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So, I'm going to choose to be an optimist when it comes to crypto energy consumption. There has literally never been a more direct reward for efficient energy

So, I'm going to choose to be an optimist when it comes to crypto energy consumption. There has literally never been a more direct reward for efficient energy production.

xwolfi 5y ago
But it s like there's ONLY the reward. You imagine if there was a way to make gold with electricity? We d live in the dark just to get more of it...
- enchiridion 5y ago
  Well, not exactly. There is the utility of enabling the chain. And there is nothing stopping us from extracting gold using electricity. It's in basically all soil and sea water. Sure there are some required materials, but I'd water a guess that those materials are no harder to obtain than GPUs. The only thing that stops this reckless mining are the forces of the market, and the same is true with crypto. Crypto miners tend to be extremely frugal, and I doubt any are any who are doing unprofitable mining in expectation of crypto going up. Now from a crypto maximalist perspective, which I don't necessarily hold, isn't the cost of the electricity worth having a decentralized currency which enables all sort of different markets? Crypto is always held up as wasteful in terms of energy, but I'd be curious to see the energy cost in comparison to current payment processing systems.
  - kemotep 5y ago
    If anyone is interested, Visa reports that their payments network (and supporting infrastructure) uses 740,000 Gigajoules[0] in a year. Can’t quite find a one for one measurement for Bitcoin, but due note this is the energy needs of all of Visa’s operations and they process in excess 100 billion transactions a year and Bitcoin (in 2020) averaged around 300,000 transactions a day[1]. If interested there is this[2] digiconomist article with more numbers (no clue as to the veracity of them). [0]: https://usa.visa.com/dam/VCOM/download/corporate-responsibility/visa-2019-corporate-responsibility-report.pdf https://usa.visa.com/dam/VCOM/download/corporate-responsibil.... [1]: https://www.blockchain.com/charts/n-transactions https://www.blockchain.com/charts/n-transactions [2]: https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/
    - enchiridion 5y ago
      So let's do the rough math and figure out the comparison 300k per day is around 100 million transactions per year, three orders of magnitude less than Visa. BTC uses 110 terawatt hours per year right now[0], which is 396,000,000 gigajoules, a three order of magnitude difference in the other direction. Assuming everything scales nicely, if Bitcoin were the size of visa it would use ~6 orders of magnitude more energy. OK, so that is way worse than I thought. I'm still not sold on the idea that it's a bad thing, but it's nice to put numbers to the situation. [0] https://www.google.com/amp/s/hbr.org/amp/2021/05/how-much-energy-does-bitcoin-actually-consume https://www.google.com/amp/s/hbr.org/amp/2021/05/how-much-en...
acjohnson55 5y ago
It's actually a complete waste. All it produces is more security for the blockchain, which is of low marginal value. They could use that energy to produce something of actual value, like hydroponic food, or desalinated water, or run a data center, or literally anything else.
- wcfields 5y ago
  Aluminum smelting and concrete production both take an immense amount of energy.
- bogota 5y ago
  Bitcoin has value that they can spend on doing all of this. You are falsely saying the only value it provides is blockchain security when im sure that isn’t even a reason they thought about when doing this. Its to produced more money for the government and hopefully that translates to better public infrastructure.
  - nitrogen 5y ago
    Bitcoin has value that they can spend on doing all of this. Money doesn't directly convert into food. Someone still has to consume the energy to actually make things. By using energy to mine bitcoin to buy food, one is potentially doubling energy consumed.
- wmil 5y ago
  Right now there's a chicken and egg problem where cheap power is not near things that need it. Crypto mining will allow places with cheap power sources to build up energy production. Once that's established it's easier to build up infrastructure for things like data centers.
  - bootlooped 5y ago
    I think it's somewhat of a Tragedy of the Commons situation. Everybody would benefit from power being built in remote places, but nobody wants to be the one to pay to build it there. I'm not seeing why crypto mining is any different though; it's a for-profit endeavor like anything else.
geofft 5y ago
Yes, but it undermines the point of energy production, because the energy produced is not going to existing consumers of energy, it's going to feed the insatiable-by-design blockchain. Imagine if there were a cryptocurrency based on proof-of-driving-things-between-cities with a mining reward, and Los Angeles invested in it. There would be an incredible incentive for expanding LA's highway infrastructure, and you'd expect LA to get a lot more highways, to but there would be no positive impact on actual commuters trying to use those highways to get around greater LA, and quite possibly a negative impact, because the more direct incentive is to use whatever highways are there - building more highways is an indirect incentive.
- defgeneric 5y ago
  That analogy would hold if the additional energy produced for bitcoin mining had some negative impact on the existing energy infrastructure. It doesn't. If anything it creates an incentive for making energy production more efficient. The fact that energy is produced and consumed is not bad in itself. The Sun could be said to be "wasting" energy by sending it off into space.
  - bootlooped 5y ago
    > If anything it creates an incentive for making energy production more efficient. How is this different from any other consumer of electricity? Every consumer wants to buy the cheapest electricity, and every producer wants to produce the most of it per energy input.
  - geofft 5y ago
    I'm not disputing that it creates an incentive for making energy production more efficient. It does! In the analogy I gave, there's definitely an incentive for building more highways ("There would be an incredible incentive for expanding LA's highway infrastructure") - it's just that this incentive is, at best, completely useless to existing commuters taking the highways. I'm also not claiming that it's bad for energy to be produced and consumed. It's not! It's just irrelevant if you're looking to consume electricity, and someone else is producing and immediately consuming it. And it's bad for you as a consumer if production goes up and consumption goes up by even more. I have no idea what your point is about the Sun.
JamilD 5y ago
Why is this a more direct reward than generating energy to sell? In mining, revenue = efficiency * potential energy * BTC per unit produced energy In selling energy, revenue = efficiency * potential energy * USD per unit produced energy I don’t see the difference, other than the fact the former just adds to the pool of required energy (it’s strictly additive to the energy produced by the second)
- ajkdhcb2 5y ago
  Transporting power is extremely expensive and infeasible over large distances. So power needs to be generated near industry or homes. However, cryptocurrency can be mined anywhere and then sold.
- enchiridion 5y ago
  Well if imagine with selling energy, the profit equation has more terms, which are difficult to model correctly. With crypto the only really question is how will the price of the currency affect the break even point for hardware cost (assuming all mined tokens are sold immediately).
pyrale 5y ago
> There has literally never been a more direct reward for efficient energy production. Yeah, too bad this happens not long after we discovered that energy production creates massive issues with regards to our future on this planet.
IfOnlyYouKnew 5y ago
> There has literally never been a more direct reward for efficient energy production. Not having to pay for the inefficiency in producing the energy you actually needs seems to be... more direct?
sanderjd 5y ago
It's a direct reward for energy production, which has always been well rewarded. There is no reason to think PoW mining in any way rewards efficient energy production more so than any other use of energy.
adrianN 5y ago
"Efficient" energy production in practice today is energy production that maximizes externalized costs.
munificent 5y ago
This is true exactly to the degree that landmines reward efficient blood donation.
- enchiridion 5y ago
  I mean it's not a perfect analogy, but I'd be willing to bet a lot of lessons from battlefield medicine has made it's way into civilian trauma care.
  - munificent 5y ago
    Yes, but that is not a sufficient justification for war. The idea that bitcoin incentivizing efficient power generation because it consumes all that power somehow being a justification for bitcoin is entirely bananas.
    - enchiridion 5y ago
      If your concede that there's a trade off then there is a point where the efficiency gains outweigh the negative externalities. I think it's unknowable right now where we will land, and as an optimist I choose to believe we will end up on the right side of the trade off, based on the apparent efficiency of market forces.
jollybean 5y ago
There has literally never been a more clear and obvious way to waste energy for no reason, something which is happening at scale, during a time of energy crisis. This has Easter Island written all over it. 'Hey, let's use all our resources to build Giant Heads! The person with the most heads gets to be the King!'.

So, I'm going to choose to be an optimist when it comes to crypto energy consumption. There has literally never been a more direct reward for efficient energy production.

xwolfi 5y ago

But it s like there's ONLY the reward. You imagine if there was a way to make gold with electricity? We d live in the dark just to get more of it...

enchiridion 5y ago
Well, not exactly. There is the utility of enabling the chain. And there is nothing stopping us from extracting gold using electricity. It's in basically all soil and sea water. Sure there are some required materials, but I'd water a guess that those materials are no harder to obtain than GPUs. The only thing that stops this reckless mining are the forces of the market, and the same is true with crypto. Crypto miners tend to be extremely frugal, and I doubt any are any who are doing unprofitable mining in expectation of crypto going up. Now from a crypto maximalist perspective, which I don't necessarily hold, isn't the cost of the electricity worth having a decentralized currency which enables all sort of different markets? Crypto is always held up as wasteful in terms of energy, but I'd be curious to see the energy cost in comparison to current payment processing systems.
- kemotep 5y ago
  If anyone is interested, Visa reports that their payments network (and supporting infrastructure) uses 740,000 Gigajoules[0] in a year. Can’t quite find a one for one measurement for Bitcoin, but due note this is the energy needs of all of Visa’s operations and they process in excess 100 billion transactions a year and Bitcoin (in 2020) averaged around 300,000 transactions a day[1]. If interested there is this[2] digiconomist article with more numbers (no clue as to the veracity of them). [0]: https://usa.visa.com/dam/VCOM/download/corporate-responsibility/visa-2019-corporate-responsibility-report.pdf https://usa.visa.com/dam/VCOM/download/corporate-responsibil.... [1]: https://www.blockchain.com/charts/n-transactions https://www.blockchain.com/charts/n-transactions [2]: https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/
  - enchiridion 5y ago
    So let's do the rough math and figure out the comparison 300k per day is around 100 million transactions per year, three orders of magnitude less than Visa. BTC uses 110 terawatt hours per year right now[0], which is 396,000,000 gigajoules, a three order of magnitude difference in the other direction. Assuming everything scales nicely, if Bitcoin were the size of visa it would use ~6 orders of magnitude more energy. OK, so that is way worse than I thought. I'm still not sold on the idea that it's a bad thing, but it's nice to put numbers to the situation. [0] https://www.google.com/amp/s/hbr.org/amp/2021/05/how-much-energy-does-bitcoin-actually-consume https://www.google.com/amp/s/hbr.org/amp/2021/05/how-much-en...

acjohnson55 5y ago

It's actually a complete waste. All it produces is more security for the blockchain, which is of low marginal value. They could use that energy to produce something of actual value, like hydroponic food, or desalinated water, or run a data center, or literally anything else.

wcfields 5y ago
Aluminum smelting and concrete production both take an immense amount of energy.
bogota 5y ago
Bitcoin has value that they can spend on doing all of this. You are falsely saying the only value it provides is blockchain security when im sure that isn’t even a reason they thought about when doing this. Its to produced more money for the government and hopefully that translates to better public infrastructure.
- nitrogen 5y ago
  Bitcoin has value that they can spend on doing all of this. Money doesn't directly convert into food. Someone still has to consume the energy to actually make things. By using energy to mine bitcoin to buy food, one is potentially doubling energy consumed.
wmil 5y ago
Right now there's a chicken and egg problem where cheap power is not near things that need it. Crypto mining will allow places with cheap power sources to build up energy production. Once that's established it's easier to build up infrastructure for things like data centers.
- bootlooped 5y ago
  I think it's somewhat of a Tragedy of the Commons situation. Everybody would benefit from power being built in remote places, but nobody wants to be the one to pay to build it there. I'm not seeing why crypto mining is any different though; it's a for-profit endeavor like anything else.

geofft 5y ago

Yes, but it undermines the point of energy production, because the energy produced is not going to existing consumers of energy, it's going to feed the insatiable-by-design blockchain. Imagine if there were a cryptocurrency based on proof-of-driving-things-between-cities with a mining reward, and Los Angeles invested in it. There would be an incredible incentive for expanding LA's highway infrastructure, and you'd expect LA to get a lot more highways, to but there would be no positive impact on actual commuters trying to use those highways to get around greater LA, and quite possibly a negative impact, because the more direct incentive is to use whatever highways are there - building more highways is an indirect incentive.

defgeneric 5y ago
That analogy would hold if the additional energy produced for bitcoin mining had some negative impact on the existing energy infrastructure. It doesn't. If anything it creates an incentive for making energy production more efficient. The fact that energy is produced and consumed is not bad in itself. The Sun could be said to be "wasting" energy by sending it off into space.
- bootlooped 5y ago
  > If anything it creates an incentive for making energy production more efficient. How is this different from any other consumer of electricity? Every consumer wants to buy the cheapest electricity, and every producer wants to produce the most of it per energy input.
- geofft 5y ago
  I'm not disputing that it creates an incentive for making energy production more efficient. It does! In the analogy I gave, there's definitely an incentive for building more highways ("There would be an incredible incentive for expanding LA's highway infrastructure") - it's just that this incentive is, at best, completely useless to existing commuters taking the highways. I'm also not claiming that it's bad for energy to be produced and consumed. It's not! It's just irrelevant if you're looking to consume electricity, and someone else is producing and immediately consuming it. And it's bad for you as a consumer if production goes up and consumption goes up by even more. I have no idea what your point is about the Sun.

JamilD 5y ago

Why is this a more direct reward than generating energy to sell? In mining, revenue = efficiency * potential energy * BTC per unit produced energy In selling energy, revenue = efficiency * potential energy * USD per unit produced energy I don’t see the difference, other than the fact the former just adds to the pool of required energy (it’s strictly additive to the energy produced by the second)

ajkdhcb2 5y ago
Transporting power is extremely expensive and infeasible over large distances. So power needs to be generated near industry or homes. However, cryptocurrency can be mined anywhere and then sold.
enchiridion 5y ago
Well if imagine with selling energy, the profit equation has more terms, which are difficult to model correctly. With crypto the only really question is how will the price of the currency affect the break even point for hardware cost (assuming all mined tokens are sold immediately).

pyrale 5y ago

> There has literally never been a more direct reward for efficient energy production. Yeah, too bad this happens not long after we discovered that energy production creates massive issues with regards to our future on this planet.

IfOnlyYouKnew 5y ago

> There has literally never been a more direct reward for efficient energy production. Not having to pay for the inefficiency in producing the energy you actually needs seems to be... more direct?

sanderjd 5y ago

It's a direct reward for energy production, which has always been well rewarded. There is no reason to think PoW mining in any way rewards efficient energy production more so than any other use of energy.

adrianN 5y ago

"Efficient" energy production in practice today is energy production that maximizes externalized costs.

munificent 5y ago

This is true exactly to the degree that landmines reward efficient blood donation.

enchiridion 5y ago
I mean it's not a perfect analogy, but I'd be willing to bet a lot of lessons from battlefield medicine has made it's way into civilian trauma care.
- munificent 5y ago
  Yes, but that is not a sufficient justification for war. The idea that bitcoin incentivizing efficient power generation because it consumes all that power somehow being a justification for bitcoin is entirely bananas.
  - enchiridion 5y ago
    If your concede that there's a trade off then there is a point where the efficiency gains outweigh the negative externalities. I think it's unknowable right now where we will land, and as an optimist I choose to believe we will end up on the right side of the trade off, based on the apparent efficiency of market forces.

jollybean 5y ago

There has literally never been a more clear and obvious way to waste energy for no reason, something which is happening at scale, during a time of energy crisis. This has Easter Island written all over it. 'Hey, let's use all our resources to build Giant Heads! The person with the most heads gets to be the King!'.