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Has anyone tried to calculate the energy expenditure of the fiat currency system as a comparison, ideally per "unit worth" (whatever that might be) since fiat s

Has anyone tried to calculate the energy expenditure of the fiat currency system as a comparison, ideally per "unit worth" (whatever that might be) since fiat still vastly outcapitalises cryptocurrency?

runeks 5y ago
Yes, and it’s vastly less than Bitcoin. Simply because it’s centralized, and a centralized system is always more efficient than a decentralized one. It’s a well known trade off. A better comparison would be gold versus Bitcoin, as they’re both similarly decentralized. Just comparing energy consumption between the two probably wouldn’t make sense, though, as gold mining e.g. ruins vast areas of land.
- intricatedetail 5y ago
  But fiat has different properties so a bit apples to oranges in terms of efficiency. You could compare how efficient is USD vs GBP, but not USD vs BTC.
- nextaccountic 5y ago
  > Yes, and it’s vastly less than Bitcoin. Where is it?
- arthurcolle 5y ago
  Care to share your sources? Naturally, a summation of the energy expenditure of all of the related components of the existing fiat system must be included, from the totality of all people operating the various functions that facilitate the existing fiat system; i.e. their commutes, aggregate expenditures due to needing to operate physical banks, power usage at these physical banks, etc. are all factored into this calculation... right? All the way to the minting of new currency (probably almost negligible in the aggregate), to all of the security apparatus that ensure that bills are legitimate, to major parts of the US Secret Service that verify that bills are legitimate (including all of their expenses scaled to the proportion of agents dedicated to this task force)... I honestly don't believe that the electricity usage of BTC is higher than fiat currency operation, in the aggregate. Please share any sources if you have any information that contradicts this. It's an interesting area of open research + I'm curious if I've missed any publications recently.
  - mxschumacher 5y ago
    This is a bit of crypto-delusion I have never understood: why compare Bitcoin with the financial system as a whole to get out of the "it is mostly powered by coal plants in China"-argument? Does Bitcoin assess credit risks of governments, companies and people and then extend+manage credit? What does Bitcoin offer in regards to risk management/hedging for operating businesses? Maybe Bitcoin has some liquidity management feature for real businesses that I am not aware of? Bitcoin has very low uptake in payments, so trying to compare its energy consumption to all retail branches and the oil burned by the employees on their commute strikes me as misleading and ignorant Modern banks and financial institutions are much more than a long list of payments. Please learn a little bit about what a company like Bank of America actually does
    - arthurcolle 5y ago
      I worked at Goldman Sachs for 3 years in technology and trading roles so I'm fairly confident that I am largely familiar with how a bulge bracket investment bank as well as how most consumer banking firms operate work. It's not misleading at all. It's important to consider that a large group of human operators, using a separately large set of semi automated processes, are a large component of the current energy spend of aggregate financial activity - all those busy worker bees are using energy. Not really interested in doing some super thorough calculation, hopefully this general outline makes a little bit of sense. I'm just asserting that if we are going to criticize one thing's energy spend, you need to actually define what you are measuring and determine a baseline with respect to what the current thing's energy consumption is, ideally as line items and then sources for each input component. Looking forward to some sources. (If you are referring to the Argentina article, please just identify that as your source). No need to be antagonistic, we're all friends here.
      - naturalauction 5y ago
        >It's not misleading at all. It's important to consider that a large group of human operators, using a separately large set of semi automated processes, are a large component of the current energy spend of aggregate financial activity - all those busy worker bees are using energy. A lot of that is compliance though. Some (or maybe even most, I'm not in the industry) of that doesn't need to exist for the system to function - the banking system would work just fine without suspicious activity reports. I don't think it's an apples to apples comparison as these checks don't and can't exist in cryptocurrency. That's just scratching the tip of the iceberg, as mentioned above the traditional financial system provides lots of services that cryptocurrencies can't provide or don't provide at any meaningful scale.
- ypcx 5y ago
  > Yes, and it’s vastly less than Bitcoin. Ponder, for a moment, the way in which governments use the "printing" of fiat money to fund wars (for private sector profit, revolving back into that private sector's lobbying those governments for even more war and military spending). Ponder, for a moment, the amount of energy and Earth's resources expended to materialize these wars and military spending. Bitcoin (or, the proof-of-work cryptocurrency concept as such) by its design prevents (or at least very severely inhibits) this type of governmental hijacking for a mere fraction of the resources spent. This applies to other heavily-subsidized sectors/areas/industries with a powerful lobbying influence/revolving doors/etc. Imagine if we could vote by paying our taxes in Bitcoin (in a Bitcoin full-blown, mainstream Bitcoin economy) in proportion to specific Bitcoin addresses/accounts allocated for specific policy issues or target governmental groups, and thus have an actual, real and direct democracy instead of a 4-year theatre of false puppets and promises.
  - UncleMeat 5y ago
    Giving more votes to the rich is bad. Very bad.
  - ineedasername 5y ago
    re: wars This seems like a novel claim: that bitcoin would reduce world conflict.
  - tsimionescu 5y ago
    Again and again this claim... I fail to imagine how anyonr believes that the US or China could be stopped from going to war by not having enough BTC of all things... In a BTC world they would simply borrow BTC (if they wluldnt control 50% of hashpower anyway) and that would be it. If you imagine that people wouldn't lend BTC to the US, remember that, when Standard&Poor's reduced America's credit rating, US bonds shot up in price (even though technically they were the one asset that S&P's rating was about the most).
    - ypcx 5y ago
      > "Counterfeiting and inflation are the same thing. Counterfeiting is criminalized inflation, and inflation is legalized counterfeiting."
globular-toast 5y ago
I'm not sure. The trouble is you're comparing apples to oranges. On the one hand you have money which, while not essential for civilisation, is generally agreed to be a good thing. On the other you have this thing that absolutely is not money by any stretch. How do you possibly calculate how much value each of these adds to society?
- antaviana 5y ago
  I think that money is essential for civilization. I support what Jeremy Irons said Kevin Spacey in movie Margin Call: “Money is just a made up thing that helps we don’t kill each other for food.”
  - globular-toast 5y ago
    I don't think it's necessary, but I think it's inevitable, especially in seasonal climates.
    - betterunix2 5y ago
      That's kind of like saying the wheel is not essential to civilization, but that it is "inevitable." An accounting system of some kind is necessary to organize the limited resources available to any civilization, and that is exactly what money is and how it emerged in early civilizations.
      - globular-toast 5y ago
        Well, for a start, there have been loads of civilisations that didn't have wheels. Don't make the mistake of thinking our current civilisation is the only one that can exist because it exists right now. Those other civilisations existed in their time too. There is a big difference between necessary and inevitable. Crime is inevitable. Is it necessary? I believe a civilisation could exist if the people decided to outlaw money. There are so many other ways to allocate resources: bartering, contracts (which get you asynchronicity), centralised allocation (which can be at a national level, e.g. communism or a local level, like a feudal system), gift economies. All of these have existed and worked for a time.
NoOneNew 5y ago
https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ They have an extremely detailed explanation and process to determine the footprint of Bitcoin transactions. Anyways, they also have the numbers for Visa based transactions, which can start to give you an idea how efficient the old system of digital transactions are. Its 980,000+ Visa transactions to equate the energy used for 1 bitcoin transaction.
- arebop 5y ago
  This is comparing Visa's use of energy to Bitcoin's. It is not comparing Visa's use of all resources to Bitcoin's. It is like saying hybrid cars are more efficient than electric or gas cars, because they use less electricity than fully-electric cars and less gas than ICEs.
  - betterunix2 5y ago
    It is comparing the energy consumed by Visa to the energy consumed by Bitcoin. If you want to get into other resources e.g. supply chains for all the computing hardware used by Visa versus Bitcoin...is there any reason to think Bitcoin would do better here? Mining operations have become enormous, thousands of machines all churning away, and there are many such operations. I suspect Visa has a smaller footprint here as well.
  - NoOneNew 5y ago
    So you're telling me that Bitcoin can make up ground for being almost a million times less efficient on a basic and everyday use case of currency in some other way? Please, go ahead and tell me. That's like saying you have the fastest drive thru hamburger shop even though it takes an hour for someone to get their food. But the burger joint is faster "elsewhere". Where else could Bitcoin make up the energy efficiency problem? Especially efficiency where it actually matters.
    - doggosphere 5y ago
      Does VISA create and secure an asset that is open source, decentralized, censorship resistant, permissionless to participate in? Apples to oranges. VISA can't do those things, it is a centralized settlement layer for US Dollar transactions. So when we selectively compare the transactions per energy metric, we are conveniently ignoring the fact that VISA is not responsible for securing the stability of the global US Dollar network.
tomxor 5y ago
Not only are fiat currencies cheaper, they are also useful... Bitcoin is no longer a practical currency, so comparisons to fiat currencies are pointless.
- New_California 5y ago
  Bitcoin is very practical for me. I use it primarily to protect my savings, but also to send anonymous donations to causes I support.
  - SwimSwimHungry 5y ago
    >I use it primarily to protect my savings You must be living under a rock then, because bitcoin just had a sizable correction last night. Sounds too volitile to protect any savings. >also to send anonymous donations to causes I support. Nope. The ledger is public and your transactions can be seen on it basically forever and, with some sleuthing of the ledger by interested parties, you could be deanonymized.
    - meowkit 5y ago
      > You must be living under a rock then, because bitcoin just had a sizable correction last night. Sounds too volitile to protect any savings. If you invested less than a month ago, you are down. If you invested any other time in the last 10 years than you are up. You might be the one under a rock.
      - SwimSwimHungry 5y ago
        That's not what I'm arguing here. If you mean to say you like to take the chance on having your number over a short time go up OR down, and you like to consider gambling, then yes, I'd say Bitcoin is more aligned for that purpose. Also... I did say the word "volatile"... both positive or negative wild volatility are not something you want in an instrument meant to protect your savings. You want slow and steady gains and, most importantly, consistency, so my critique is still valid here. As the old saying goes "Past performance is no guarantee of future results." Bitcoin could get legislated into oblivion causing a massive decrease in the value of your holdings (especially if world governments take climate change seriously, they may see Bitcoin mining as a major threat), a quantum computer could literally "break" into wallets and steal, Satoshi's wallet could suddenly move and expect billions of USD to be extracted out at once. Too many variables here to suggest that your savings are secure. You're a braver man (or woman) than I would be.

runeks 5y ago

Yes, and it’s vastly less than Bitcoin. Simply because it’s centralized, and a centralized system is always more efficient than a decentralized one. It’s a well known trade off. A better comparison would be gold versus Bitcoin, as they’re both similarly decentralized. Just comparing energy consumption between the two probably wouldn’t make sense, though, as gold mining e.g. ruins vast areas of land.

intricatedetail 5y ago
But fiat has different properties so a bit apples to oranges in terms of efficiency. You could compare how efficient is USD vs GBP, but not USD vs BTC.
nextaccountic 5y ago
> Yes, and it’s vastly less than Bitcoin. Where is it?
arthurcolle 5y ago
Care to share your sources? Naturally, a summation of the energy expenditure of all of the related components of the existing fiat system must be included, from the totality of all people operating the various functions that facilitate the existing fiat system; i.e. their commutes, aggregate expenditures due to needing to operate physical banks, power usage at these physical banks, etc. are all factored into this calculation... right? All the way to the minting of new currency (probably almost negligible in the aggregate), to all of the security apparatus that ensure that bills are legitimate, to major parts of the US Secret Service that verify that bills are legitimate (including all of their expenses scaled to the proportion of agents dedicated to this task force)... I honestly don't believe that the electricity usage of BTC is higher than fiat currency operation, in the aggregate. Please share any sources if you have any information that contradicts this. It's an interesting area of open research + I'm curious if I've missed any publications recently.
- mxschumacher 5y ago
  This is a bit of crypto-delusion I have never understood: why compare Bitcoin with the financial system as a whole to get out of the "it is mostly powered by coal plants in China"-argument? Does Bitcoin assess credit risks of governments, companies and people and then extend+manage credit? What does Bitcoin offer in regards to risk management/hedging for operating businesses? Maybe Bitcoin has some liquidity management feature for real businesses that I am not aware of? Bitcoin has very low uptake in payments, so trying to compare its energy consumption to all retail branches and the oil burned by the employees on their commute strikes me as misleading and ignorant Modern banks and financial institutions are much more than a long list of payments. Please learn a little bit about what a company like Bank of America actually does
  - arthurcolle 5y ago
    I worked at Goldman Sachs for 3 years in technology and trading roles so I'm fairly confident that I am largely familiar with how a bulge bracket investment bank as well as how most consumer banking firms operate work. It's not misleading at all. It's important to consider that a large group of human operators, using a separately large set of semi automated processes, are a large component of the current energy spend of aggregate financial activity - all those busy worker bees are using energy. Not really interested in doing some super thorough calculation, hopefully this general outline makes a little bit of sense. I'm just asserting that if we are going to criticize one thing's energy spend, you need to actually define what you are measuring and determine a baseline with respect to what the current thing's energy consumption is, ideally as line items and then sources for each input component. Looking forward to some sources. (If you are referring to the Argentina article, please just identify that as your source). No need to be antagonistic, we're all friends here.
    - naturalauction 5y ago
      >It's not misleading at all. It's important to consider that a large group of human operators, using a separately large set of semi automated processes, are a large component of the current energy spend of aggregate financial activity - all those busy worker bees are using energy. A lot of that is compliance though. Some (or maybe even most, I'm not in the industry) of that doesn't need to exist for the system to function - the banking system would work just fine without suspicious activity reports. I don't think it's an apples to apples comparison as these checks don't and can't exist in cryptocurrency. That's just scratching the tip of the iceberg, as mentioned above the traditional financial system provides lots of services that cryptocurrencies can't provide or don't provide at any meaningful scale.
ypcx 5y ago
> Yes, and it’s vastly less than Bitcoin. Ponder, for a moment, the way in which governments use the "printing" of fiat money to fund wars (for private sector profit, revolving back into that private sector's lobbying those governments for even more war and military spending). Ponder, for a moment, the amount of energy and Earth's resources expended to materialize these wars and military spending. Bitcoin (or, the proof-of-work cryptocurrency concept as such) by its design prevents (or at least very severely inhibits) this type of governmental hijacking for a mere fraction of the resources spent. This applies to other heavily-subsidized sectors/areas/industries with a powerful lobbying influence/revolving doors/etc. Imagine if we could vote by paying our taxes in Bitcoin (in a Bitcoin full-blown, mainstream Bitcoin economy) in proportion to specific Bitcoin addresses/accounts allocated for specific policy issues or target governmental groups, and thus have an actual, real and direct democracy instead of a 4-year theatre of false puppets and promises.
- UncleMeat 5y ago
  Giving more votes to the rich is bad. Very bad.
- ineedasername 5y ago
  re: wars This seems like a novel claim: that bitcoin would reduce world conflict.
- tsimionescu 5y ago
  Again and again this claim... I fail to imagine how anyonr believes that the US or China could be stopped from going to war by not having enough BTC of all things... In a BTC world they would simply borrow BTC (if they wluldnt control 50% of hashpower anyway) and that would be it. If you imagine that people wouldn't lend BTC to the US, remember that, when Standard&Poor's reduced America's credit rating, US bonds shot up in price (even though technically they were the one asset that S&P's rating was about the most).
  - ypcx 5y ago
    > "Counterfeiting and inflation are the same thing. Counterfeiting is criminalized inflation, and inflation is legalized counterfeiting."

globular-toast 5y ago

I'm not sure. The trouble is you're comparing apples to oranges. On the one hand you have money which, while not essential for civilisation, is generally agreed to be a good thing. On the other you have this thing that absolutely is not money by any stretch. How do you possibly calculate how much value each of these adds to society?

antaviana 5y ago
I think that money is essential for civilization. I support what Jeremy Irons said Kevin Spacey in movie Margin Call: “Money is just a made up thing that helps we don’t kill each other for food.”
- globular-toast 5y ago
  I don't think it's necessary, but I think it's inevitable, especially in seasonal climates.
  - betterunix2 5y ago
    That's kind of like saying the wheel is not essential to civilization, but that it is "inevitable." An accounting system of some kind is necessary to organize the limited resources available to any civilization, and that is exactly what money is and how it emerged in early civilizations.
    - globular-toast 5y ago
      Well, for a start, there have been loads of civilisations that didn't have wheels. Don't make the mistake of thinking our current civilisation is the only one that can exist because it exists right now. Those other civilisations existed in their time too. There is a big difference between necessary and inevitable. Crime is inevitable. Is it necessary? I believe a civilisation could exist if the people decided to outlaw money. There are so many other ways to allocate resources: bartering, contracts (which get you asynchronicity), centralised allocation (which can be at a national level, e.g. communism or a local level, like a feudal system), gift economies. All of these have existed and worked for a time.

NoOneNew 5y ago

https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ They have an extremely detailed explanation and process to determine the footprint of Bitcoin transactions. Anyways, they also have the numbers for Visa based transactions, which can start to give you an idea how efficient the old system of digital transactions are. Its 980,000+ Visa transactions to equate the energy used for 1 bitcoin transaction.

arebop 5y ago
This is comparing Visa's use of energy to Bitcoin's. It is not comparing Visa's use of all resources to Bitcoin's. It is like saying hybrid cars are more efficient than electric or gas cars, because they use less electricity than fully-electric cars and less gas than ICEs.
- betterunix2 5y ago
  It is comparing the energy consumed by Visa to the energy consumed by Bitcoin. If you want to get into other resources e.g. supply chains for all the computing hardware used by Visa versus Bitcoin...is there any reason to think Bitcoin would do better here? Mining operations have become enormous, thousands of machines all churning away, and there are many such operations. I suspect Visa has a smaller footprint here as well.
- NoOneNew 5y ago
  So you're telling me that Bitcoin can make up ground for being almost a million times less efficient on a basic and everyday use case of currency in some other way? Please, go ahead and tell me. That's like saying you have the fastest drive thru hamburger shop even though it takes an hour for someone to get their food. But the burger joint is faster "elsewhere". Where else could Bitcoin make up the energy efficiency problem? Especially efficiency where it actually matters.
  - doggosphere 5y ago
    Does VISA create and secure an asset that is open source, decentralized, censorship resistant, permissionless to participate in? Apples to oranges. VISA can't do those things, it is a centralized settlement layer for US Dollar transactions. So when we selectively compare the transactions per energy metric, we are conveniently ignoring the fact that VISA is not responsible for securing the stability of the global US Dollar network.

tomxor 5y ago

Not only are fiat currencies cheaper, they are also useful... Bitcoin is no longer a practical currency, so comparisons to fiat currencies are pointless.

New_California 5y ago
Bitcoin is very practical for me. I use it primarily to protect my savings, but also to send anonymous donations to causes I support.
- SwimSwimHungry 5y ago
  >I use it primarily to protect my savings You must be living under a rock then, because bitcoin just had a sizable correction last night. Sounds too volitile to protect any savings. >also to send anonymous donations to causes I support. Nope. The ledger is public and your transactions can be seen on it basically forever and, with some sleuthing of the ledger by interested parties, you could be deanonymized.
  - meowkit 5y ago
    > You must be living under a rock then, because bitcoin just had a sizable correction last night. Sounds too volitile to protect any savings. If you invested less than a month ago, you are down. If you invested any other time in the last 10 years than you are up. You might be the one under a rock.
    - SwimSwimHungry 5y ago
      That's not what I'm arguing here. If you mean to say you like to take the chance on having your number over a short time go up OR down, and you like to consider gambling, then yes, I'd say Bitcoin is more aligned for that purpose. Also... I did say the word "volatile"... both positive or negative wild volatility are not something you want in an instrument meant to protect your savings. You want slow and steady gains and, most importantly, consistency, so my critique is still valid here. As the old saying goes "Past performance is no guarantee of future results." Bitcoin could get legislated into oblivion causing a massive decrease in the value of your holdings (especially if world governments take climate change seriously, they may see Bitcoin mining as a major threat), a quantum computer could literally "break" into wallets and steal, Satoshi's wallet could suddenly move and expect billions of USD to be extracted out at once. Too many variables here to suggest that your savings are secure. You're a braver man (or woman) than I would be.