5 ms·

WARNING: Bitcoin Will Eat the World

9 points by EGreg 6y ago

I used to think that Bitcoin was a poor currency, and if someone just made one that was actually scalable and better, then this whole first-gen system would fizzle out, like Friendster or AskJeeves in the presence of better technology. But no. You see, Satoshi had us all fooled with the title of his paper: “A peer to peer cash system.” FORGET about Bitcoin being a currency. It is a store of value. And it has all the features you’d ever need to store value and not have it be diluted. There is nothing that needs to be improved over and above those features, and that is its killer app: being a black hole of value. Constantly growing versus fiat. You see, just like gold, Bitcoin is a store of value becaus others say it is. It has reached critical mass and mindshare for “storing value” even from companies now. From here on out, even if a better system arises, if it becomes a sidechain of bitcoin that locks up the coins, then there will be less and less “unlocked” coins, and therefore each coin will be more valuable. Also, bitcoins are constantly lost as dust or misplaced private keys or other things. And so the supply shrinks. But bitcoin is divisible into extremely tiny pieces (satoshis) so this merely helps one bitcoin get more and more valuable. You can’t kill bitcoin by making something better because even if 1/1000th of it remains, it will actually just be more valuable. The scarcer bitcoin gets, the pricier bitcoin gets, like the Hulk. Ok so what does it mean for electricity consumption? Here is where the sad part comes in! You see, bitcoin miners are rewarded in bitcoin, and as long as the price of bitcoin outpaces the halvings, mining rewards will grow. Think about what this means for the cost of electricity. Currently the costs in large parts of the USA are 10x what they normally are. With Bitcoin miners consuming more and more electricity, this will become the norm for nearly everyone hooked up to the national grid. (Continued in comment below.)

EGreg 6y ago
Let’s extrapolate. The year is 2035, Bitcoin is $50 Million a coin (but there are less coins), and households are fighting for electricity against bitcoin miners, who are easily winning. Governments trying to ban bitcoin mining meet similar fate to Mexican governments trying to ban the drug cartels’ activity, that is to say their families are threatened and they do not have power anymore to stop it, etc. Their feeble attempts to print money fall short of the ever growing rewards. Everything in the articles about bitcoin using “only” 6% is misunderstanding the expontnential function. In 2021 those stats are outdated and the Bitcoin network consumes more electricity than half the world’s countries. We are five minutes to midnight. By the time we realize it’s consuming more than half the world combined, it will be too late to stop this activity. It will be “too sweet” and too financial lucrative. If you think we can stop it as a society, then let’s see how we have done with killing off insects, reducing biodiversity and species, polluting the world with plastic and pumping greenhouse gases into the air. Take that last one for example — have we been able to make a reduction in the greenhouse gas emissions, or merely their rate of growth? What exactly will change between now and 2035, or 2135 that will make bitcoing mining NOT be more economical valuable than, say, airconditioning homes? Change my mind. Prove me wrong.
- arthurcolle 6y ago
  What about the carbon offsets that would need to be considered if people in aggregate spend less if they all are hoarding bitcoin. Of course the core mining operations must be considered, but if most people are delaying spending because they expect fiat to be replaced by bitcoin, or other cryptos, the quantity demanded of various consumer goods might be lower and this would cause less aggregate power. I don't buy it, but I mean I heard this on another bitcoin thread and figured I'd bring it up
- flgb 6y ago
  Electricity is not a finite resource. We have access to functionally unlimited energy from renewable sources which is becoming exponentially cheaper to convert to electricity, but it is a variable resource. What we need is not 100% renewables, but more like 500-600%. We need economic activity to unlock the investment in new infrastructure. Bitcoin is arguably the way forward for cheap clean energy, not the obstacle.
  - cdolan 6y ago
    How is energy not finite within our lifetimes? It is not feasible for us to capture the universe’ energy within the next 100 or perhaps 1,000 years (and that universe is expanding faster than light, we become more lonely every second). Now the power of the sun going into an efficient and massive solar array is absurdly large so yes, we could technically have nearly unlimited power in a few decades.... but sorry my Sci-fi nerd got the best of me and I don’t agree electricity is technically infinite.
    - bingbong70 6y ago
      There is no shortage of energy in the universe, bitcoin heavily incentivizes utilizing it to secure a global financial network... so we will capture it with increasing efficiency and mankind will get the benefit of all the new tech.
- anigbrowl 6y ago
  OK, let's imagine a 2030 scenario where environmental and energy use problems ar rampant and Bitcoin is widely agreed to be a big problem. It's super lucrative to mine and unscrupulous miners threaten officials. But what stops governments or private interests from just identifying large power consumers who are mining and arresting or killing them? Sure, miners could retaliate but frankly most people who mine bitcoin aren't professional criminals and don't have sufficiently strong social infrastructure to undertake offensive campaigns against their enemies (otherwise every billionaire would be like an emergent nation state). Another problem for them is that there's no relationship between miners and the public at large. Big drug dealers have the (very indirect) support of the many people who enjoy drug consumption. I'm not sure that exists for crypto. You could own a whole cargo container of GPUs that are mining for you 24-7 but I kinda doubt your hardware supplier/network techs are gonna take or dispense a bullet for you.
riverlong 6y ago
This is FUD. If the electricity consumption becomes prohibitive, Bitcoin will just switch to Proof-of-Stake. Ethereum's already doing it. Zero electrical waste.
- EGreg 6y ago
  Bitcoin’s community was ripped apart by simply suggesting a larger block size. Many miners refused to change a single thing about the protocol. What makes you think most, let alone all, miners will agree to switch to proof of stake when the miners have invested exactly in proof of work? They’re just going to leave all those machines they set up and walk away? LOL And even if most of them did — which is already laughably improbable — the ones that stayed behind would continue the arms race. Bitcoin Cash didn’t kill Bitcoin. Why would your Proof of Stake version kill it? PS: Ethereum’s community and governance is different, and focused on computation, so it has some chance of switching to Proof of Stake. ETH isn’t known as a Store of Value, and in fact is designed to inflate slightly to countract this notion. And yet I am sure that not everyone will stake in Ethereum 2, the ones who stay behind will cop-out to Ethereum 1 being a store of value just like people continue to mine Ethereum Classic mostly for the token rewards. Sadly even Ethereum may have a version of this economic morass.
  - eigenvalue 6y ago
    Technically, the decision could be made at the level of the main Bitcoin developer team, which could release new Bitcoin node software that replaces PoW. If enough people switch to using the no-PoW node software, I'm not sure what the miners could really do other than forking Bitcoin. I guess the question is, which version to investors prefer? I know that personally prefer PoW over PoS, since I believe it's much more secure and proven.
WheelsAtLarge 6y ago
I'm one that believes that Bitcoin is here to stay but as all other attempts to decentralize it will be captured by a few and therefore controlled by a few which will make it easier to control its fate. This will make it more likely that the power consuming algorithm will be changed to something more friendly to the environment(world). I suspect that there are companies out there trying to expand mining as fast as possible to they can be the biggest miners. Already more than 50% of the mining is done in China. Now look at the future of that...
numpad0 6y ago
AntMinerCoin and NvidiaCoin IPO when
tromp 6y ago
> as long as the price of bitcoin outpaces the halvings Not needed, since within 4 halvings, we can expect transaction fees to dominate the block subsidy.
- EGreg 6y ago
  Why do you expect that? You think fees will be in the thousands of dollars?
  - tromp 6y ago
    No, fees will be $20-$100, similar to now. Block subsidy will be 16x lower than currently, so block reward will be mostly fees.
    - EGreg 6y ago
      Block subsidy will be 16x lower but BTC will be worth more than 16x than today’s price. That was my point!
      - deleted 6y ago
        [deleted]
      - tromp 6y ago
        And my point was that once fees dominate the block reward, the price doesn't need to double with every subsidy halving for mining income to grow. A smaller increase in price will suffice.
remuskaos 6y ago
One thought I haven't seen here is this: Let's assume Bitcoin stays and keeps getting more valuable per btc. Due to the increasing price per khw, mining on the power grid is outlawed, and let's assume for now that law can actually be enforced. What's stopping miners from generating the energy themselves? They, at least the largest ones, have enough money to actually build and maintain power plants. Cheap and dirty coal power for example. Mining would happen close to the plant, they'd cut out the middle man, and while they're at it, why not generate 12VDC instead of 220VAC, they wouldn't even need high efficiency PSUs anymore. I think this is a real threat to Bitcoin. They mostly mine in China because energy is cheap and the ICs are made there, but as soon as commercial mining is outlawed, they can go someplace the rules aren't as strict, or as enforceable. Think third world countries.

9 points by EGreg 6y ago

EGreg 6y ago

Let’s extrapolate. The year is 2035, Bitcoin is $50 Million a coin (but there are less coins), and households are fighting for electricity against bitcoin miners, who are easily winning. Governments trying to ban bitcoin mining meet similar fate to Mexican governments trying to ban the drug cartels’ activity, that is to say their families are threatened and they do not have power anymore to stop it, etc. Their feeble attempts to print money fall short of the ever growing rewards. Everything in the articles about bitcoin using “only” 6% is misunderstanding the expontnential function. In 2021 those stats are outdated and the Bitcoin network consumes more electricity than half the world’s countries. We are five minutes to midnight. By the time we realize it’s consuming more than half the world combined, it will be too late to stop this activity. It will be “too sweet” and too financial lucrative. If you think we can stop it as a society, then let’s see how we have done with killing off insects, reducing biodiversity and species, polluting the world with plastic and pumping greenhouse gases into the air. Take that last one for example — have we been able to make a reduction in the greenhouse gas emissions, or merely their rate of growth? What exactly will change between now and 2035, or 2135 that will make bitcoing mining NOT be more economical valuable than, say, airconditioning homes? Change my mind. Prove me wrong.

arthurcolle 6y ago
What about the carbon offsets that would need to be considered if people in aggregate spend less if they all are hoarding bitcoin. Of course the core mining operations must be considered, but if most people are delaying spending because they expect fiat to be replaced by bitcoin, or other cryptos, the quantity demanded of various consumer goods might be lower and this would cause less aggregate power. I don't buy it, but I mean I heard this on another bitcoin thread and figured I'd bring it up
flgb 6y ago
Electricity is not a finite resource. We have access to functionally unlimited energy from renewable sources which is becoming exponentially cheaper to convert to electricity, but it is a variable resource. What we need is not 100% renewables, but more like 500-600%. We need economic activity to unlock the investment in new infrastructure. Bitcoin is arguably the way forward for cheap clean energy, not the obstacle.
- cdolan 6y ago
  How is energy not finite within our lifetimes? It is not feasible for us to capture the universe’ energy within the next 100 or perhaps 1,000 years (and that universe is expanding faster than light, we become more lonely every second). Now the power of the sun going into an efficient and massive solar array is absurdly large so yes, we could technically have nearly unlimited power in a few decades.... but sorry my Sci-fi nerd got the best of me and I don’t agree electricity is technically infinite.
  - bingbong70 6y ago
    There is no shortage of energy in the universe, bitcoin heavily incentivizes utilizing it to secure a global financial network... so we will capture it with increasing efficiency and mankind will get the benefit of all the new tech.
anigbrowl 6y ago
OK, let's imagine a 2030 scenario where environmental and energy use problems ar rampant and Bitcoin is widely agreed to be a big problem. It's super lucrative to mine and unscrupulous miners threaten officials. But what stops governments or private interests from just identifying large power consumers who are mining and arresting or killing them? Sure, miners could retaliate but frankly most people who mine bitcoin aren't professional criminals and don't have sufficiently strong social infrastructure to undertake offensive campaigns against their enemies (otherwise every billionaire would be like an emergent nation state). Another problem for them is that there's no relationship between miners and the public at large. Big drug dealers have the (very indirect) support of the many people who enjoy drug consumption. I'm not sure that exists for crypto. You could own a whole cargo container of GPUs that are mining for you 24-7 but I kinda doubt your hardware supplier/network techs are gonna take or dispense a bullet for you.

riverlong 6y ago

This is FUD. If the electricity consumption becomes prohibitive, Bitcoin will just switch to Proof-of-Stake. Ethereum's already doing it. Zero electrical waste.

EGreg 6y ago
Bitcoin’s community was ripped apart by simply suggesting a larger block size. Many miners refused to change a single thing about the protocol. What makes you think most, let alone all, miners will agree to switch to proof of stake when the miners have invested exactly in proof of work? They’re just going to leave all those machines they set up and walk away? LOL And even if most of them did — which is already laughably improbable — the ones that stayed behind would continue the arms race. Bitcoin Cash didn’t kill Bitcoin. Why would your Proof of Stake version kill it? PS: Ethereum’s community and governance is different, and focused on computation, so it has some chance of switching to Proof of Stake. ETH isn’t known as a Store of Value, and in fact is designed to inflate slightly to countract this notion. And yet I am sure that not everyone will stake in Ethereum 2, the ones who stay behind will cop-out to Ethereum 1 being a store of value just like people continue to mine Ethereum Classic mostly for the token rewards. Sadly even Ethereum may have a version of this economic morass.
- eigenvalue 6y ago
  Technically, the decision could be made at the level of the main Bitcoin developer team, which could release new Bitcoin node software that replaces PoW. If enough people switch to using the no-PoW node software, I'm not sure what the miners could really do other than forking Bitcoin. I guess the question is, which version to investors prefer? I know that personally prefer PoW over PoS, since I believe it's much more secure and proven.

WheelsAtLarge 6y ago

I'm one that believes that Bitcoin is here to stay but as all other attempts to decentralize it will be captured by a few and therefore controlled by a few which will make it easier to control its fate. This will make it more likely that the power consuming algorithm will be changed to something more friendly to the environment(world). I suspect that there are companies out there trying to expand mining as fast as possible to they can be the biggest miners. Already more than 50% of the mining is done in China. Now look at the future of that...

numpad0 6y ago

AntMinerCoin and NvidiaCoin IPO when

tromp 6y ago

> as long as the price of bitcoin outpaces the halvings Not needed, since within 4 halvings, we can expect transaction fees to dominate the block subsidy.

EGreg 6y ago
Why do you expect that? You think fees will be in the thousands of dollars?
- tromp 6y ago
  No, fees will be $20-$100, similar to now. Block subsidy will be 16x lower than currently, so block reward will be mostly fees.
  - EGreg 6y ago
    Block subsidy will be 16x lower but BTC will be worth more than 16x than today’s price. That was my point!
    - deleted 6y ago
      [deleted]
    - tromp 6y ago
      And my point was that once fees dominate the block reward, the price doesn't need to double with every subsidy halving for mining income to grow. A smaller increase in price will suffice.

remuskaos 6y ago

One thought I haven't seen here is this: Let's assume Bitcoin stays and keeps getting more valuable per btc. Due to the increasing price per khw, mining on the power grid is outlawed, and let's assume for now that law can actually be enforced. What's stopping miners from generating the energy themselves? They, at least the largest ones, have enough money to actually build and maintain power plants. Cheap and dirty coal power for example. Mining would happen close to the plant, they'd cut out the middle man, and while they're at it, why not generate 12VDC instead of 220VAC, they wouldn't even need high efficiency PSUs anymore. I think this is a real threat to Bitcoin. They mostly mine in China because energy is cheap and the ICs are made there, but as soon as commercial mining is outlawed, they can go someplace the rules aren't as strict, or as enforceable. Think third world countries.