6 ms·

The power consumption is linked to network size and has nothing to do with the block itself. If anything the marginal power cost is linked to the price of a Bit

The power consumption is linked to network size and has nothing to do with the block itself. If anything the marginal power cost is linked to the price of a Bitcoin, as the higher it climbs the more incentive to mine, the greater the competition and therefore the greater the mining difficulty/energy required. The only way to really lower energy consumption is to lower the price I can get for a Bitcoin but with the current economic conditions I don't see that happening anytime soon.

sp332 6y ago
How is power consumption related to network size? I agree that the power consumption of the network is directly related to the value of the bitcoins mined (and I supposed the transaction fee/tip size).
- x3n0ph3n3 6y ago
  Network size increases competition to mine blocks faster, leading to demands for higher hash rate, leading to higher power consumption.
  - hollerith 6y ago
    That's not how Bitcoin mining works. A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity. If the mining reward is cut in half, the electricity consumption of the network is cut in half, too. In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
    - deleted 6y ago
      [deleted]
    - x3n0ph3n3 6y ago
      I think you are _very_ mistaken. > If the mining reward is cut in half, the electricity consumption of the network is cut in half, too. That's not true it all -- there is no difficulty adjustment when the reward is halved. There may be pressure on some miners to stop mining, but that adjustment is not immediate and can also be compensated for by change in the price of bitcoin. > In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. Given the network is operating at peak transaction rate already, there's not much change here. Neither block size nor the transaction count has a meaningful affect on the computations required to "solve" a block. The merkle tree for the transactions is computed once, but most of computation is finding a nonce, that combined with the rest of the block header, produces a hash with a certain number of leading zeros. Changing the block size or transaction count doesn't meaningfully change electricity consumption.
      - hollerith 6y ago
        I agree with your final 2 paragraphs. >that adjustment . . . can also be compensated for by change in the price of bitcoin. It can. When I wrote that if the mining reward is cut in half, the electricity consumption of the network is cut in half, too, I assumed that the price remains constant. A miner must pay for the electricity he or she uses. Where do you think the money comes from to pay for the massive amount of electricity used by the network? Do you imagine that rich people (i.e., people who can afford to lose money) are buying the electricity for pro-Bitcoin ideological reasons? I don't: I believe that it comes out of the revenue made (collectively) by the miners. In other words, the payments for the electricity are parts of (individual) plans to make money through mining. And I believe that if that (collective) revenue were cut in half -- especially if miners and prospective miners knew of the halving in advance (particularly, before they decided what mining hardware if any to buy) -- then money spent on electricity is approximately cut in half, too. (Because otherwise the plans to make money would not work.) You are correct that the adjustment in the hash rate is not immediate after a halving of the mining reward. Mostly that is because miners who recently bought mining hardware have to continue mining after the halving to continue to pay for their hardware. If the halving was announced in advance, then the halving will start exerting downward pressure on the mining difficulty months in advance of the actual date of the halving. The major cause of that downward pressure is miners opting not to upgrade their hardware and prospective miners opting not to enter the mining business in the first place (the effect of which is to make it take longer for the remaining miners with their non-upgraded hardware to solve the proof-of-work puzzles, which in turns causes the software to reduce mining difficulty to return the average time between successive blocks back to 10 minutes). Basically, it takes many months for newly-manufactured mining hardware to pay for itself, and that delay is the main reason the response to a reward-rate halving is slow. But again the response starts months before the actual halving; and the cumulative effect of the halving on the rate -- more precisely the effect the rate has on how much electricity is consumed by the network over the years -- is approximately the same as it would be if the effect of the halving on the rate were instantaneous. It is the fact that one of the major expenses (namely, hardware) of the miners is "lumpy" (requires an upfront expenditure that is then recouped over many months) that obscures the simple relationship whereby the collective expenses of the mining community approximately equals the collective revenues of that community -- where most of that revenue is from mining rewards, which is equal to the price of bitcoin (or the value of bitcoin if you prefer) times the rate at which the network dispenses bitcoins from miners as rewards. What makes me confident that expenses = revenues is that miners are rational and consequently are capable of taking into account scheduled halvings of the rewards to mining and the "lumpiness" of the cost of mining hardware (and many other factors).
- kybernetikos 6y ago
  I think by 'network size' the GP is referring to the network hashrate. For proof of work networks to function securely, the network as a whole must have a much higher computation rate than an attacker. Obviously capabilities increase the whole time, so the bitcoin network needs to be able to adapt - to do this, it adjusts its 'difficulty' approximately every two weeks. The power usage corresponds directly to the difficulty level set by the network. If you add more miners, the difficulty will increase, and power consumption will go up, if miners leave, the difficulty will decrease and power consumption will go down.

sp332 6y ago

How is power consumption related to network size? I agree that the power consumption of the network is directly related to the value of the bitcoins mined (and I supposed the transaction fee/tip size).

x3n0ph3n3 6y ago
Network size increases competition to mine blocks faster, leading to demands for higher hash rate, leading to higher power consumption.
- hollerith 6y ago
  That's not how Bitcoin mining works. A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity. If the mining reward is cut in half, the electricity consumption of the network is cut in half, too. In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
  - deleted 6y ago
    [deleted]
  - x3n0ph3n3 6y ago
    I think you are _very_ mistaken. > If the mining reward is cut in half, the electricity consumption of the network is cut in half, too. That's not true it all -- there is no difficulty adjustment when the reward is halved. There may be pressure on some miners to stop mining, but that adjustment is not immediate and can also be compensated for by change in the price of bitcoin. > In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. Given the network is operating at peak transaction rate already, there's not much change here. Neither block size nor the transaction count has a meaningful affect on the computations required to "solve" a block. The merkle tree for the transactions is computed once, but most of computation is finding a nonce, that combined with the rest of the block header, produces a hash with a certain number of leading zeros. Changing the block size or transaction count doesn't meaningfully change electricity consumption.
    - hollerith 6y ago
      I agree with your final 2 paragraphs. >that adjustment . . . can also be compensated for by change in the price of bitcoin. It can. When I wrote that if the mining reward is cut in half, the electricity consumption of the network is cut in half, too, I assumed that the price remains constant. A miner must pay for the electricity he or she uses. Where do you think the money comes from to pay for the massive amount of electricity used by the network? Do you imagine that rich people (i.e., people who can afford to lose money) are buying the electricity for pro-Bitcoin ideological reasons? I don't: I believe that it comes out of the revenue made (collectively) by the miners. In other words, the payments for the electricity are parts of (individual) plans to make money through mining. And I believe that if that (collective) revenue were cut in half -- especially if miners and prospective miners knew of the halving in advance (particularly, before they decided what mining hardware if any to buy) -- then money spent on electricity is approximately cut in half, too. (Because otherwise the plans to make money would not work.) You are correct that the adjustment in the hash rate is not immediate after a halving of the mining reward. Mostly that is because miners who recently bought mining hardware have to continue mining after the halving to continue to pay for their hardware. If the halving was announced in advance, then the halving will start exerting downward pressure on the mining difficulty months in advance of the actual date of the halving. The major cause of that downward pressure is miners opting not to upgrade their hardware and prospective miners opting not to enter the mining business in the first place (the effect of which is to make it take longer for the remaining miners with their non-upgraded hardware to solve the proof-of-work puzzles, which in turns causes the software to reduce mining difficulty to return the average time between successive blocks back to 10 minutes). Basically, it takes many months for newly-manufactured mining hardware to pay for itself, and that delay is the main reason the response to a reward-rate halving is slow. But again the response starts months before the actual halving; and the cumulative effect of the halving on the rate -- more precisely the effect the rate has on how much electricity is consumed by the network over the years -- is approximately the same as it would be if the effect of the halving on the rate were instantaneous. It is the fact that one of the major expenses (namely, hardware) of the miners is "lumpy" (requires an upfront expenditure that is then recouped over many months) that obscures the simple relationship whereby the collective expenses of the mining community approximately equals the collective revenues of that community -- where most of that revenue is from mining rewards, which is equal to the price of bitcoin (or the value of bitcoin if you prefer) times the rate at which the network dispenses bitcoins from miners as rewards. What makes me confident that expenses = revenues is that miners are rational and consequently are capable of taking into account scheduled halvings of the rewards to mining and the "lumpiness" of the cost of mining hardware (and many other factors).
kybernetikos 6y ago
I think by 'network size' the GP is referring to the network hashrate. For proof of work networks to function securely, the network as a whole must have a much higher computation rate than an attacker. Obviously capabilities increase the whole time, so the bitcoin network needs to be able to adapt - to do this, it adjusts its 'difficulty' approximately every two weeks. The power usage corresponds directly to the difficulty level set by the network. If you add more miners, the difficulty will increase, and power consumption will go up, if miners leave, the difficulty will decrease and power consumption will go down.