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Whether you like it or not, Bitcoin's current market cap is 1 trillion$ (which btw is more than the GDP of many countries), when you look at it from that perspe

Whether you like it or not, Bitcoin's current market cap is 1 trillion$ (which btw is more than the GDP of many countries), when you look at it from that perspective, the energy spent to secure it is worth it.

rideontime 6y ago
Depends on how much you value money.
chmod775 6y ago
Bitcoin has no real intrinsic value, so no, it's not worth it. To make this more obvious suppose all money was bitcoin. By your logic it would be worth it to make our sole economic activity 'securing' it. We'd literally all starve and die.
- thebean11 6y ago
  That makes no sense. If all money was USD would literally everyone be in the banking industry with no market for corn?
  - anbende 6y ago
    I believe the argument they were making was about the electricity cost of securing it if all money was in bitcoin. At the current energy requirements (which are escalating per transaction), it would take more than the entire energy production of the world to make bitcoin the sole currency.
    - thebean11 6y ago
      > which are escalating per transaction Wrong. The number (or more specifically "weight") of the transactions that can be processed in a given time period is constant, and does not scale with the hash rate. > it would take more than the entire energy production of the world to make bitcoin the sole currency I do not follow..
      - rspeele 6y ago
        Let me see if I can help you. One of Bitcoin's biggest selling points is that there is a limited supply of it. For it to be the world's reserve currency, each 1 BTC would represent a stunning amount of actual wealth. You can find plenty of starry-eyed investors using this principle to explain how their price target of, say, $10M/BTC makes sense. Sound good so far? Next, the block reward is denominated in BTC. Currently 6.25 BTC every 10 minutes, but it'll halve again in 2024. The block reward, plus transaction fees, is what the network pays miners. It makes sense for miners in aggregate to expend about that much money on mining, because if the network is spending less than that, there is still profit available for additional miners joining in. If that 6.25 BTC becomes valued at 10x or 100x as much as it is today, the expenditure on mining will also be 10x or 100x larger. Obviously this can't actually exceed the energy production of the world because that's impossible, but this new artificial demand for energy can soak up lots of capacity that would otherwise go to more productive, yet less profitable, endeavors. The fact that it's using 1/200th of the world's energy production already, while it's just a toy speculation vehicle, doesn't bode well. As you correctly point out though, this additional expenditure on mining will do absolutely nothing to help the number of transactions that can be processed in any given time period.
        thebean11 6y ago
        > Let me see if I can help you. Nobody here is impressed by you, the condescension sounds ridiculous. > the expenditure on mining will also be 10x or 100x larger This is correct, but the assumption that energy will continue to represent a very large part of that expenditure is faulty. There is a huge incentive for miners to mine more efficiently, especially in this hypothetical universe where Bitcoin is driving up energy prices.. That expenditure could easily be disproportionately spent on more efficient hardware / algorithms. Alternatively Bitcoin might not be using proof of work in this hypothetical future. It's not immutable.
        tlb 6y ago
        We've had several generations of more efficient hardware, and it just causes the hash rate to increase while energy usage stays at the energy-cost equilibrium described above. I can't imagine an algorithmic or hardware improvement that would stop a proof of work system scaling with energy input.
  - chmod775 6y ago
    > That makes no sense. If all money was USD would literally everyone be in the banking industry with no market for corn? It indeed makes no sense if you completely ignore half of the argument (and probably misunderstand it on top of that). The argument was that it makes sense to spend currency for security equal to the amount of currency you are securing, meaning if you do that for all currency, (pretty much) the sole economic activity will be securing it. Suppose for the moment that what is mining power to bitcoin is the US military to the USD. It makes no sense to spend all USD on just the military, so that it can secure the currency, does it?
    - thebean11 6y ago
      > The argument was that it makes sense to spend currency for security equal to the amount of currency you are securing You are right, I don't understand this argument at all. It only makes sense to spend the minimal amount that would keep it secure. The incentive to mine is only the block reward, which is only transaction fees plus inflation. The incentive is not the entire pool of currency.
- rawtxapp 6y ago
  I prefaced it with "Whether you like it or not", because what you think doesn't matter, you don't get to tell people what has value and what doesn't, the market decides and there's currently a market with billions of dollars in volume across many different exchanges that decides the value. You think it's a worthless tulip? Great, go and short it. I'm not sure what you mean by the 2nd paragraph, are you saying if all money was bitcoin, we'd only spend energy to secure that and we wouldn't do nothing else? That wouldn't make sense right? If all money was Bitcoin, there wouldn't be as much upside to it, because it will have already won, so you'd need to do other economic activities which will grow faster than that.
gammalost 6y ago
>the energy spent to secure it is worth it According to who, the people making all the money? It's obvious that people don't find it that simple.
gidam 6y ago
If the profit is the only measure that a lot of people here seem to consider: why not just burning the trash in the air, pouring polluted water directly in the ocean and allowing toxic material in our food chain? Do we want forbidding people to become rich doing nothing for others? These markets are bigger than several GDP of many countries, "whether you like it or not".
- rawtxapp 6y ago
  I mean you realize all those things you mentioned are happening right? Waters are polluted, global warming is real, oil/gold extraction destroys the environment. If anything, this problem is not limited to Bitcoin, we should put a carbon tax on everything with externalities. Why just focus on crypto when there are far bigger polluters?
mdemare 6y ago
You cannot compare $ (market cap) with $/year (GDP)
gorkish 6y ago
Another way to say this is that Bitcoin's value comes entirely from the sunken cost fallacy. It is a war of consumption. Whoever can waste the most resources and/or produce them the most cheaply will gain the most economic benefit. It's just another one of the forms of mutually assured destruction that we will eventually have to confront. It's unfortunate that being very obviously horrible isn't enough to change it, but the same could be said for climate change or nuclear proliferation, and these things are still moving along, full-tilt.

rideontime 6y ago

Depends on how much you value money.

chmod775 6y ago

Bitcoin has no real intrinsic value, so no, it's not worth it. To make this more obvious suppose all money was bitcoin. By your logic it would be worth it to make our sole economic activity 'securing' it. We'd literally all starve and die.

thebean11 6y ago
That makes no sense. If all money was USD would literally everyone be in the banking industry with no market for corn?
- anbende 6y ago
  I believe the argument they were making was about the electricity cost of securing it if all money was in bitcoin. At the current energy requirements (which are escalating per transaction), it would take more than the entire energy production of the world to make bitcoin the sole currency.
  - thebean11 6y ago
    > which are escalating per transaction Wrong. The number (or more specifically "weight") of the transactions that can be processed in a given time period is constant, and does not scale with the hash rate. > it would take more than the entire energy production of the world to make bitcoin the sole currency I do not follow..
    - rspeele 6y ago
      Let me see if I can help you. One of Bitcoin's biggest selling points is that there is a limited supply of it. For it to be the world's reserve currency, each 1 BTC would represent a stunning amount of actual wealth. You can find plenty of starry-eyed investors using this principle to explain how their price target of, say, $10M/BTC makes sense. Sound good so far? Next, the block reward is denominated in BTC. Currently 6.25 BTC every 10 minutes, but it'll halve again in 2024. The block reward, plus transaction fees, is what the network pays miners. It makes sense for miners in aggregate to expend about that much money on mining, because if the network is spending less than that, there is still profit available for additional miners joining in. If that 6.25 BTC becomes valued at 10x or 100x as much as it is today, the expenditure on mining will also be 10x or 100x larger. Obviously this can't actually exceed the energy production of the world because that's impossible, but this new artificial demand for energy can soak up lots of capacity that would otherwise go to more productive, yet less profitable, endeavors. The fact that it's using 1/200th of the world's energy production already, while it's just a toy speculation vehicle, doesn't bode well. As you correctly point out though, this additional expenditure on mining will do absolutely nothing to help the number of transactions that can be processed in any given time period.
      - thebean11 6y ago
        > Let me see if I can help you. Nobody here is impressed by you, the condescension sounds ridiculous. > the expenditure on mining will also be 10x or 100x larger This is correct, but the assumption that energy will continue to represent a very large part of that expenditure is faulty. There is a huge incentive for miners to mine more efficiently, especially in this hypothetical universe where Bitcoin is driving up energy prices.. That expenditure could easily be disproportionately spent on more efficient hardware / algorithms. Alternatively Bitcoin might not be using proof of work in this hypothetical future. It's not immutable.
        tlb 6y ago
        We've had several generations of more efficient hardware, and it just causes the hash rate to increase while energy usage stays at the energy-cost equilibrium described above. I can't imagine an algorithmic or hardware improvement that would stop a proof of work system scaling with energy input.
- chmod775 6y ago
  > That makes no sense. If all money was USD would literally everyone be in the banking industry with no market for corn? It indeed makes no sense if you completely ignore half of the argument (and probably misunderstand it on top of that). The argument was that it makes sense to spend currency for security equal to the amount of currency you are securing, meaning if you do that for all currency, (pretty much) the sole economic activity will be securing it. Suppose for the moment that what is mining power to bitcoin is the US military to the USD. It makes no sense to spend all USD on just the military, so that it can secure the currency, does it?
  - thebean11 6y ago
    > The argument was that it makes sense to spend currency for security equal to the amount of currency you are securing You are right, I don't understand this argument at all. It only makes sense to spend the minimal amount that would keep it secure. The incentive to mine is only the block reward, which is only transaction fees plus inflation. The incentive is not the entire pool of currency.
rawtxapp 6y ago
I prefaced it with "Whether you like it or not", because what you think doesn't matter, you don't get to tell people what has value and what doesn't, the market decides and there's currently a market with billions of dollars in volume across many different exchanges that decides the value. You think it's a worthless tulip? Great, go and short it. I'm not sure what you mean by the 2nd paragraph, are you saying if all money was bitcoin, we'd only spend energy to secure that and we wouldn't do nothing else? That wouldn't make sense right? If all money was Bitcoin, there wouldn't be as much upside to it, because it will have already won, so you'd need to do other economic activities which will grow faster than that.

gammalost 6y ago

>the energy spent to secure it is worth it According to who, the people making all the money? It's obvious that people don't find it that simple.

gidam 6y ago

If the profit is the only measure that a lot of people here seem to consider: why not just burning the trash in the air, pouring polluted water directly in the ocean and allowing toxic material in our food chain? Do we want forbidding people to become rich doing nothing for others? These markets are bigger than several GDP of many countries, "whether you like it or not".

rawtxapp 6y ago
I mean you realize all those things you mentioned are happening right? Waters are polluted, global warming is real, oil/gold extraction destroys the environment. If anything, this problem is not limited to Bitcoin, we should put a carbon tax on everything with externalities. Why just focus on crypto when there are far bigger polluters?

mdemare 6y ago

You cannot compare $ (market cap) with $/year (GDP)

gorkish 6y ago

Another way to say this is that Bitcoin's value comes entirely from the sunken cost fallacy. It is a war of consumption. Whoever can waste the most resources and/or produce them the most cheaply will gain the most economic benefit. It's just another one of the forms of mutually assured destruction that we will eventually have to confront. It's unfortunate that being very obviously horrible isn't enough to change it, but the same could be said for climate change or nuclear proliferation, and these things are still moving along, full-tilt.