4 ms·

The difficulty of mining bitcoin is variable, whereas for gold it is (comparatively) constant. The energy cost of creating $40,000 worth of bitcoin right now is

by jjk166 6y ago

The difficulty of mining bitcoin is variable, whereas for gold it is (comparatively) constant. The energy cost of creating $40,000 worth of bitcoin right now is very different from the energy cost of $40,000 worth of bitcoin having been created. It is estimated that 190,000 Tons of gold have been produced in history, which is 53.8 years worth at current production rates. That current production rate requires 132 TWh per year, so the total cost of producing the gold in circulation should be approximately 7100 TWh. The total power consumption of bitcoin has been approximately 370 TWh. The market cap for gold is approximately 11 times higher than bitcoin's, but that would still only be 4070 TWh when normalized. On average that's 0.37 kwh per dollar of bitcoin mined to date vs 0.64 kwh per dollar of gold mined to date.

guenthert 6y ago
A good share of the gold mined is not in circulation. Besides other uses, the bond wires of every chip are made out of gold. Bitcoin is "the gift which keeps on giving". Every transaction, not only the original "mining", incurs a substantial ecological cost. The share of gold otoh used as financial tool is often not moved at all in transactions. E.g. a good share of it is stored in some vaults and virtually never moved. Most of Germany's gold was store in Fort Knox for more than sixty years, see https://www.ft.com/content/4edf00ee-a43c-11e7-8d56-98a09be71849 https://www.ft.com/content/4edf00ee-a43c-11e7-8d56-98a09be71... .
- jjk166 6y ago
  And plenty of bitcoin is not in circulation, but that is irrelevant. The comparison is between the ecological cost of mining bitcoin versus mining gold. Like gold, bitcoin does not actually have to change hands to be used. If people deposit bitcoin into a virtual vault, they can exchange it with eachother all day long without anything being processed on the network. It's only when someone withdraws their bitcoin from that vault that they need to process a real transaction - equivalent to physically moving gold. The difference between bitcoin and gold is that the environmental costs of transferring value by gold increase with distance and quantity: it takes a lot more to ship a ton of gold around the world than handing a coin to a person next door. Bitcoin, on the other hand has a fixed cost - the transaction to buy a pizza is no different from the transaction to buy a pizzeria. Of course you're not going to wire a bitcoin to the local pizza boy, you're going to go through an intermediary that provides a lower cost transaction. You use bitcoin for the big transfers where it is competitive both financially and ecologically with transporting similar value in physical assets.
- thebruce87m 6y ago
  Not every chip, copper is used too. The automotive semiconductor manufacturer I used to work for was transitioning to copper.

by jjk166 6y ago

guenthert 6y ago

A good share of the gold mined is not in circulation. Besides other uses, the bond wires of every chip are made out of gold. Bitcoin is "the gift which keeps on giving". Every transaction, not only the original "mining", incurs a substantial ecological cost. The share of gold otoh used as financial tool is often not moved at all in transactions. E.g. a good share of it is stored in some vaults and virtually never moved. Most of Germany's gold was store in Fort Knox for more than sixty years, see https://www.ft.com/content/4edf00ee-a43c-11e7-8d56-98a09be71849 https://www.ft.com/content/4edf00ee-a43c-11e7-8d56-98a09be71... .

jjk166 6y ago
And plenty of bitcoin is not in circulation, but that is irrelevant. The comparison is between the ecological cost of mining bitcoin versus mining gold. Like gold, bitcoin does not actually have to change hands to be used. If people deposit bitcoin into a virtual vault, they can exchange it with eachother all day long without anything being processed on the network. It's only when someone withdraws their bitcoin from that vault that they need to process a real transaction - equivalent to physically moving gold. The difference between bitcoin and gold is that the environmental costs of transferring value by gold increase with distance and quantity: it takes a lot more to ship a ton of gold around the world than handing a coin to a person next door. Bitcoin, on the other hand has a fixed cost - the transaction to buy a pizza is no different from the transaction to buy a pizzeria. Of course you're not going to wire a bitcoin to the local pizza boy, you're going to go through an intermediary that provides a lower cost transaction. You use bitcoin for the big transfers where it is competitive both financially and ecologically with transporting similar value in physical assets.
thebruce87m 6y ago
Not every chip, copper is used too. The automotive semiconductor manufacturer I used to work for was transitioning to copper.