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Bitcoin is not a Battery – it is a Sink

345 points by velmu 6y ago

bitflate 6y ago
> But that’s not the case: in Bitcoin, more electricity does not buy “more Bitcoin”, it rather buys “more security”. I think this piece misses. Electricity and hash power does translate to economic value. It gives you more share of the 6.25 reward. The author's argument is made by conflating economic value and security into one. As a whole, the system produces 6.25 bitcoins every 10 minutes. The reward is a constant. But the BTCUSD price can go up. And it has always been going up. That means it's always profitable to invest in mining. The original piece from Nick Grossman also misses. There're two problems with using Bitcoin as a battery. The first problem is Bitcoin has an unbounded energy use [1]. If its price continues to go up forever, that means we'd spend unbounded energy. The second problem is volatility. Unlike the aluminum example, Bitcoin has no intrinsic value. It has no practical applications like aluminum. Its price is pure speculation. With Bitcoin, we're converting energy into a volatile asset. Bitcoin can be a battery. But it's a fairly bad one. It stores value with high volatility. The problem hindering Bitcoin's adoption is volatility. Changing the narrative from digital gold to battery won't fix the problem. [1] https://bitflate.org/post/2021/02/05/the-bitcoin-price-paradox.html https://bitflate.org/post/2021/02/05/the-bitcoin-price-parad...
- rjknight 6y ago
  > It gives you more share of the 6.25 reward. But this is zero-sum competition for a portion of a fixed supply. In the aggregate, more electricity does not buy more Bitcoin because it is a fundamental principle of the Bitcoin system that the supply of Bitcoin cannot be increased in response to anything.
  - bitflate 6y ago
    More electricity buys more BTCUSD, so far. It hasn't been a problem since Bitcoin price continues to go up. If you own Bitcoin, you believe it'd go up forever. If you don't own Bitcoin, you think it'd stop at some point. This is the disconnect between Bitcoin and the world.
    - rjknight 6y ago
      I might buy an umbrella because I believe it is going to rain, but that does not mean that an increase in the supply of umbrellas will lead to an increase in the amount of rain.
- ftlio 6y ago
  Thank you for a measured response that doesn't categorize everyone on the "wrong side" of history here as inept, or miscategorizes Proof of Work. What also seems to be thrown out with the bathwater in this discussion is that for the project of intermediary free money, with a long time horizon, the subsidy is only a small reason Bitcoin will have ever been mined.
skywhopper 6y ago
Yes, this is exactly what I thought when I read the other piece. A battery stores energy to use elsewhere. Bitcoin just consumes leftover energy. The fact that it would be able to consume as much energy as we could ever provide to it is not a feature.
- isoprophlex 6y ago
  No, BTC doesn't just consume leftover energy. It causes delays in overhauling our energy grid. Renewable generation must be paired with storage to get past a certain % of share in the energy mix. BTC mining is analogous to just turning off windmills or solar panels during times of excess production. Presence of BTC miners removes market pressure on grids that make storage feasible. BTC is actively harmful to the environment. Proof of work is an abomination.
ArtTimeInvestor 6y ago
Bitcoin is getting an unfair treatment here on HN. The mining of Bitcoin uses as much resources as people are willing to pay for the resulting coins. The same holds true for gold. 3000 tons of gold are mined per year. Which is worth about $150B. So the mining probably uses resources of about $150B as well. The value of bitcoins mined per year is $15B. So Gold mining probably uses about 10x as much resources as Bitcoin mining.
- numbsafari 6y ago
  Once mined, gold is gold and we can just hand it to each other, or exchange notes of ownership on a very efficient ledger. Bitcoin requires a constant supply of electricity to maintain its utility. Without electricity, Bitcoin would collapse. Gold’s utility as a medium of exchange and a store of value is secure in a crisis, bitcoin’s is not.
  - moralsupply 6y ago
    Feel free to keep all your wealth allocated in gold. We'll talk again in 5 years time.
    - rpadovani 6y ago
      Will gold lose its value in the next 5 years?
    - CalChris 6y ago
      Gold is a useful metal over and and above its currency value. Bitcoin is not useful except as a currency.
      - moralsupply 6y ago
        Except that most gold being traded under the "store of value" premise doesn't exist, it's "paper gold". Also, gold is the one most manipulated market in the world, having both banks, central banks and governments actively interfering in its price discovery.
moralsupply 6y ago
I love how much the HN community is invested in demonizing Bitcoin for its energy consumption. I wish for you bashing Bitcoin to keep all your wealth allocated in assets associated with fiat currencies. I also wish that you spend lots of time running political narratives in order to stop a decentralized piece of technology from growing. Good luck trying to reach out the Bitcoin CEO in order to ask him to shut down his "environmentally damaging operations". In 5 years time, however, once the US dollar has lost 50% of its purchase power, you'll be begging your employer to pay you in Bitcoin. By that time you'll conveniently forget the narrative about energy consumption. You'll even claim that Bitcoin is one of the most important technologies ever invented, and that you always believed in it.
- avree 6y ago
  Bitcoin is a fiat currency though...
  - moralsupply 6y ago
    Do you know what "fiat" means? It means "mandatory". How is Bitcoin being imposed on you? On the other hand, if you live in the US and you decide to not use the US Dollar, you'll go to jail.
    - tedunangst 6y ago
      Going to jail for not using USD doesn't sound like a compelling argument for me to use BTC.
      - moralsupply 6y ago
        How did you conclude that I was implying that USD being fiat is an argument for the use of BTC?
    - tempodox 6y ago
      You are wrong. The fiat part comes from how its value is determined. https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money
simias 6y ago
I was not familiar with the original argument but it's so ridiculous at face value that I wonder if a rebuttal was necessary. Mining Bitcoins is like Iceland smelting aluminum? Mining bitcoin "converts electricity into value"? Preposterous. The value of bitcoin is driven by speculation, and in turns that increases the incentive for the miners, not the other way around. There's no value created by crunching random SHA-256. As a thought experiment, let's assume that tomorrow a breakthrough slashes in half the cost of energy worldwide. Nuclear fusion reactors become viable or something. That would probably make aluminum cheaper, since processing it is so energy-incentive. But what about bitcoin? It'd just lower the bar for mining to be profitable, and it'll temporarily increase the size of the mining pool as the difficulty adjusts, but that's about it. There's simply no direct relationship between the cost of electricity and that of bitcoin that I can see. There's not even a direct relationship between the cost of electricity and the service provided by bitcoin. Bitcoin doesn't become more or less useful based on the cost of mining, it's always one block every 10 minutes give or take.
- exdsq 6y ago
  Bitcoin becomes more secure from 51% attacks the more electricity (cost) that is required
  - derefr 6y ago
    But the network is only incentivized to be exactly secure enough from Sybil attacks that nobody bothers to try one. There’s no added value in being more secure to Sybil attacks beyond that. Just like there’s no added value in hiring extra fire-fighers once every fire gets an instant + effective response. ————— The problem with Proof-of-Work systems that prevents this logic from actually translating to a sigmoid curve in number-of-miners, though, is that any left-over electricity that isn’t going into “good” mining, could instead be going into Sybil attacks. It’s as if every potential fire-fighter who isn’t hired as a fire-fighter, instead has a chance of being recruited by “Big Fire” to one day work together to all set fires at once. If-and-when governments actually establish their own cryptocurrencies, massive distributed purchases of electrical capacity for the sake of mounting a Sybil attack are exactly the sort of thing that state intelligence agencies will try to track and prevent ahead-of-time, such that nobody will ever be able to gain that capacity in the first place. Just like right now nobody can really build a stockpile of plutonium. But as long as governments don’t care, and attackers are free to be economic actors buying up electrical capacity, then there is a specific effect we see today: rather than the network’s electricity consumption just growing to a certain absolute amount, the set of all Proof-of-Work networks are incentivized together to consume a certain percentile amount of global excess electricity consumption — 51% of it, specifically. Such that, at any point, there’s not enough electricity left over to even theoretically mount a Sybil attack against the largest network. (The smaller PoW networks? Basically screwed.)
SideburnsOfDoom 6y ago
Bitcoin is not a battery for the very simple reason that it does not store energy: you cannot turn a bitcoin directly back into energy. Proof that energy has been expended has no intrinsic value at all. If it did, we would not throw out burnt toast. But it is mere entropy.
- deleted 6y ago
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- tantalor 6y ago
  Bitcoin is money, which can be exchanged for goods & services: buy wholesale electricity, or the means to produce it yourself; so the bitcoin -> energy analogy works. I'm not sure what you mean by "directly".
  - capableweb 6y ago
    With that argument anything is a battery if you can find the right buyer. Used panties? Batteries. I feel like the argument of "Bitcoin is a battery" was never well done in the first place, since obviously batteries usually have to actually "store energy" and eventually "output energy" again. Something Bitcoin does not do.
    - deleted 6y ago
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    - knocte 6y ago
      You cannot have your hydro power plant generate panties.
  - africanboy 6y ago
    is sex a battery?
  - SideburnsOfDoom 6y ago
    What I mean is: at the intersection of deliberately not understanding what in physics terms is actually "a battery", and not understanding what in financial terms is actually "a store of value"; you will find BitCoin fans.
sprafa 6y ago
Bitcoin is the digital gold for the cryptocurrency universe atm. It's not really useful anymore for any of its advertised goals - Ethereum is a far better coin for all practical purposes. But since it's the first and it's accepted everywhere, it's going to maintain its dominance. Obv. Bitcoin is also deflationary having a fixed supply. But really it's really about it being the gateway to the altcoin universe, where actual useful stuff is being built. The Bitcoin Core team has fallen prey to corruption and collusion with miners, unf.
- dfgdghdf 6y ago
  > Ethereum is a far better coin for all practical purposes. Pretty sure Ethereum scaling as a currency is even worse that bitcoin. Ethereum has some very interesting features, but performance is not one of them.
  - chrisco255 6y ago
    Yes, it is, thanks to Zero Knowledge proofs (and shards in the future), Ethereum will scale to 200K TPS (with proof of stake running 99.98% more efficiently than PoW: https://medium.com/starkware/on-the-road-to-starknet-a-permissionless-stark-powered-l2-zk-rollup-83be53640880 https://medium.com/starkware/on-the-road-to-starknet-a-permi... https://medium.com/matter-labs/zksync-2-0-roadmap-update-zkevm-testnet-in-may-mainnet-in-august-379c66995021 https://medium.com/matter-labs/zksync-2-0-roadmap-update-zke...
    - DemocracyFTW 6y ago
      > Zero Knowledge proofs there's lots of that stuff on the internet to be sure
    - ric2b 6y ago
      > Yes, it is > will
      - chrisco255 6y ago
        There are some zkRollups already live: https://loopring.org/#/ https://loopring.org/#/ and https://zksync.io/ https://zksync.io/ They are currently capable of 2K - 10K TPS, which is substantial. But with sharding they'll achieve 200K TPS.
DJBunnies 6y ago
It’s weird seeing consistent downvotes of folks trying to clarify how/why Bitcoin consumes energy. Is there something better than minting new money that we should be using this energy on, and to which we can economically distribute said energy from locations with excess capacity?
- Okkef 6y ago
  It's weird seeing consistent replies by people who have not read the post.
- Spooky23 6y ago
  It’s not weird, the article isn’t about that. The premise that the author was responding to is that Bitcoin represents some fungible store of electricity, and would somehow magically drive energy costs down. That’s an interesting thought experiment but, wrong. Other than utilizing low cost electricity that would otherwise be wasted, there’s no way to transmutate bits into electricity. There’s a lot of bikeshedding about the wastefulness of minting virtual money with electricity. End of the day, people will do whatever they want to generate profit. Some poor bastard in Africa is toiling away right now in a dangerous mine to extract gold ore for investors. Right now, it makes economic sense to buy Electricity in China to produce internet money and bypass capital controls.
- fredfoobar 6y ago
  HackerNews has a huge anti-bitcoin bias, if it isn't clear to you, it should be now.
- DasIch 6y ago
  > Is there something better than minting new money that we should be using this energy on, and to which we can economically distribute said energy from locations with excess capacity? CO2 extraction from our atmosphere for long term storage or creation of CO2-neutral carbon-based fuels for applications that require fuels with high energy density like airplanes.
  - DJBunnies 6y ago
smoldesu 6y ago
I honestly can't agree with either article. Bitcoin's shortcomings are becoming apparent because it has hit an impossible edge case: after years of latent nerdspeak referencing cryptocurrency, one good rally got Wall Street to take notice. Now, everyone seems to have their own ideas about what Bitcoin should be: it's a store of value, it's a securities investment, it's a money laundering machine, or it's an alternative to the stock market. I don't blame Satoshi for staying hidden, because this is such a bastardization of what his vision of cryptocurrency really was. Bitcoin was free software, with the same purpose as the GNU coreutils or the Linux kernel: it was intended to empower the world indiscriminately, and provide opportunities and solutions to people who otherwise wouldn't have access to them. Bitcoin was a way to easily pay someone for a side job, or a private tip jar for your website. The current paradigm around what people perceive Bitcoin as is going to come crashing down, eventually. When it does, no nation will ever trust a digital currency again, thanks to an impending media shitstorm about how dangerous Bitcoin was.
- SubiculumCode 6y ago
  There is no reason in my mind why bitcoin would crash. Gold has not (and no gold's price is not majorly driven by its industrial uses). If anything it is more like gold than ever before. Expensive, and difficult to find, transport, and spend.
  - slg 6y ago
    The fact that gold is "Expensive, and difficult to find, transport, and spend." is mostly a problem for the havers of gold. The biggest problem for PoW cryptocurrencies is the wasted electricity and corresponding wasting of carbon output which is a huge negative externality impacting all the non-cryptocurrency havers too.
    - anikan_vader 6y ago
      I would think the mining of gold also has massive negative externalities, including carbon output.
    - 6y ago
Dotnaught 6y ago
We could save time with these sorts of Bitcoin analyses if authors disclosed up front whether they have a financial interest in Bitcoin. It's fine for a VC to conclude "I believe the properties of Bitcoin’s battery are powerful and profound, and will lead to the kinds of solutions I point to here." But when the author's firm invests in Bitcoin companies, that's not exactly a surprising conclusion.
- the_local_host 6y ago
  Can't you just assume that anyone who is pro-bitcoin owns it, and anyone who is anti-bitcoin does not? Anyone who doesn't fit into those categories would (I guess) be unconvinced of their own analysis, but publishing it anyway?
  - DangitBobby 6y ago
    I disagree. You can be pro something and not have it or anti something and have it anyway. But the people who are most likely to lie or spin the truth for personal benefit will be those who own it and want to see it succeed, unless you can short Bitcoin. Even so, I think it's less likely that people will short something they think is legitimate than to buy something they think is illegitimate.
    - capableweb 6y ago
      > But the people who are most likely to lie or spin the truth for personal benefit will be those who own it and want to see it succeed Does it matter why they are lying or spinning the truth? The only thing we should care about is that they were lying, so we need to look at the arguments themselves, otherwise we risk loosing impartialness because of our own feelings about cryptocurrencies.
    - deleted 6y ago
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  - lucb1e 6y ago
    I'm not a fan of many of google's practices, but still use their traffic data a few times per month because there isn't really any alternative. Similarly, I bought some bitcoin to donate money to sci-hub, because I believe the good that they do is greater than the negative effects of a single additional bitcoin transaction, and sci-hub doesn't offer any alternative methods. I don't have to like bitcoin to weigh pros and cons and make an educated decision to use it for a specific purpose. Then as for holding it, I was paid out in bitcoin for a short time and waited a while before converting to fiat in order to not pay miners multiple times. During that time I was both holding bitcoin as well as being of the opinion that this blockchain+PoW tech has lost the novel factor and we should get over the hype rather than spend more and more energy on it when we're already consuming a hundredfold more energy than we can currently produce without direct CO2 emissions. It's not as simple as: you use it, therefore you must love it (or conversely, if you don't use it you must hate it; some people might be interested in the tech but still not believe it's an investment vessel befitting of their risk profile).
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baby 6y ago
Why are we still talking about Bitcoin when there are hundreds of other currencies with no fork, no proof of work, much faster finality/latency/throughput, etc?
- Itsdijital 6y ago
  Bitcoin has the branding. It's like the bud light of crypto in a world where most people aren't aware yet that bud light isn't the only beer.
chedine 6y ago
Leaving the arguable utility and purpose aside, why is consuming electricity for securing traditional finance ok, but not for securing crypto based financial system? Isnt traditional systems consuming arguably needless electricity for ATM security, severs, surveillance, transportation, software and its resources that go into securing the system, etc etc? If thats acceptable i wonder why is the energy spent, in the name of PoW, unacceptable?PoW grabs a lot of eyeballs and also lets these paper analysts to easily quantify the consumption. While quantifying the energy consumption of traditional systems is difficult and hence becomes ok..
- jonathanpeterwu 6y ago
  Bitcoin energy consumption is a brittle argument, our entire monetary system is backed by much more expensive energy usage. Energy usage for security is a trait of sound money.
- mancerayder 6y ago
  There's a lot of one-liner talk about externalities in this thread above, but I'd be curious if people would show the stats of energy consumption of the rest of the traditional banking system. I'm not an owner of BTC, but I worked managing datacenter servers in the past, and it's like no one has mentioned a single time that there are arrays upon arrays of servers, 10's of thousands, that run company back-end systems. There are servers to manage the servers to manage the servers (stuff like monitoring, automation management systems, etc.), and it blossoms from there. And these places still use mainframes on top of distributed computing. BTC might be giant waste of resources, but it's curious that the comparisons imply that it's BTC versus no energy usage, instead of BTC versus traditional banks with their giant datacenters all over the country and world. Might be worth at least a mention in the comparison?
  - varjag 6y ago
    Traditional banking runs all the world's actual financial transactions (likely billions settlements at any given moment), something that crypto hasn't even started scratching.
lordnacho 6y ago
One argument I hadn't heard yet about this battery thing: If you think about it, everything is done in one place or another because it's advantageous to do it there. We grow food out in the countryside because we don't find it economically sensible to grow potatoes in Mayfair, where we'd rather have hedge funds. Are potatoes then a solar panel, used to capture and transport energy to fund managers? I mean sure, but in a trivial way that doesn't really illuminate any economic issue. Specialization has been known for some time.
noxer 6y ago
Footnotes #2 is rather unlikely. First PoS is not the successor of PoW. Its the same idea all over again. People are rewarded for wasting capital opportunity instead of energy. It only makes sense for them if they get enough return on the capital. Therefore it can not be cheap. Someone has to pay thous stakers. Trough fees or trough inflation. Neither is in the interest of the accentual user of the network. FBA (Federated Byzantine Agreement) DLT are the real successors to PoW. They provide no incentives for running/"securing" the network instead the people who wanna use it runs it themself that and obviously they have no interest in wasting resources or making the usage expensive. The second thing that is very unlikely is that bitcoin will move away from PoW. The miners are in control. If they dont want to move away, people can only fork and at that point the general consensus is that the fork is no longer "the real bitcoin".
- fastball 6y ago
  Have a link where I can read more?
  - noxer 6y ago
    Could not find something to read about this topic directly but here https://www.youtube.com/watch?v=fo8ZScrXFZE https://www.youtube.com/watch?v=fo8ZScrXFZE is a great talk about why the incentives in blockchains systems are bad for the system and its users. The speaker is an ex-btc dev and one of the creator of the first public FBA based blockchain. (which obviously mean hes biased but good arguments are good arguments)
    - fastball 6y ago
      Interesting, thanks for the link! At first blush, my main concern with such a system is tragedy of the commons – without an artificial incentive, it seems likely that people would say "everyone else is running a full node, why do I need to, that will just cost me money". And then boom, everybody does it and you don't have a network anymore.
      - 6y ago
lmilcin 6y ago
Bitcoin isn't a Sink. Sink has utility in disposing waste. Bitcoin is a short circuit in the system. It is a fault. It is where our resources disappear without bringing any useful value other than rewarding the one who can burn more but leaving everybody else worse overall.
- ric2b 6y ago
  The useful value is the increased security from larger threats.
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tumblewit 6y ago
bitcoin is the dotcom bubble of 2020s
fcantournet 6y ago
It's not a sink, it's a
fcantournet 6y ago
It's not a sink it's a drag
wesleywt 6y ago
HN is anti-Bitcoin. You probably should take these comments with a grain of salt until there is more balance.
- mynameisvlad 6y ago
  HN is not one person. There's people here that are for Bitcoin and those that are against it. I see plenty of healthy debate in the comments here and in other submissions about it.
  - literallycancer 6y ago
    Crypto threads here are almost always full of people who can't be bothered to do even a cursory search or find out how things actually work. The tech itself is almost never discussed, and you'll never find a novel perspective here for a very simple reason -- the people who push the envelope in this area are not posting here.
    - kukabynd 6y ago
      Mind sharing those places where they do post?
wodow 6y ago
> Bitcoin ... is still likely much cheaper than the banking system (depending on how you measure) I've seen this argued in articles about Bitcoin's energy usage, but not a thorough analysis (either way). Has someone written one?
- lucb1e 6y ago
  Well it's rather obviously false. Even if there are no miners at all (e.g. pretend the difficulty was fixed at a trivial value), the only way to know whether someone really has the coins they are paying with is to download all transactions that lead to this public key having a certain value. Even with blockchain checkpoints, you'd be hard-pressed to make this use less power than a very badly designed centralized service -- unless you use some form of centralization and defeat the purpose. Comparing transactions is one way of measuring it, but I can't fault the proponents for saying it's a bad analogy. The number of transactions is indeed quite unrelated to the current power draw. But it's not hard to see that even the transaction system without the mining is already less efficient than a few database servers per bank for each bank in the world. Now, Bitcoin doesn't have to provide power to people operating phones for customer support and other things that people expect from their bank, so in that sense you save a bit, but then there are still developers working on the bitcoin ecosystem, and there's this minor issue called miners that also use a small amount of power on top of it all.
  - wodow 6y ago
    For it to be "obviously false" you seem to be assuming that the comparison in energy use should be between the Bitcoin network (miners and all) and bank infrastructure ("a few database servers per bank" plus "people operating phones ... and other things"), whereas I think that the OP (and others) believe the comparison should be between Bitcoin-the-currency (still miners and all) and USD-the-currency (many dependencies!). That's much harder to cost and argue which is why I'd like to see a serious analysis on this I realise that using the phrase "the banking system", as the quote does, makes it ambiguous.
LAMike 6y ago
The author is mistaking the lock reward as the ONLY reason electricity is used to secure the network. The block rewards are a small portion of the reason a miner like Fidelity would secure the network... it's about preserving the past as well.
jonathanpeterwu 6y ago
Mining bitcoin is exactly what the author mentions a heat sink not a battery. But mining bitcoin and capturing excess heat produces a provably scarce and globally accessible digital asset. You are not transferring energy across time or space. Instead you are directly converting cheaply available energy (usually hydro) into monetary value that can be easily transferred through time and space.
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kickscondor 6y ago
What I'd really like to see is a discussion of how Bitcoin energy use compares with the current banking system. Many people criticize Bitcoin in a vacuum - so it's easy to get behind those arguments. But I'd rather talk about whether or not Bitcoin is worthwhile progress or not. The current banking system might not be as wasteful from an energy usage perspective - but might have other environmental costs - plastic, paper printing, transportation costs. How do those compare? And is Bitcoin progress - in the sense that it eliminates the state from printing and controlling the currency? If not, then what would progress look like?
- toyg 6y ago
  Those are very good questions, but nobody wants to touch them because they are inherently political and somewhat destabilising. Personally, I don’t think the absence of well-regulated banks and central banks under a degree of democratic oversight would be progress; but there is some value in making the underground economy somewhat structured and relatively transparent. It’s a bit like the Japanese yakuza: everyone knows it exists, members are very visible, the state tolerates it as long as it stays under certain limits, and so on. This is not perfect but it’s a better and more desirable situation than full-out war like in Mexico, for example. Similarly, we currently have little or no visibility of dirty money; we know it’s pumped in our “clean” banking systems but we don’t really know where, we’re in a constant struggle to uproot it before it taints the rest. Wouldn’t it be better to keep all that in its own dedicated system? Btc can be that.
o_p 6y ago
So much words to cope you didnt get into the train at the right time, but keep going no-coiners :-)
- verdverm 6y ago
  HN is not a place where calling others derogatory names because they have different opinions is acceptable. Please refrain from doing this again
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nly 6y ago
Bitcoin (and similar) are the only truly global digital cash assets. We could build a digital currency that was secured by public cryptography, totally anonymous, tradable without involving central authorities, and verifiable offline/by third-parties. It would require no blockchain, consume no natural resources (anymore than, say, VISA), and plug seamlessly in to the existing banking system. No government, however, would allow such a beast to be on the Internet: global, unrestricted, and free of capital controls. In order to redeem or refresh the tokens you'd need to be a citizen and have a bank account. That's the only unique selling point for Bitcoin.
- mids_hn 6y ago
  GNU Taler doesn't have those issues. It keeps payers anonymous, while payees not, allowing them to be taxed. Being a payment system, any currency can be attached to it, including USD and Bitcoin.
mshumi 6y ago
Hard fork to pure proof of stake, problems solved. However, against Miners' best interests
alphabet9000 6y ago
haven't read the comments yet, but i ctrl+f'd and searched the word 'fiat' - 39 results - yeah its a bitcoin thread alright
Black101 6y ago
Nice job Sherlock... you appear to know what battery means.
Zamicol 6y ago
I cannot fathom Bitcoin ever adopting Proof of Stake (PoS) like Ethereum. Bitcoin's community is far too dogmatic. I see PoW as a liability for the whole cryptocurrency system. For this reason I think the transition to PoS will be like the Whigs vs. the Republicans. One simply does not survive.
dalbasal 6y ago
Some articles' job is to spark a great rebuttal. This is a great read, and great debating. Nerd-bait-ey information density so high. The economic equilibrium of the Bitcoin economic model is as follows: the total cost of all electricity invested into the network over a 10-minute period strives to be equal to the present financial value of 6.25 Bitcoins. If electricity becomes cheaper, then more electricity gets poured into the system, producing the exact same output. That is why Bitcoin is not a battery — Bitcoin is a sink: its economic output is constant, regardless of the amount of resources poured into it.³ When miners pour more electricity into Bitcoin, they don’t get more Bitcoin; instead, the entirety of the Bitcoin network becomes more secure. Security is not a commodity,.. .. Bitcoin is indeed incentivizing the creation of cheap power sources, but those sources are not going to be used for anything... I learned more about bitcoin in a few minutes than so many hours of people talking while saying so little. Glass of ice water in hell. I can now deduce that the "equilibrium energy cost" of bitcoin is currently $45m per day.
- nadahalli 6y ago
  I am curious why the author thinks that security is not a commodity.
  - xapata 6y ago
    How about explaining why it might be -- How do I store it and trade it; and does it have provenance?
  - tim333 6y ago
    If you look at the definition security doesn't really fit. See for example https://en.wikipedia.org/wiki/Commodity https://en.wikipedia.org/wiki/Commodity
  - dalbasal 6y ago
    Read on. The counterexample is aluminium, which is a commodity. It can be stored, resold. Security cannot. You output the same number of bitcoins regardless of electricity input. There's no storage or saving that can be recovered later. With aluminium, you would have more aluminium. The reason it's like this is because the price of bitcoin isn't affected by electricity prices and electricity prices aren't affected by bitcoin prices.
153791098c 6y ago
Bitcoin was meant first and foremost as a peer-to-peer electronic cash system. It has to function as a large scale payments systems for it to work as a store of value (utility drives value). The current value proposition is ridiculous and can't ever work long term. Up to 2015-17 the price was at least partially driven by the utility it had, and part by speculation about what it could be. Right now the price is driven purely by speculation and the underlying value is entirely gone. The system wasn't initially designed for this so the cracks and unaligned incentive system are starting to show. It's a shame such a great project ended up like this. It's now one of the most uninteresting cryptocurrency projects (in prospects) in the space and once people realise the whole SoV narrative is a load of crap the market will become a bloodbath. It has and will continue to set the whole crypto revolution back for years. Enough time for states to make sure they stay in control of the money society uses.
- jenoer 6y ago
  A decentralized peer-to-peer cash system as a movement against the (banking) elite has become a centralized and 'propagandized' "story of value" for the (banking) elite. Satoshi Nakamoto has great dreams, but basic human greed has struck again.
  - MrMan 6y ago
    Bitcoin was about greed from the beginning, the myth that it was somehow altruistic is just that. It was obvious from the start how bitcoin was setup, the design encodes the intentions of the designer. You can say it's supposed to be a payment system but it is mostly an experiment in game theory and behavioral finance.
ridicter 6y ago
Was this removed from hacker news' front page? I don't see it there any more even though this post is ~3 hours old and has 300 points.
- javierbyte 6y ago
  Looks like so, weird. I currently see "Bitcoin as a Battery" in the front page, which is older and has less points, with 121 points and posted 7 hours ago.
- kilovoltaire 6y ago
  Just came here to ask about this too Seems a bit sketchy for the other article to be on front page, but its newer, more-upvoted rebuttal to be removed @dang if you see this, I would love to understand the reason
  - ridicter 6y ago
    And they pulled the plug on this thread while it was hot. They'll probably put it back when it simmers down and gets off the front page. YC has a vested interest in crypto. They also have vested interests in carbon removal. I'm just surprised to see the censorship.
heurist 6y ago
Arguments like 'is bitcoin a battery or not' reduce the complexity of bitcoin down to meaningless binary noise. It's a new thing entirely, there's no analogy that will effectively describe it. I have seen effective points made on both sides of the electricity usage argument. There is certainly a strong incentive to use the lowest cost energy to mine, and there is significant waste in energy production that is beginning to be harvested for bitcoin rather than lost entirely. I might be buying into the propaganda, who knows. However, the more I learn about bitcoin, the more I believe it will be around for a very long time. I'd rather debate how to use the wealth that it is generating to develop more sustainable economies than argue over terminology. Let's build walkable cities that don't need cars, where the buildings are dense and energy-efficient, renewable energy production is distributed and owned by communities, and locally grown food is abundant. The value bitcoin is storing needs to be put to work eventually. The systems to do this are starting to come into place, there's no new technology needed.
- dalbasal 6y ago
  This article isn't trying to define bitcoin, and neither is the article it's refuting. It's not about terminology at all. This article is about how energy economics of bitcoin currently work. Quite an interesting topic, besides the headline.
BTCOG 6y ago
Different people tend to look at Bitcoin in completely different ways. In terms of what is a store of value, and what is wasted energy vs well used and worthwhile energy consumption. https://bitcoinmagazine.com/business/bitcoin-will-save-our-earth https://bitcoinmagazine.com/business/bitcoin-will-save-our-e...
cannam 6y ago
Can anyone explain why this apparently excellent article, 3 hours old, with 305 points and 304 comments, is currently on page 16 (!) of HN - while the article it's a reply to, 8 hours old, 127 points, 240 comments, is still on the front page? I thought articles were marked down with the passage of time and by the flamewar coefficient (comments-to-points ratio) but neither goes anywhere near explaining this. Is there something massively wrong with it that I'm not seeing? I thought it seemed like good analysis and a great explainer for the subject.
- ckastner 6y ago
  The way I understand it, flagging by users also penalizes rank; hence, users disliking the article can bury it.

345 points by velmu 6y ago

> But that’s not the case: in Bitcoin, more electricity does not buy “more Bitcoin”, it rather buys “more security”. I think this piece misses. Electricity and hash power does translate to economic value. It gives you more share of the 6.25 reward. The author's argument is made by conflating economic value and security into one. As a whole, the system produces 6.25 bitcoins every 10 minutes. The reward is a constant. But the BTCUSD price can go up. And it has always been going up. That means it's always profitable to invest in mining. The original piece from Nick Grossman also misses. There're two problems with using Bitcoin as a battery. The first problem is Bitcoin has an unbounded energy use [1]. If its price continues to go up forever, that means we'd spend unbounded energy. The second problem is volatility. Unlike the aluminum example, Bitcoin has no intrinsic value. It has no practical applications like aluminum. Its price is pure speculation. With Bitcoin, we're converting energy into a volatile asset. Bitcoin can be a battery. But it's a fairly bad one. It stores value with high volatility. The problem hindering Bitcoin's adoption is volatility. Changing the narrative from digital gold to battery won't fix the problem. [1] https://bitflate.org/post/2021/02/05/the-bitcoin-price-paradox.html https://bitflate.org/post/2021/02/05/the-bitcoin-price-parad...

rjknight 6y ago
> It gives you more share of the 6.25 reward. But this is zero-sum competition for a portion of a fixed supply. In the aggregate, more electricity does not buy more Bitcoin because it is a fundamental principle of the Bitcoin system that the supply of Bitcoin cannot be increased in response to anything.
- bitflate 6y ago
  More electricity buys more BTCUSD, so far. It hasn't been a problem since Bitcoin price continues to go up. If you own Bitcoin, you believe it'd go up forever. If you don't own Bitcoin, you think it'd stop at some point. This is the disconnect between Bitcoin and the world.
  - rjknight 6y ago
    I might buy an umbrella because I believe it is going to rain, but that does not mean that an increase in the supply of umbrellas will lead to an increase in the amount of rain.
ftlio 6y ago
Thank you for a measured response that doesn't categorize everyone on the "wrong side" of history here as inept, or miscategorizes Proof of Work. What also seems to be thrown out with the bathwater in this discussion is that for the project of intermediary free money, with a long time horizon, the subsidy is only a small reason Bitcoin will have ever been mined.

skywhopper 6y ago

Yes, this is exactly what I thought when I read the other piece. A battery stores energy to use elsewhere. Bitcoin just consumes leftover energy. The fact that it would be able to consume as much energy as we could ever provide to it is not a feature.

isoprophlex 6y ago
No, BTC doesn't just consume leftover energy. It causes delays in overhauling our energy grid. Renewable generation must be paired with storage to get past a certain % of share in the energy mix. BTC mining is analogous to just turning off windmills or solar panels during times of excess production. Presence of BTC miners removes market pressure on grids that make storage feasible. BTC is actively harmful to the environment. Proof of work is an abomination.

ArtTimeInvestor 6y ago

Bitcoin is getting an unfair treatment here on HN. The mining of Bitcoin uses as much resources as people are willing to pay for the resulting coins. The same holds true for gold. 3000 tons of gold are mined per year. Which is worth about $150B. So the mining probably uses resources of about $150B as well. The value of bitcoins mined per year is $15B. So Gold mining probably uses about 10x as much resources as Bitcoin mining.

numbsafari 6y ago
Once mined, gold is gold and we can just hand it to each other, or exchange notes of ownership on a very efficient ledger. Bitcoin requires a constant supply of electricity to maintain its utility. Without electricity, Bitcoin would collapse. Gold’s utility as a medium of exchange and a store of value is secure in a crisis, bitcoin’s is not.
- moralsupply 6y ago
  Feel free to keep all your wealth allocated in gold. We'll talk again in 5 years time.
  - rpadovani 6y ago
    Will gold lose its value in the next 5 years?
  - CalChris 6y ago
    Gold is a useful metal over and and above its currency value. Bitcoin is not useful except as a currency.
    - moralsupply 6y ago
      Except that most gold being traded under the "store of value" premise doesn't exist, it's "paper gold". Also, gold is the one most manipulated market in the world, having both banks, central banks and governments actively interfering in its price discovery.

moralsupply 6y ago

I love how much the HN community is invested in demonizing Bitcoin for its energy consumption. I wish for you bashing Bitcoin to keep all your wealth allocated in assets associated with fiat currencies. I also wish that you spend lots of time running political narratives in order to stop a decentralized piece of technology from growing. Good luck trying to reach out the Bitcoin CEO in order to ask him to shut down his "environmentally damaging operations". In 5 years time, however, once the US dollar has lost 50% of its purchase power, you'll be begging your employer to pay you in Bitcoin. By that time you'll conveniently forget the narrative about energy consumption. You'll even claim that Bitcoin is one of the most important technologies ever invented, and that you always believed in it.

avree 6y ago
Bitcoin is a fiat currency though...
- moralsupply 6y ago
  Do you know what "fiat" means? It means "mandatory". How is Bitcoin being imposed on you? On the other hand, if you live in the US and you decide to not use the US Dollar, you'll go to jail.
  - tedunangst 6y ago
    Going to jail for not using USD doesn't sound like a compelling argument for me to use BTC.
    - moralsupply 6y ago
      How did you conclude that I was implying that USD being fiat is an argument for the use of BTC?
  - tempodox 6y ago
    You are wrong. The fiat part comes from how its value is determined. https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money

simias 6y ago

I was not familiar with the original argument but it's so ridiculous at face value that I wonder if a rebuttal was necessary. Mining Bitcoins is like Iceland smelting aluminum? Mining bitcoin "converts electricity into value"? Preposterous. The value of bitcoin is driven by speculation, and in turns that increases the incentive for the miners, not the other way around. There's no value created by crunching random SHA-256. As a thought experiment, let's assume that tomorrow a breakthrough slashes in half the cost of energy worldwide. Nuclear fusion reactors become viable or something. That would probably make aluminum cheaper, since processing it is so energy-incentive. But what about bitcoin? It'd just lower the bar for mining to be profitable, and it'll temporarily increase the size of the mining pool as the difficulty adjusts, but that's about it. There's simply no direct relationship between the cost of electricity and that of bitcoin that I can see. There's not even a direct relationship between the cost of electricity and the service provided by bitcoin. Bitcoin doesn't become more or less useful based on the cost of mining, it's always one block every 10 minutes give or take.

exdsq 6y ago
Bitcoin becomes more secure from 51% attacks the more electricity (cost) that is required
- derefr 6y ago
  But the network is only incentivized to be exactly secure enough from Sybil attacks that nobody bothers to try one. There’s no added value in being more secure to Sybil attacks beyond that. Just like there’s no added value in hiring extra fire-fighers once every fire gets an instant + effective response. ————— The problem with Proof-of-Work systems that prevents this logic from actually translating to a sigmoid curve in number-of-miners, though, is that any left-over electricity that isn’t going into “good” mining, could instead be going into Sybil attacks. It’s as if every potential fire-fighter who isn’t hired as a fire-fighter, instead has a chance of being recruited by “Big Fire” to one day work together to all set fires at once. If-and-when governments actually establish their own cryptocurrencies, massive distributed purchases of electrical capacity for the sake of mounting a Sybil attack are exactly the sort of thing that state intelligence agencies will try to track and prevent ahead-of-time, such that nobody will ever be able to gain that capacity in the first place. Just like right now nobody can really build a stockpile of plutonium. But as long as governments don’t care, and attackers are free to be economic actors buying up electrical capacity, then there is a specific effect we see today: rather than the network’s electricity consumption just growing to a certain absolute amount, the set of all Proof-of-Work networks are incentivized together to consume a certain percentile amount of global excess electricity consumption — 51% of it, specifically. Such that, at any point, there’s not enough electricity left over to even theoretically mount a Sybil attack against the largest network. (The smaller PoW networks? Basically screwed.)

SideburnsOfDoom 6y ago

Bitcoin is not a battery for the very simple reason that it does not store energy: you cannot turn a bitcoin directly back into energy. Proof that energy has been expended has no intrinsic value at all. If it did, we would not throw out burnt toast. But it is mere entropy.

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tantalor 6y ago
Bitcoin is money, which can be exchanged for goods & services: buy wholesale electricity, or the means to produce it yourself; so the bitcoin -> energy analogy works. I'm not sure what you mean by "directly".
- capableweb 6y ago
  With that argument anything is a battery if you can find the right buyer. Used panties? Batteries. I feel like the argument of "Bitcoin is a battery" was never well done in the first place, since obviously batteries usually have to actually "store energy" and eventually "output energy" again. Something Bitcoin does not do.
  - deleted 6y ago
    [deleted]
  - knocte 6y ago
    You cannot have your hydro power plant generate panties.
- africanboy 6y ago
  is sex a battery?
- SideburnsOfDoom 6y ago
  What I mean is: at the intersection of deliberately not understanding what in physics terms is actually "a battery", and not understanding what in financial terms is actually "a store of value"; you will find BitCoin fans.

sprafa 6y ago

Bitcoin is the digital gold for the cryptocurrency universe atm. It's not really useful anymore for any of its advertised goals - Ethereum is a far better coin for all practical purposes. But since it's the first and it's accepted everywhere, it's going to maintain its dominance. Obv. Bitcoin is also deflationary having a fixed supply. But really it's really about it being the gateway to the altcoin universe, where actual useful stuff is being built. The Bitcoin Core team has fallen prey to corruption and collusion with miners, unf.

dfgdghdf 6y ago
> Ethereum is a far better coin for all practical purposes. Pretty sure Ethereum scaling as a currency is even worse that bitcoin. Ethereum has some very interesting features, but performance is not one of them.
- chrisco255 6y ago
  Yes, it is, thanks to Zero Knowledge proofs (and shards in the future), Ethereum will scale to 200K TPS (with proof of stake running 99.98% more efficiently than PoW: https://medium.com/starkware/on-the-road-to-starknet-a-permissionless-stark-powered-l2-zk-rollup-83be53640880 https://medium.com/starkware/on-the-road-to-starknet-a-permi... https://medium.com/matter-labs/zksync-2-0-roadmap-update-zkevm-testnet-in-may-mainnet-in-august-379c66995021 https://medium.com/matter-labs/zksync-2-0-roadmap-update-zke...
  - DemocracyFTW 6y ago
    > Zero Knowledge proofs there's lots of that stuff on the internet to be sure
  - ric2b 6y ago
    > Yes, it is > will
    - chrisco255 6y ago
      There are some zkRollups already live: https://loopring.org/#/ https://loopring.org/#/ and https://zksync.io/ https://zksync.io/ They are currently capable of 2K - 10K TPS, which is substantial. But with sharding they'll achieve 200K TPS.

DJBunnies 6y ago

It’s weird seeing consistent downvotes of folks trying to clarify how/why Bitcoin consumes energy. Is there something better than minting new money that we should be using this energy on, and to which we can economically distribute said energy from locations with excess capacity?

Okkef 6y ago
It's weird seeing consistent replies by people who have not read the post.
Spooky23 6y ago
It’s not weird, the article isn’t about that. The premise that the author was responding to is that Bitcoin represents some fungible store of electricity, and would somehow magically drive energy costs down. That’s an interesting thought experiment but, wrong. Other than utilizing low cost electricity that would otherwise be wasted, there’s no way to transmutate bits into electricity. There’s a lot of bikeshedding about the wastefulness of minting virtual money with electricity. End of the day, people will do whatever they want to generate profit. Some poor bastard in Africa is toiling away right now in a dangerous mine to extract gold ore for investors. Right now, it makes economic sense to buy Electricity in China to produce internet money and bypass capital controls.
fredfoobar 6y ago
HackerNews has a huge anti-bitcoin bias, if it isn't clear to you, it should be now.
DasIch 6y ago
> Is there something better than minting new money that we should be using this energy on, and to which we can economically distribute said energy from locations with excess capacity? CO2 extraction from our atmosphere for long term storage or creation of CO2-neutral carbon-based fuels for applications that require fuels with high energy density like airplanes.
- DJBunnies 6y ago

smoldesu 6y ago

I honestly can't agree with either article. Bitcoin's shortcomings are becoming apparent because it has hit an impossible edge case: after years of latent nerdspeak referencing cryptocurrency, one good rally got Wall Street to take notice. Now, everyone seems to have their own ideas about what Bitcoin should be: it's a store of value, it's a securities investment, it's a money laundering machine, or it's an alternative to the stock market. I don't blame Satoshi for staying hidden, because this is such a bastardization of what his vision of cryptocurrency really was. Bitcoin was free software, with the same purpose as the GNU coreutils or the Linux kernel: it was intended to empower the world indiscriminately, and provide opportunities and solutions to people who otherwise wouldn't have access to them. Bitcoin was a way to easily pay someone for a side job, or a private tip jar for your website. The current paradigm around what people perceive Bitcoin as is going to come crashing down, eventually. When it does, no nation will ever trust a digital currency again, thanks to an impending media shitstorm about how dangerous Bitcoin was.

SubiculumCode 6y ago
There is no reason in my mind why bitcoin would crash. Gold has not (and no gold's price is not majorly driven by its industrial uses). If anything it is more like gold than ever before. Expensive, and difficult to find, transport, and spend.
- slg 6y ago
  The fact that gold is "Expensive, and difficult to find, transport, and spend." is mostly a problem for the havers of gold. The biggest problem for PoW cryptocurrencies is the wasted electricity and corresponding wasting of carbon output which is a huge negative externality impacting all the non-cryptocurrency havers too.
  - anikan_vader 6y ago
    I would think the mining of gold also has massive negative externalities, including carbon output.
  - 6y ago

Dotnaught 6y ago

We could save time with these sorts of Bitcoin analyses if authors disclosed up front whether they have a financial interest in Bitcoin. It's fine for a VC to conclude "I believe the properties of Bitcoin’s battery are powerful and profound, and will lead to the kinds of solutions I point to here." But when the author's firm invests in Bitcoin companies, that's not exactly a surprising conclusion.

the_local_host 6y ago
Can't you just assume that anyone who is pro-bitcoin owns it, and anyone who is anti-bitcoin does not? Anyone who doesn't fit into those categories would (I guess) be unconvinced of their own analysis, but publishing it anyway?
- DangitBobby 6y ago
  I disagree. You can be pro something and not have it or anti something and have it anyway. But the people who are most likely to lie or spin the truth for personal benefit will be those who own it and want to see it succeed, unless you can short Bitcoin. Even so, I think it's less likely that people will short something they think is legitimate than to buy something they think is illegitimate.
  - capableweb 6y ago
    > But the people who are most likely to lie or spin the truth for personal benefit will be those who own it and want to see it succeed Does it matter why they are lying or spinning the truth? The only thing we should care about is that they were lying, so we need to look at the arguments themselves, otherwise we risk loosing impartialness because of our own feelings about cryptocurrencies.
  - deleted 6y ago
    [deleted]
- lucb1e 6y ago
  I'm not a fan of many of google's practices, but still use their traffic data a few times per month because there isn't really any alternative. Similarly, I bought some bitcoin to donate money to sci-hub, because I believe the good that they do is greater than the negative effects of a single additional bitcoin transaction, and sci-hub doesn't offer any alternative methods. I don't have to like bitcoin to weigh pros and cons and make an educated decision to use it for a specific purpose. Then as for holding it, I was paid out in bitcoin for a short time and waited a while before converting to fiat in order to not pay miners multiple times. During that time I was both holding bitcoin as well as being of the opinion that this blockchain+PoW tech has lost the novel factor and we should get over the hype rather than spend more and more energy on it when we're already consuming a hundredfold more energy than we can currently produce without direct CO2 emissions. It's not as simple as: you use it, therefore you must love it (or conversely, if you don't use it you must hate it; some people might be interested in the tech but still not believe it's an investment vessel befitting of their risk profile).

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baby 6y ago

Why are we still talking about Bitcoin when there are hundreds of other currencies with no fork, no proof of work, much faster finality/latency/throughput, etc?

Itsdijital 6y ago
Bitcoin has the branding. It's like the bud light of crypto in a world where most people aren't aware yet that bud light isn't the only beer.

chedine 6y ago

Leaving the arguable utility and purpose aside, why is consuming electricity for securing traditional finance ok, but not for securing crypto based financial system? Isnt traditional systems consuming arguably needless electricity for ATM security, severs, surveillance, transportation, software and its resources that go into securing the system, etc etc? If thats acceptable i wonder why is the energy spent, in the name of PoW, unacceptable?PoW grabs a lot of eyeballs and also lets these paper analysts to easily quantify the consumption. While quantifying the energy consumption of traditional systems is difficult and hence becomes ok..

jonathanpeterwu 6y ago
Bitcoin energy consumption is a brittle argument, our entire monetary system is backed by much more expensive energy usage. Energy usage for security is a trait of sound money.
mancerayder 6y ago
There's a lot of one-liner talk about externalities in this thread above, but I'd be curious if people would show the stats of energy consumption of the rest of the traditional banking system. I'm not an owner of BTC, but I worked managing datacenter servers in the past, and it's like no one has mentioned a single time that there are arrays upon arrays of servers, 10's of thousands, that run company back-end systems. There are servers to manage the servers to manage the servers (stuff like monitoring, automation management systems, etc.), and it blossoms from there. And these places still use mainframes on top of distributed computing. BTC might be giant waste of resources, but it's curious that the comparisons imply that it's BTC versus no energy usage, instead of BTC versus traditional banks with their giant datacenters all over the country and world. Might be worth at least a mention in the comparison?
- varjag 6y ago
  Traditional banking runs all the world's actual financial transactions (likely billions settlements at any given moment), something that crypto hasn't even started scratching.

lordnacho 6y ago

One argument I hadn't heard yet about this battery thing: If you think about it, everything is done in one place or another because it's advantageous to do it there. We grow food out in the countryside because we don't find it economically sensible to grow potatoes in Mayfair, where we'd rather have hedge funds. Are potatoes then a solar panel, used to capture and transport energy to fund managers? I mean sure, but in a trivial way that doesn't really illuminate any economic issue. Specialization has been known for some time.

noxer 6y ago

Footnotes #2 is rather unlikely. First PoS is not the successor of PoW. Its the same idea all over again. People are rewarded for wasting capital opportunity instead of energy. It only makes sense for them if they get enough return on the capital. Therefore it can not be cheap. Someone has to pay thous stakers. Trough fees or trough inflation. Neither is in the interest of the accentual user of the network. FBA (Federated Byzantine Agreement) DLT are the real successors to PoW. They provide no incentives for running/"securing" the network instead the people who wanna use it runs it themself that and obviously they have no interest in wasting resources or making the usage expensive. The second thing that is very unlikely is that bitcoin will move away from PoW. The miners are in control. If they dont want to move away, people can only fork and at that point the general consensus is that the fork is no longer "the real bitcoin".

fastball 6y ago
Have a link where I can read more?
- noxer 6y ago
  Could not find something to read about this topic directly but here https://www.youtube.com/watch?v=fo8ZScrXFZE https://www.youtube.com/watch?v=fo8ZScrXFZE is a great talk about why the incentives in blockchains systems are bad for the system and its users. The speaker is an ex-btc dev and one of the creator of the first public FBA based blockchain. (which obviously mean hes biased but good arguments are good arguments)
  - fastball 6y ago
    Interesting, thanks for the link! At first blush, my main concern with such a system is tragedy of the commons – without an artificial incentive, it seems likely that people would say "everyone else is running a full node, why do I need to, that will just cost me money". And then boom, everybody does it and you don't have a network anymore.
    - 6y ago

lmilcin 6y ago

Bitcoin isn't a Sink. Sink has utility in disposing waste. Bitcoin is a short circuit in the system. It is a fault. It is where our resources disappear without bringing any useful value other than rewarding the one who can burn more but leaving everybody else worse overall.

ric2b 6y ago
The useful value is the increased security from larger threats.

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tumblewit 6y ago

bitcoin is the dotcom bubble of 2020s

fcantournet 6y ago

It's not a sink, it's a

fcantournet 6y ago

It's not a sink it's a drag

wesleywt 6y ago

HN is anti-Bitcoin. You probably should take these comments with a grain of salt until there is more balance.

mynameisvlad 6y ago
HN is not one person. There's people here that are for Bitcoin and those that are against it. I see plenty of healthy debate in the comments here and in other submissions about it.
- literallycancer 6y ago
  Crypto threads here are almost always full of people who can't be bothered to do even a cursory search or find out how things actually work. The tech itself is almost never discussed, and you'll never find a novel perspective here for a very simple reason -- the people who push the envelope in this area are not posting here.
  - kukabynd 6y ago
    Mind sharing those places where they do post?

wodow 6y ago

> Bitcoin ... is still likely much cheaper than the banking system (depending on how you measure) I've seen this argued in articles about Bitcoin's energy usage, but not a thorough analysis (either way). Has someone written one?

lucb1e 6y ago
Well it's rather obviously false. Even if there are no miners at all (e.g. pretend the difficulty was fixed at a trivial value), the only way to know whether someone really has the coins they are paying with is to download all transactions that lead to this public key having a certain value. Even with blockchain checkpoints, you'd be hard-pressed to make this use less power than a very badly designed centralized service -- unless you use some form of centralization and defeat the purpose. Comparing transactions is one way of measuring it, but I can't fault the proponents for saying it's a bad analogy. The number of transactions is indeed quite unrelated to the current power draw. But it's not hard to see that even the transaction system without the mining is already less efficient than a few database servers per bank for each bank in the world. Now, Bitcoin doesn't have to provide power to people operating phones for customer support and other things that people expect from their bank, so in that sense you save a bit, but then there are still developers working on the bitcoin ecosystem, and there's this minor issue called miners that also use a small amount of power on top of it all.
- wodow 6y ago
  For it to be "obviously false" you seem to be assuming that the comparison in energy use should be between the Bitcoin network (miners and all) and bank infrastructure ("a few database servers per bank" plus "people operating phones ... and other things"), whereas I think that the OP (and others) believe the comparison should be between Bitcoin-the-currency (still miners and all) and USD-the-currency (many dependencies!). That's much harder to cost and argue which is why I'd like to see a serious analysis on this I realise that using the phrase "the banking system", as the quote does, makes it ambiguous.

LAMike 6y ago

The author is mistaking the lock reward as the ONLY reason electricity is used to secure the network. The block rewards are a small portion of the reason a miner like Fidelity would secure the network... it's about preserving the past as well.

jonathanpeterwu 6y ago

Mining bitcoin is exactly what the author mentions a heat sink not a battery. But mining bitcoin and capturing excess heat produces a provably scarce and globally accessible digital asset. You are not transferring energy across time or space. Instead you are directly converting cheaply available energy (usually hydro) into monetary value that can be easily transferred through time and space.

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kickscondor 6y ago

What I'd really like to see is a discussion of how Bitcoin energy use compares with the current banking system. Many people criticize Bitcoin in a vacuum - so it's easy to get behind those arguments. But I'd rather talk about whether or not Bitcoin is worthwhile progress or not. The current banking system might not be as wasteful from an energy usage perspective - but might have other environmental costs - plastic, paper printing, transportation costs. How do those compare? And is Bitcoin progress - in the sense that it eliminates the state from printing and controlling the currency? If not, then what would progress look like?

toyg 6y ago
Those are very good questions, but nobody wants to touch them because they are inherently political and somewhat destabilising. Personally, I don’t think the absence of well-regulated banks and central banks under a degree of democratic oversight would be progress; but there is some value in making the underground economy somewhat structured and relatively transparent. It’s a bit like the Japanese yakuza: everyone knows it exists, members are very visible, the state tolerates it as long as it stays under certain limits, and so on. This is not perfect but it’s a better and more desirable situation than full-out war like in Mexico, for example. Similarly, we currently have little or no visibility of dirty money; we know it’s pumped in our “clean” banking systems but we don’t really know where, we’re in a constant struggle to uproot it before it taints the rest. Wouldn’t it be better to keep all that in its own dedicated system? Btc can be that.

o_p 6y ago

So much words to cope you didnt get into the train at the right time, but keep going no-coiners :-)

verdverm 6y ago
HN is not a place where calling others derogatory names because they have different opinions is acceptable. Please refrain from doing this again

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nly 6y ago

Bitcoin (and similar) are the only truly global digital cash assets. We could build a digital currency that was secured by public cryptography, totally anonymous, tradable without involving central authorities, and verifiable offline/by third-parties. It would require no blockchain, consume no natural resources (anymore than, say, VISA), and plug seamlessly in to the existing banking system. No government, however, would allow such a beast to be on the Internet: global, unrestricted, and free of capital controls. In order to redeem or refresh the tokens you'd need to be a citizen and have a bank account. That's the only unique selling point for Bitcoin.

mids_hn 6y ago
GNU Taler doesn't have those issues. It keeps payers anonymous, while payees not, allowing them to be taxed. Being a payment system, any currency can be attached to it, including USD and Bitcoin.

mshumi 6y ago

Hard fork to pure proof of stake, problems solved. However, against Miners' best interests

alphabet9000 6y ago

haven't read the comments yet, but i ctrl+f'd and searched the word 'fiat' - 39 results - yeah its a bitcoin thread alright

Black101 6y ago

Nice job Sherlock... you appear to know what battery means.

Zamicol 6y ago

I cannot fathom Bitcoin ever adopting Proof of Stake (PoS) like Ethereum. Bitcoin's community is far too dogmatic. I see PoW as a liability for the whole cryptocurrency system. For this reason I think the transition to PoS will be like the Whigs vs. the Republicans. One simply does not survive.

dalbasal 6y ago

Some articles' job is to spark a great rebuttal. This is a great read, and great debating. Nerd-bait-ey information density so high. The economic equilibrium of the Bitcoin economic model is as follows: the total cost of all electricity invested into the network over a 10-minute period strives to be equal to the present financial value of 6.25 Bitcoins. If electricity becomes cheaper, then more electricity gets poured into the system, producing the exact same output. That is why Bitcoin is not a battery — Bitcoin is a sink: its economic output is constant, regardless of the amount of resources poured into it.³ When miners pour more electricity into Bitcoin, they don’t get more Bitcoin; instead, the entirety of the Bitcoin network becomes more secure. Security is not a commodity,.. .. Bitcoin is indeed incentivizing the creation of cheap power sources, but those sources are not going to be used for anything... I learned more about bitcoin in a few minutes than so many hours of people talking while saying so little. Glass of ice water in hell. I can now deduce that the "equilibrium energy cost" of bitcoin is currently $45m per day.

nadahalli 6y ago
I am curious why the author thinks that security is not a commodity.
- xapata 6y ago
  How about explaining why it might be -- How do I store it and trade it; and does it have provenance?
- tim333 6y ago
  If you look at the definition security doesn't really fit. See for example https://en.wikipedia.org/wiki/Commodity https://en.wikipedia.org/wiki/Commodity
- dalbasal 6y ago
  Read on. The counterexample is aluminium, which is a commodity. It can be stored, resold. Security cannot. You output the same number of bitcoins regardless of electricity input. There's no storage or saving that can be recovered later. With aluminium, you would have more aluminium. The reason it's like this is because the price of bitcoin isn't affected by electricity prices and electricity prices aren't affected by bitcoin prices.

153791098c 6y ago

Bitcoin was meant first and foremost as a peer-to-peer electronic cash system. It has to function as a large scale payments systems for it to work as a store of value (utility drives value). The current value proposition is ridiculous and can't ever work long term. Up to 2015-17 the price was at least partially driven by the utility it had, and part by speculation about what it could be. Right now the price is driven purely by speculation and the underlying value is entirely gone. The system wasn't initially designed for this so the cracks and unaligned incentive system are starting to show. It's a shame such a great project ended up like this. It's now one of the most uninteresting cryptocurrency projects (in prospects) in the space and once people realise the whole SoV narrative is a load of crap the market will become a bloodbath. It has and will continue to set the whole crypto revolution back for years. Enough time for states to make sure they stay in control of the money society uses.

jenoer 6y ago
A decentralized peer-to-peer cash system as a movement against the (banking) elite has become a centralized and 'propagandized' "story of value" for the (banking) elite. Satoshi Nakamoto has great dreams, but basic human greed has struck again.
- MrMan 6y ago
  Bitcoin was about greed from the beginning, the myth that it was somehow altruistic is just that. It was obvious from the start how bitcoin was setup, the design encodes the intentions of the designer. You can say it's supposed to be a payment system but it is mostly an experiment in game theory and behavioral finance.

ridicter 6y ago

Was this removed from hacker news' front page? I don't see it there any more even though this post is ~3 hours old and has 300 points.

javierbyte 6y ago
Looks like so, weird. I currently see "Bitcoin as a Battery" in the front page, which is older and has less points, with 121 points and posted 7 hours ago.
kilovoltaire 6y ago
Just came here to ask about this too Seems a bit sketchy for the other article to be on front page, but its newer, more-upvoted rebuttal to be removed @dang if you see this, I would love to understand the reason
- ridicter 6y ago
  And they pulled the plug on this thread while it was hot. They'll probably put it back when it simmers down and gets off the front page. YC has a vested interest in crypto. They also have vested interests in carbon removal. I'm just surprised to see the censorship.

heurist 6y ago

Arguments like 'is bitcoin a battery or not' reduce the complexity of bitcoin down to meaningless binary noise. It's a new thing entirely, there's no analogy that will effectively describe it. I have seen effective points made on both sides of the electricity usage argument. There is certainly a strong incentive to use the lowest cost energy to mine, and there is significant waste in energy production that is beginning to be harvested for bitcoin rather than lost entirely. I might be buying into the propaganda, who knows. However, the more I learn about bitcoin, the more I believe it will be around for a very long time. I'd rather debate how to use the wealth that it is generating to develop more sustainable economies than argue over terminology. Let's build walkable cities that don't need cars, where the buildings are dense and energy-efficient, renewable energy production is distributed and owned by communities, and locally grown food is abundant. The value bitcoin is storing needs to be put to work eventually. The systems to do this are starting to come into place, there's no new technology needed.

dalbasal 6y ago
This article isn't trying to define bitcoin, and neither is the article it's refuting. It's not about terminology at all. This article is about how energy economics of bitcoin currently work. Quite an interesting topic, besides the headline.

BTCOG 6y ago

Different people tend to look at Bitcoin in completely different ways. In terms of what is a store of value, and what is wasted energy vs well used and worthwhile energy consumption. https://bitcoinmagazine.com/business/bitcoin-will-save-our-earth https://bitcoinmagazine.com/business/bitcoin-will-save-our-e...

cannam 6y ago

Can anyone explain why this apparently excellent article, 3 hours old, with 305 points and 304 comments, is currently on page 16 (!) of HN - while the article it's a reply to, 8 hours old, 127 points, 240 comments, is still on the front page? I thought articles were marked down with the passage of time and by the flamewar coefficient (comments-to-points ratio) but neither goes anywhere near explaining this. Is there something massively wrong with it that I'm not seeing? I thought it seemed like good analysis and a great explainer for the subject.

ckastner 6y ago
The way I understand it, flagging by users also penalizes rank; hence, users disliking the article can bury it.