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Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (fast

Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). When water prices are lower people water their lawns more and take more baths. When shipping ePackets from China is cheap, people buy more stuff from there. I just don’t see how Bitcoin responding to supply and demand is different from any other consumable. It feels like the argument makes the unstated presumption that Bitcoin has no utility, which is a separate debate. Bitcoin advocates would say that more and more miners arguably provide greater security assurances making the currency itself more valuable.

paulgb 6y ago
> Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. This is human behavior responding to incentives. Yes, more energy is burned, but more people get places. What I’m talking about is like if a car responded to the price of gas decreasing by 50% by revving in neutral until the total cost per mile was the same.
ufo 6y ago
I think this is not what the parent poster was saying. The problem of bitcoin is not one of induced demand, where cheaper goods means that people become willing to use it less efficiently. Difficulty adjustment is as if every car monitored its MPG and then dynamically adjusted the engine until it became as efficient as a 2003 hummer. When the mining efficiency is increased, that isn't translated into more bitcoins being mined or more people benefiting from bitcoin. The matching mining difficulty increase ensures that all that extra efficiency will be turned into waste heat.
ardy42 6y ago
>> This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)? > Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). I don't think that's true, or it's only true if you look at it from a consumption perspective that ignores important parts of the picture. When gas prices fall, more energy is used, but travel miles increase. More work gets done per dollar. When bitcoin mining gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant, because the difficulty changes to compensate. It's like if roads got longer the cheaper gas gets.
- kingo55 6y ago
  > When bitcoin gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant... Not quite. The extra work it does allows the network to secure itself better. We don't have to agree with this energy use, but it does do something.
  - paulgb 6y ago
    Do you believe the Bitcoin network would be insufficiently secure if miners were incentivized only by the transaction fees and not the block rewards?
    - xiphias2 6y ago
      Bitcoin has to withstand an attack from central banks of the world in the future. Just look at some comments from Christine Legarde to see what is coming. It's the war of media companies vs internet coming back, just with something much more important. I hope Bitcoin wins, but I think that nobody knows the future for certain.
      - SCLeo 6y ago
        Other cryptocurrencies? Maybe, I am not an expert on them. But definitely not bitcoin. Its transaction speed is simply way too slow. And it is not even close.
        xiphias2 6y ago
        Most cryptocurrencies are a joke, trivial to attack by any state, or even somebody renting machines on AWS
      - logifail 6y ago
        > Bitcoin has to withstand an attack from central banks of the world in the future Q: How do we imagine central banks would 'attack' a cryptocurrency, and how is a cryptocurrency (or its users/owners/proponents) going to defend against whatever form such attacks might take?
lottin 6y ago
A fall in the price of a product (say, as a consequence of efficiency gains in the production process that shift the supply curve) increases the quantity demanded for that product. The end result of the efficiency gain is an increased consumption at a lower cost.
panax 6y ago
Yes this is known as Jevon's paradox and is not unique to these situations https://en.wikipedia.org/wiki/Jevons_paradox https://en.wikipedia.org/wiki/Jevons_paradox We can't simply just rely on improvements in efficiency to solve these problems.
tomjen3 6y ago
But when gas prices fall people either move those savings to cheaper, less efficient cars or get more satisfaction out of their driving? Whereas there is very little change in the bitcoin mining, unless you have fetish for long zeros in hash values.
- aabbcc1241 6y ago
  The zeros translate to "more secure network"

paulgb 6y ago

> Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. This is human behavior responding to incentives. Yes, more energy is burned, but more people get places. What I’m talking about is like if a car responded to the price of gas decreasing by 50% by revving in neutral until the total cost per mile was the same.

ufo 6y ago

I think this is not what the parent poster was saying. The problem of bitcoin is not one of induced demand, where cheaper goods means that people become willing to use it less efficiently. Difficulty adjustment is as if every car monitored its MPG and then dynamically adjusted the engine until it became as efficient as a 2003 hummer. When the mining efficiency is increased, that isn't translated into more bitcoins being mined or more people benefiting from bitcoin. The matching mining difficulty increase ensures that all that extra efficiency will be turned into waste heat.

ardy42 6y ago

>> This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)? > Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). I don't think that's true, or it's only true if you look at it from a consumption perspective that ignores important parts of the picture. When gas prices fall, more energy is used, but travel miles increase. More work gets done per dollar. When bitcoin mining gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant, because the difficulty changes to compensate. It's like if roads got longer the cheaper gas gets.

kingo55 6y ago
> When bitcoin gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant... Not quite. The extra work it does allows the network to secure itself better. We don't have to agree with this energy use, but it does do something.
- paulgb 6y ago
  Do you believe the Bitcoin network would be insufficiently secure if miners were incentivized only by the transaction fees and not the block rewards?
  - xiphias2 6y ago
    Bitcoin has to withstand an attack from central banks of the world in the future. Just look at some comments from Christine Legarde to see what is coming. It's the war of media companies vs internet coming back, just with something much more important. I hope Bitcoin wins, but I think that nobody knows the future for certain.
    - SCLeo 6y ago
      Other cryptocurrencies? Maybe, I am not an expert on them. But definitely not bitcoin. Its transaction speed is simply way too slow. And it is not even close.
      - xiphias2 6y ago
        Most cryptocurrencies are a joke, trivial to attack by any state, or even somebody renting machines on AWS
    - logifail 6y ago
      > Bitcoin has to withstand an attack from central banks of the world in the future Q: How do we imagine central banks would 'attack' a cryptocurrency, and how is a cryptocurrency (or its users/owners/proponents) going to defend against whatever form such attacks might take?

lottin 6y ago

A fall in the price of a product (say, as a consequence of efficiency gains in the production process that shift the supply curve) increases the quantity demanded for that product. The end result of the efficiency gain is an increased consumption at a lower cost.

panax 6y ago

Yes this is known as Jevon's paradox and is not unique to these situations https://en.wikipedia.org/wiki/Jevons_paradox https://en.wikipedia.org/wiki/Jevons_paradox We can't simply just rely on improvements in efficiency to solve these problems.

tomjen3 6y ago

But when gas prices fall people either move those savings to cheaper, less efficient cars or get more satisfaction out of their driving? Whereas there is very little change in the bitcoin mining, unless you have fetish for long zeros in hash values.

aabbcc1241 6y ago
The zeros translate to "more secure network"