't the only thing that matters, It's pretty important for adoption to happen. Right now most Ethereum apps with complex contracts (i.e. Augur, Synthetix) can cost $50+ per transaction. > 2) TPS on L2 such as lightning is both extremely fast and very cheap. That's only true if there isn't high demand. If there is opening a channel costs $15 or more. > Ethereum is also going to have an L2 because it makes a lot of sense. Something which has been discussed since 2017. The architecture still isn't there. Most apps have to interact on the main chain. Not confident it is going to happen anytime soon even with startups like Matic.
        6y ago
kerng 6y ago
I think your analysis shows how valuable (literally) Bitcoin actually is.
jiveturkey 6y ago
You didn't include the production cost (energy input) to make the paper bills. I can only assume it's negligible but perhaps that should be stated. The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear. Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.
madacol 6y ago
I think the real value in Bitcoin is its immutability. I don't think there's any piece of information in the world as immutable as the first bitcoin block mined by satoshi. This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/ https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know! Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection. And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered
- Nursie 6y ago
  If it was centralised, that's fine. Not everyone shares this decentralisaton fetish.
  - madacol 6y ago
    Why is it a fetish?, if something is centralized it means you need to trust that central party. Decentralization removes that dependency In the bitcoin's case, to verify the immutability of *any block*, you only need some basic knowledge of cryptography, and all the blockchain after that block. You then need to sum all the proofs of work of every subsequent block and divide by the network's current hash power, that will give you the amount of effort (energy, cost, etc) needed today to create that amount of proof of work, and that's how you get a feeling of the mind-boggling immutability of bitcoin's block In summary, you can, independently, verify how much work a piece of information in a bitcoin block has. You don't need to trust anyone
    - 6y ago

Taek 6y ago

The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. It also pays for the security of all the value stored in the rest of the system, and that's actually where most of the revenue for mining comes from - inflation, not fees. But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems. But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin. If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.

totheloop 6y ago
You mean deflation, incidentally.
- rspeele 6y ago
  No, I do think he means inflation. He's talking about the block reward, the Bitcoin "minted" through mining, being larger than the fees. Currently it's 6.25 BTC minted per block and the fees only add up to between 1 and 2 BTC. We don't really see this as inflation because of the value of Bitcoin going up, but it is a tiny tiny tax on all the people HODLING their coins, as it dilutes the value (again, by a miniscule amount). In theory if BTC is still being used in 2150 or whenever the block reward goes to zero, all the cost of mining will be borne by those actually exchanging BTC, and the people just holding it will be free-riding, with the security of the network paid for entirely by people transacting on it. Not sure how well this will work.
- krupan 6y ago
  Bitcoin supply is scheduled to increase for the next 100 years or so. So yes, inflation.
xur17 6y ago
> The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. No energy "goes into a Bitcoin transaction". A block with 0 transactions and a block with 100 transactions will both take the same amount of energy to generate.
- 3np 6y ago
  You just repeated why they said

amackera 6y ago

The downside of driving your tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.

Nursie 6y ago
Many would see that as an upside. Irreversible transactions are not very desirable to a lot of folks, particularly where it comes to the consumer side of things.
- ecommerceguy 6y ago
  As such thus regulations will occur once normal folks can't get a refund for whatever broken trinket they purchase with Dogecoin or EROS or ETH or ETHC or BSV or Ripple or Stellar or, or do I need to continue?... I'm off to play in the penny stock section of Yahoo... /s
- amackera 6y ago
  In that case, write them a cheque? If you don't want irreversible transactions, you don't want bitcoin. My point is that claiming bitcoin is or isn't inefficient relative to other systems is nonsense. There's simply no comparable system that has the same guarantees as bitcoin, presently or throughout history. As far as we know, the power cost of bitcoin may very well be the minimum required energy to run an irreversible proof-of-work distributed ledger. Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal? I really don't know.
  - notahacker 6y ago
    If we can conclude it's nonsense to say that other systems are more efficient than BTC because other systems aren't proof of work distributed ledgers, maybe it's also nonsense to say that Teslas are more energy efficient than something with a 6 litre V12 engine, because they don't have a throaty growl or run on petrol. Back in the world of actual use cases, we can probably put a ceiling on the value of circumventing AML laws without using a non-POW altcoin at well below BTC's current energy cost.

reedf1 6y ago

And the cost of an off-chain transaction? Actually, you're right, that's not worth mentioning because that doesn't fit with your argument.

Nursie 6y ago
Well that would be double, as you have to set up and tear down the lightning channel with a transaction for each operation...
- reedf1 6y ago
  ...and the cost of those operations?
- chill1 6y ago
  Your comment is so obviously disingenuous. It makes absolutely no sense to open a Lightning Network channel to send one transaction and then immediately close it.
  - Nursie 6y ago
    It was a joke. OTOH lightning is IMHO a joke as well, for many reasons. Funds need to be tied up, nodes generally need to be online, routing is a (mathematically) hard issue, and the channel open and close transactions (or 'add funds') would certainly become an issue on the main chain if lightning became popular.
  - UncleMeat 6y ago
    Why? If I want to send money to Bob in Venezuela I need a connection to him. And I'm not interested in sending further transactions to him. And he is in Venezuela and cannot rely on institutions (this is the real scenario that advocates keep bringing up). How am I going to pull this off without an on-chain transaction?
    - j3th9n 6y ago
      You both use your lightning app connected to a LN payment processor which already has the necessary channels open with other nodes and/or payment processors.

acec 6y ago

Nobody ever said that Bitcoin was a efficient system. It has other qualities that worth it.

newswasboring 6y ago
Every time anyone brings up a problem with Bitcoin someone says this. It seems like bitcoin is not designed for anything but existing.
- wickoff 6y ago
  Exactly right. All needs to do is outlast everything else. This where the store of value narrative comes from.
  - kgwgk 6y ago
    And when it goes down 75% in a few months it doesn't matter because if your intention was not to "store value" until the end of time you're doing it wrong. HODL!
hshshs2 6y ago
couldn’t it be replaced with something that’s not terribly broken? then we can save the energy expended in all these mental gymnastics too
anigbrowl 6y ago
Indeed it does, but generally in industry and technology one goes from inefficient prototype that serves as proof of concept to a more efficient one. Do other cryptocurrencies not improve on Bitcoin in some way? If so, why does it continue to have value despite its agreed-upon flaws? If not, why do they have any value?

beckingz 6y ago

With a fancy tesla it might even be faster.

j3th9n 6y ago

What about all those Lightning Network transactions on top of Bitcoin?

sharpneli 6y ago
https://bitcoinvisuals.com/lightning https://bitcoinvisuals.com/lightning No information on actual transactions performed. But in practice the lightning network is tiny and stagnant. If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.
- j3th9n 6y ago
  That's because of the nature of the Lightning Network. You can only see transactions going through your own LN node, if you run one. Only the opened LN channels are visible for everyone.
  - sharpneli 6y ago
    Sure. But the amount of channels gives an indication on the potential users. And it's way way less than on the main network, basically a footnote at this point. Yeah it _might_ grow in the future. But until it does it doesn't work as an argument. Also in order to get into Visa levels of efficiency one would have to have (assuming the 741kWh in the main network) 500k TX per second in the lightning network with 0 energy cost. Visa handles around 1700 per second. So basically if we'd have all the worlds economy in Lightning network we might get close to those numbers (assuming 8 billion people each doing one transaction per 4 hours, that's super high but ah well, whatever). And that's assuming the mining energy consumption doesn't change at all which it definitely would not do in case of the whole world relying on Bitcoin.
    - j3th9n 6y ago
      The amount of channels doesn't give any indication on the potential users. For example a bitcoin exchange can have one LN channel open with the rest of the network and allow many transactions per second for all its users. And I believe LN will grow much bigger than VISA, because not only people will make transactions, also programs who will send many micro-transactions to eachother, something which is far from possible with the VISA network.

z3t4 6y ago

Energy is the ultimate currency. A bitcoin transfer is cheap considering the amount of energy it takes, and its also cheaper then a bank transfer. Visa is overcharging if it takes such little energy.

3np 6y ago

It's misrepresentative to represent it just in quantities of number of on-chain transactions. First, let's look at the actual transacted value: last 24h ~90 billion USD. Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well. One estimate of the current market cap of Bitcoin is ~800 billion USD. Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions. Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country? If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.

pawsed 6y ago

This isn't exactly an rebuttal to your argument, but 74% of energy that Bitcoin used to power it's network was renewable energy [1], that's more than you can say for most countries. While the network itself is inefficient, I think the philosophy of "why bitcoin", is always amiss in these arguments. Everything can be made more efficient. Edit: 39% of energy used is renewable, not really sure how that doesn't matter. [1] https://www.finextra.com/newsarticle/36672/renewable-energy-not-as-prominent-in-cryptocurrency-mining-as-previously-claimed#:~:text=Wind%20and%20solar%20energy%20meanwhile,renewable%20energy%20at%20any%20point https://www.finextra.com/newsarticle/36672/renewable-energy-....

xirbeosbwo1234 6y ago
Doesn't matter, really. Bitcoin is secured by waste. Maybe the money is burned in coal-fired power plants, maybe it's burned buying "mining" equipment, maybe it's burned building wind turbines. All of those things are polluting and all of them use manpower and natural resources. If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
newswasboring 6y ago
Read two paragraphs below what in your own link. >However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables. > Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
- fastball 6y ago
  Yes, but only because electricity from those sources is cheaper. Green up the grid (pls nuclear) and no problems.
  - newswasboring 6y ago
    Bitcoin people keep trying to score points and if they can't they move the goal post. You tried to get the green energy point but when you can't get it its like "yeah... duh nobody else can either". The what are you good for and why do people constantly bring up this false stat.

frongpik 6y ago

Are you saying that if I send you $100 worth of bitcoins, the network would spend 700 kWh? I find that hard to believe.

aakilfernandes 6y ago
Analyses like this just take the energy cost of each block of transactions and divide it by the amount of transactions in the block. If the number of transactions in a block doubles, the average energy cost per transaction is halved. Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
- MereInterest 6y ago
  Except that there is a maximum number of transactions per block. Across the entire network, by design, there can never be more than 5 transactions per second. This is stupidly small. If people received their biweekly paychecks in bitcoin, only 6 million people could be paid without going over that transaction limit, assuming that absolutely nothing else is done using bitcoin. The marginal energy usage being zero is another way of saying that Bitcoin wastes the tremendous amount of energy that it does even if nobody is using it at the time.
- rcxdude 6y ago
  Yes, but the number of transactions in 'bitcoin' as it's currently defined is severely limited (blocks are already full at a $15 per transaction cost). Conceptually, making something which increases the transaction count involves forking bitcoin, and a fork which aimed to do exactly that was denounced heavily by the community and rejected by the markets. The marginal cost may be small but the cost per transaction is high, by design, and by design which has extremely heavy resistance to even small and simple changes.
- UncleMeat 6y ago
  But the number of transactions in a block is fixed. We went through this with BTC/BCH. The BTC folks did not want to increase block size.
6y ago

rattlesnakedave 6y ago

You are leaving out significant amounts of energy consumed in the legacy financial system. Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc. I’m not sure that any of this is meaningful in any way.

slg 6y ago
Which is also true on the opposite side or did your mining rig magically materialize out of nowhere? The difference is that a lot of the infrastructure for the traditional system is already built out which reduces the marginal energy costs to a degree that isn't the case for cryptocurrencies.
newswasboring 6y ago
The mining equipment needed to be produced. The mining rig needed to be installed, many factories needed to be produced. There are workers in these mines, did they spend energy driving a car? Did they use a gym bag? Where did that come from? BTC is not magic dude, it has externalities too.
choward 6y ago
This "legacy financial system" comparison isn't fair. I use standard banking and haven't been to a bank in years. I think a more reasonable comparison is with online only banks. Our current system doesn't actually need physical cash. You just need banks keeping score for individual accounts and a central bank keeping score of the banks' accounts.
UncleMeat 6y ago
How many people go speak to a bank teller to transfer funds? My bank can give me a mortgage for my home. The banking system is doing way way way more than counting how much people own and shifting that around. If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
- bingbong70 6y ago

deleted 6y ago

[deleted]

xirbeosbwo1234 6y ago

I have often seen people saying things like "Bitcoin is orders of magnitude less efficient than Visa". While true, it's kind of like saying "the Atlantic Ocean is orders of magnitude bigger than my swimming pool". Bitcoin is six orders of magnitude less efficient than Visa. Six. And it's getting worse every day.

moonbug 6y ago

> It is hilariously inefficient system I think you mean "morally reprehensible"

deleted 6y ago

[deleted]

nulbyte 6y ago

> That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip. It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.

snickms 6y ago

True - and even with this tremendous waste, it pays for itself. We have never looked beyond monetary return to justify the existence of anything and i fear we are doomed to stay that way. Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that. All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.

andreygrehov 6y ago

Super pessimistic. I don't know why this comment is at the top. The analogy and calculations are fun, but nothing more than that. You are basically suggesting that we all should buy Teslas, right? 330 miles roundtrip is about 5-6 hours of non-stop driving. Not the best UX. I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn. People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin. Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).

rspeele 6y ago
In your estimation, how much Bitcoin is purchased in hopes of gaining freedom from the existing banking system, and how much Bitcoin is purchased in hopes of making money when it goes up?
- andreygrehov 6y ago
  > In your estimation, how much Bitcoin is purchased in hopes of gaining freedom Not a lot, but it's definitely a thing. Speaking about majority, these days, most people and companies are accumulating Bitcoin only because in 5-10 years it'll worth much, much more. And that makes a lot of sense if you think about it. The shift to a digital form of currency will eventually happen anyway. I do not believe Bitcoin will ever become a global currency, but I strongly believe that it's going to stay with us for quite a long while. The blockchain technology is in its infancy and is experiencing a lot of research on all fronts.
imtringued 6y ago
>You are basically suggesting that we all should buy Teslas, right? Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim. In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable. It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.

jude- 6y ago

Bitcoin transactions take negligible amounts of electricity to produce and validate. The fact that you can spin up a Bitcoin node on a Raspberry Pi is trivial proof of this. Block production, on the other hand, takes as much energy as the market will bear.

minsc__and__boo 6y ago
Bitcoin transactions are worthless unless put into blocks, and blocks have a cap for transactions.
- jude- 6y ago
  The parent was talking about the cost per transaction being high. In reality, that number is basically 0. The entire cost of Bitcoin mining is in block production, no matter how many or few transactions there are. If you're going to get mad about the energy use, at least direct it towards the right target.
  - kaba0 6y ago
    As others have written, a block can handle at most (I think 100, but the exact number doesn’t matter) transactions, so to get an lower bound on consumption per transaction we could divide the block’s energy requirements by this number.
    - jude- 6y ago
      If there were _zero_ transactions, Bitcoin would take the same amount of energy. The proof-of-work calculation is _completely decoupled_ from how many transactions there are.
      - minsc__and__boo 6y ago
        You're missing the point. The point isn't that there are zero transactions, it's that there is an upper limit to the transactions allowed on blocks (a very famous limit) which allows for these types cost calculations.

ad31mar 6y ago

https://www.coindesk.com/what-bloomberg-gets-wrong-about-bitcoins-climate-footprint https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...

lacker 6y ago

At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery. This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units. It varies but over the past couple months a Bitcoin transaction has cost from $7-$20. source: https://ycharts.com/indicators/bitcoin_average_transaction_fee https://ycharts.com/indicators/bitcoin_average_transaction_f... That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-) It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient. Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.

paulsutter 6y ago

Bitcoin uses electricity for security, not transactions. The transaction rate for bitcoin is basically independent of the hashrate

rspeele 6y ago
This is like saying my car's engine uses oil as lubricant, not as fuel. It's true, but I still have to change the oil every 5,000 miles. So I can still calculate the cost of oil changes into each mile. Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
- paulsutter 6y ago
  It's quite different: the energy represents the market cost of securing the network. The value of the network supports that cost otherwise nobody would be performing mining. If this were taxpayer supported I could understand the objection, but the people buying the energy to run the system are doing so as a commercial activity to make a profit. How is this commercial use of energy inherently worse than other commercial activities?

raziel2701 6y ago

This is amazing and absolutely crazy! Thanks for the analysis. It's still not going to convince the cultists that are hodling it unfortunately.

KorematsuFred 6y ago

Without a doubt it is inefficient. Now US government can arm twist wist Visa and Mastercard to stop serving companies they dont like (Po*nhub). They can not do that to Bitcoin. This is the value the inefficiency adds.

centimeter 6y ago

Now include the environmental impact of all visa employees. You can’t divorce the effects of the people who run the system (which are relatively very insignificant for Bitcoin) from the effects of the system itself.

nostrademons 6y ago

Say you want to transfer a billion dollars 3000 miles. A billion dollars is 10 million Benjamins, which weighs 10 tons. You're not fitting that in a Tesla. More likely, you'll put it in an armored car and hire a few armed guards to go along with it. If you need to transport it overseas, you need a freighter (and a week) too. Now the energy cost of that Bitcoin transaction doesn't seem so bad. The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to. (Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)

perseusprime11 6y ago
Correct. Ultimately, we will end up using Bitcoin as an asset and less for transactions. It is a better version of Gold.
EastSmith 6y ago
I can see smaller bitcoin transactions running on an alternative networks like Stellar, where assets (like bitcoin, USD, etc) can be issued by a trusted 3rd party.
volgar1x 6y ago
Deutsche Marks do not exist anymore.
- 6y ago

tippytippytango 6y ago

The people making the transactions pay for that energy. At 10 cents a kWh that's $16.5 , right in line with the current transaction price. Some people are getting enough value from the transaction to purchase that volume of energy. Who are we to tell them how to use the energy they purchase?

Symbiote 6y ago
> Who are we to tell them how to use the energy they purchase? Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on. Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.

Geee 6y ago

That comparison is flawed. Visa is not money. The purpose of mining is to protect the value of the currency. Protecting the value of the US dollar requires a huge economy with politics and military power.

benlivengood 6y ago
Visa is literally money created by issuing credit just like all the other money in the economy. No one spends specie.
- Geee 6y ago
  It's credit that is backed by the US dollar. Similarly Visa could use Bitcoin as their base currency, and they probably will.
perfunctory 6y ago
Wouldn't you eventually need military power to protect your bitcoin mining rig?
- mateuszf 6y ago
  No if it's decentralized enough.

willmadden 6y ago

The 4 transactions per second is an artificial cap that is not associated with the power consumption of Bitcoin. The answer was, and is, to increase the maximum block size parameter, preferably making it dynamic.

mrb 6y ago

«a single Bitcoin transaction consumes 165kWh» This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same. People have this wrong idea that more transactions imply more energy consumption. That's just not true.

deleted 6y ago
[deleted]
ctz 6y ago
> The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same. There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
- rodiger 6y ago
  Also worth noting though that "extra" energy per-tx increases the security of that tx. You aren't just paying for the system to function, you're paying for the system to be resistant to bad actors.
  - PragmaticPulp 6y ago
    Only so far as the majority of the miners are not coordinated. With the current concentration of mining capacity in China, that's not exactly a sure thing any more.
    - shawnz 6y ago
      The point is that the energy they are spending on mining disincentivizes them from doing anything except using it to earn Bitcoins legitimately. If they waste that energy attacking the network instead, it would be less profitable.

ketamine__ 6y ago

The team that works on it isn't interested in making any upgrades. It's pure religion at this point. They would argue that a chunk of the energy is renewable -- so that makes it better.

rawtxapp 6y ago
That is not true, when you have billions of dollars at stake you need to be a lot more careful with the changes you're going to implement, otherwise, it would jeopardize the whole network. There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
- ketamine__ 6y ago
  And the outcome has been exactly what in terms of TPS?
  - rawtxapp 6y ago
    1) TPS isn't the only thing that matters, 2) TPS on L2 such as lightning is both extremely fast and very cheap. Ethereum is also going to have an L2 because it makes a lot of sense.
    - ketamine__ 6y ago
      > 1) TPS isn't the only thing that matters, It's pretty important for adoption to happen. Right now most Ethereum apps with complex contracts (i.e. Augur, Synthetix) can cost $50+ per transaction. > 2) TPS on L2 such as lightning is both extremely fast and very cheap. That's only true if there isn't high demand. If there is opening a channel costs $15 or more. > Ethereum is also going to have an L2 because it makes a lot of sense. Something which has been discussed since 2017. The architecture still isn't there. Most apps have to interact on the main chain. Not confident it is going to happen anytime soon even with startups like Matic.
      - 6y ago

kerng 6y ago

I think your analysis shows how valuable (literally) Bitcoin actually is.

jiveturkey 6y ago

You didn't include the production cost (energy input) to make the paper bills. I can only assume it's negligible but perhaps that should be stated. The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear. Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.

madacol 6y ago

I think the real value in Bitcoin is its immutability. I don't think there's any piece of information in the world as immutable as the first bitcoin block mined by satoshi. This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/ https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know! Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection. And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered

Nursie 6y ago
If it was centralised, that's fine. Not everyone shares this decentralisaton fetish.
- madacol 6y ago
  Why is it a fetish?, if something is centralized it means you need to trust that central party. Decentralization removes that dependency In the bitcoin's case, to verify the immutability of *any block*, you only need some basic knowledge of cryptography, and all the blockchain after that block. You then need to sum all the proofs of work of every subsequent block and divide by the network's current hash power, that will give you the amount of effort (energy, cost, etc) needed today to create that amount of proof of work, and that's how you get a feeling of the mind-boggling immutability of bitcoin's block In summary, you can, independently, verify how much work a piece of information in a bitcoin block has. You don't need to trust anyone
  - 6y ago