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Mining bitcoin does not convert electricity into value. It converts electricity into currency. Currencies don't have value, they represent value. Their only int

Mining bitcoin does not convert electricity into value. It converts electricity into currency. Currencies don't have value, they represent value. Their only intrinsic value lies in their ability to allow exchanges of goods. Take regular currencies for instance ($€¥…): they do not convert paper into value, they use paper to represent value. Now does printing more of it makes it better at enabling exchanges? Not necessarily. There's a point beyond which you just get over-inflation (a little inflation can be very beneficial, though). Now Bitcoin is definitely not at the point where it does causes over-inflation (else its valuation would drop). But you do need to compare it with other currencies, and its energy consumption is a big fat drawback. A deal breaker in my opinion. Barring perhaps some extreme cases, using proof-of-work crypto currencies is simply unethical: too much harm, not enough good.

dragonwriter 6y ago
> Take regular currencies for instance ($€¥…): they do not convert paper into value, they use paper to represent value Mostly, they use mostly-electronic ledger entries to represent value.
fredfoobar 6y ago
I'm sorry, but I don't think you understand bitcoin mining at all. Bitcoin mining is not just "making currency", the miners get a reward for minting a block, which is just a bundle of transactions. The new bitcoin they get as a reward is theirs to spend.
- loup-vaillant 6y ago
  I'm aware of this clever mechanism, thank you very much. Bitcoin needs a reliable way for transactions to work in a single thread (so the block chain doesn't turn into a block tree), and we avoid stuff like double spends. That's proof of work, coupled with a reward (in currency). To avoid hyper inflation, Bitcoin automatically sets the difficulty so we create one new block every 10 minutes. That limits the number of transactions, but we can remedy that by just making making blocks bigger. Now the value of a successful block mining is the transactions it represents. Without them, you wouldn't have a means of exchange to begin with. But the reward is a new Bitcoin. And that new Bitcoin by itself does not add any value. It just inflates the currency a little bit, effectively taking value from all other bitcoins. The total value represented by all bitcoins stays the same. Now we can discuss pros and cons: on the bright side, mining a block enables a bunch of transactions. With a maximum block size of 1MB and 1 block every 10 minutes, we get 7 transactions per second. That's the real value of Bitcoin to humanity: 7 transactions per second, give or take. As for how much those 7 transactions per second cost, well… there's all the hardware and the resources required to make it, and there's energy. A back of the envelope calculation tells me Bitcoin spent about 8 Gigawatts of power in early 2020, and now it's more like 14. That's 2 Gigajoules per transaction, or about 500KWh. That's way too much energy for way too little value. Hence my thesis that Bitcoin as a whole is so wasteful that actively participating in it (especially if you're a miner), is unethical.

dragonwriter 6y ago

> Take regular currencies for instance ($€¥…): they do not convert paper into value, they use paper to represent value Mostly, they use mostly-electronic ledger entries to represent value.

fredfoobar 6y ago

I'm sorry, but I don't think you understand bitcoin mining at all. Bitcoin mining is not just "making currency", the miners get a reward for minting a block, which is just a bundle of transactions. The new bitcoin they get as a reward is theirs to spend.

loup-vaillant 6y ago
I'm aware of this clever mechanism, thank you very much. Bitcoin needs a reliable way for transactions to work in a single thread (so the block chain doesn't turn into a block tree), and we avoid stuff like double spends. That's proof of work, coupled with a reward (in currency). To avoid hyper inflation, Bitcoin automatically sets the difficulty so we create one new block every 10 minutes. That limits the number of transactions, but we can remedy that by just making making blocks bigger. Now the value of a successful block mining is the transactions it represents. Without them, you wouldn't have a means of exchange to begin with. But the reward is a new Bitcoin. And that new Bitcoin by itself does not add any value. It just inflates the currency a little bit, effectively taking value from all other bitcoins. The total value represented by all bitcoins stays the same. Now we can discuss pros and cons: on the bright side, mining a block enables a bunch of transactions. With a maximum block size of 1MB and 1 block every 10 minutes, we get 7 transactions per second. That's the real value of Bitcoin to humanity: 7 transactions per second, give or take. As for how much those 7 transactions per second cost, well… there's all the hardware and the resources required to make it, and there's energy. A back of the envelope calculation tells me Bitcoin spent about 8 Gigawatts of power in early 2020, and now it's more like 14. That's 2 Gigajoules per transaction, or about 500KWh. That's way too much energy for way too little value. Hence my thesis that Bitcoin as a whole is so wasteful that actively participating in it (especially if you're a miner), is unethical.