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"Externalities" isn't the right word to use here; Bitcoin miners pay for the resources they use to mine Bitcoin. But there is a positive externality associated

by ddxxdd 5y ago

"Externalities" isn't the right word to use here; Bitcoin miners pay for the resources they use to mine Bitcoin. But there is a positive externality associated with Bitcoin, in that it serves as a check and a balance against authoritarian governments, present and future. Hence why it's important to ask these questions.

Emma_Goldman 5y ago
>"Externalities" isn't the right word to use here; Bitcoin miners pay for the resources they use to mine Bitcoin. Yes it is, Bitcoin miners are overwhelmingly located in China and powered by highly carbon-intensive coal plants. The costs of those emissions are not borne by the transacting parties, because they are global and intergenerational. Regardless of whether Bitcoin miners pay for their coal-powered electricity, their revenue is effectively subsidised by externalities. The higher the demand for Bitcoin, the greater those externalities.
- oceanplexian 5y ago
  I don’t get it, are you proposing that alternative currencies like USD are completely carbon neutral and have no externalities? Personally, I am not aware of any currency that does not have externalities, most currencies have a sizable body count from the wars required to preserve their value. Presumably, once Bitcoin is fully mined it may end up having the least externalities of any currency, past or present.
  - MereInterest 5y ago
    > Presumably, once Bitcoin is fully mined it may end up having the least externalities of any currency, past or present. The "mining" is of "new" Bitcoin is utterly and completely irrelevant to the the power consumption. The power consumption is the goal, in order to verify that enough power has been sacrificed so that one is allowed to update the ledger. The "new" Bitcoin is an addition to the ledger without a corresponding subtraction, a creation of something from nothing, done as an incentive for transaction validators to spend such tremendous amounts of electricity. As that incentive goes away, transaction fees will increase in order to cover the cost of electricity. At all times, cryptocurrency resource consumption must be proportional to the total value represented by that cryptocurrency. Anything less than proportional, and the network would be vulnerable to attack. This is independent of the particular mechanism used to incentivize the waste of resources.
colinmhayes 5y ago
Energy usage is absolutely an externality for almost exactly the reason you claimed it's not. The miners pay the electricity company but the electricity company's price doesn't take pollution into account.

by ddxxdd 5y ago

Emma_Goldman 5y ago

>"Externalities" isn't the right word to use here; Bitcoin miners pay for the resources they use to mine Bitcoin. Yes it is, Bitcoin miners are overwhelmingly located in China and powered by highly carbon-intensive coal plants. The costs of those emissions are not borne by the transacting parties, because they are global and intergenerational. Regardless of whether Bitcoin miners pay for their coal-powered electricity, their revenue is effectively subsidised by externalities. The higher the demand for Bitcoin, the greater those externalities.

oceanplexian 5y ago
I don’t get it, are you proposing that alternative currencies like USD are completely carbon neutral and have no externalities? Personally, I am not aware of any currency that does not have externalities, most currencies have a sizable body count from the wars required to preserve their value. Presumably, once Bitcoin is fully mined it may end up having the least externalities of any currency, past or present.
- MereInterest 5y ago
  > Presumably, once Bitcoin is fully mined it may end up having the least externalities of any currency, past or present. The "mining" is of "new" Bitcoin is utterly and completely irrelevant to the the power consumption. The power consumption is the goal, in order to verify that enough power has been sacrificed so that one is allowed to update the ledger. The "new" Bitcoin is an addition to the ledger without a corresponding subtraction, a creation of something from nothing, done as an incentive for transaction validators to spend such tremendous amounts of electricity. As that incentive goes away, transaction fees will increase in order to cover the cost of electricity. At all times, cryptocurrency resource consumption must be proportional to the total value represented by that cryptocurrency. Anything less than proportional, and the network would be vulnerable to attack. This is independent of the particular mechanism used to incentivize the waste of resources.

colinmhayes 5y ago

Energy usage is absolutely an externality for almost exactly the reason you claimed it's not. The miners pay the electricity company but the electricity company's price doesn't take pollution into account.