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I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. I know many here are stridently anti-crypto

I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. I know many here are stridently anti-crypto, but there is some not very likely but plausible future where Bitcoin or Ethereum become the global reserve asset. Much the same way gold was in the 19th century or IMF drawing rights have operated at certain points post Breton Woods. This is entirely different than the scalability limits that stand in the way of Bitcoin becoming a consumer currency. In this future, only major central banks and financial institutions would hold physical Bitcoin. Consumers would use either Bitcoin backed scrip issued by a bank. Or fiat currency where global confidence largely stems from the central bank’s BTC reserves. I’d give this future a 1% of happening in the next 15 years. And conditional on it occurring, I’d estimate the price of BTC would likely increase by two orders of magnitude. From a pure expected value standpoint that makes crypto one of the most compelling asset classes around.

babyshake 5y ago
This lines up with the "hyperbitcoinization" narrative. It is pretty interesting to consider from a game theory perspective what sequence of events might cause this outcome to occur.
tekstar 5y ago
> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. crypto, especially bitcoin, is an intentional environmental disaster. I don't want to invest 1% of my money into an intentional environmental disaster.
- thundergolfer 5y ago
  Exactly the reason I don't invest. My risk appetite is more than enough to take on Bitcoin/Ethereum investment, but the environmental impact relative to its utility outside of speculative investment is insane. Did you mean to say "international environmental disaster"? I don't know in which way it's intentional that Bitcoin destroys the environment. The damage seems incidental.
  - gwicks56 5y ago
    I don't understand this argument. There are lots of things people like to do that use a lot of energy that I think are stupid. Like why to people in the West drive such stupidly large cars? Surely the answer to clean the inputs, not the use case? Trying to control what people can do is just going to make the transition to a clean future impossible, because you will piss lots of people off, and make then enemies. Bitcoin uses a lot of energy because that's it's security model. Trucks use a lot of energy because they are huge. Seems a lot more productive to concentrate on moving electricity to be a clean world input ( say a carbon tax), or move to electric vehicles ( say via tax credits), than to police the actual end usage.
    - tekstar 5y ago
      I also don't drive a really big car, and I think it's stupid as well. So, now we're at two things I don't do because they're bad for the environment.
    - jcpham2 5y ago
      Internet brainwashing “ but it uses electricity” never mind the fact proof of work is on it’s fourth generation of hardware and the price absolutely coo relates with the cost to play the game. We’re opining about a system that finally, for the first time in the history of man, might accurately price the cost of the electricity consumed to power the system. It’s pretty mind boggling but that’s the internet for you.
    - TheDong 5y ago
      Bitcoin is fairly unique in its energy use. Almost every other use of resources will try to be more efficient if it can be. If, for example, it were possible to create steel alloy in a way that took 1% less energy or made less waste (and thus was presumably cheaper at scale), the trucks would use this slightly more efficient steel. On the other hand, Bitcoin relies on wasting a certain monetary value of energy for the security of the network. Its waste is adversarial. If we manage to produce 2x the electricity tomorrow and it becomes significantly cheaper, that just means a 51% attack also became much cheaper so people need to waste even more energy mining. I can't think of any other uses of energy offhand that so actively resist any improvements. I can think of other intentional forms of waste (like dumping toxic waste, "rolling coal", etc), but I can't think of any that are aligned such that making upstream production of a resource more efficient then requires producing even more waste and environmental damage.
- rawtxapp 5y ago
  Look at it this way, if Bitcoin/crypto fails, then you have nothing to worry about, since they'll just go away and there will be no environmental concerns. In this scenario, you lose the 1% you invested. If they succeed on the other hand at becoming world reserve currency, then that energy usage will be justified since it's replacing something that takes even more energy (current fiat system). In this scenario, your 1% investment has probably grown to be a much larger % of your portfolio.
  - im_down_w_otp 5y ago
    I've never seen an energy consumption breakdown of what it takes to run the branches of the Federal Reserve or the Treasury. Do you have any primary source material on that?
    - gwicks56 5y ago
      The USA dollar is the settlement currency of the world. Which means you are really looking at the energy use of the Army/Navy/Air-force. If, in this hypothetical future, BTC became the settlement record.
      - ramchip 5y ago
        I don't follow this reasoning - why would moving to BTC as a global settlement currency make armed forces obsolete?
      - wwweston 5y ago
        If you assume: (a) the energy of the Army/Navy/Air-force supports nothing other than US currency (b) no force would be necessary to back compliance with entries in a crypto ledger
      - jayd16 5y ago
        As if BTC would somehow eliminate the army, navy and air-force.
    - FpUser 5y ago
- kragen 5y ago
  This is goofy. The worldwide Bitcoin network uses about 12 GW, mostly renewable, because Bitcoin mining is unprofitable if it's using anything but the absolute cheapest electricity, and scalable renewable electricity is about a third the price of fossil-fuel electricity now, with the gap constantly widening. By comparison, China built 71.7 GW(p!) of new wind energy capacity last year, and the world economy uses 18000 GW. Worrying about today's Bitcoin mining is as silly as worrying about plastic straws. Maybe in the future Bitcoin mining could become an environmental disaster, but today it's insignificant. Further details in https://news.ycombinator.com/item?id=27449443 https://news.ycombinator.com/item?id=27449443 and https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall....
  - jcranmer 5y ago
    > The worldwide Bitcoin network uses about 12 GW, mostly renewable, because Bitcoin mining is unprofitable if it's using anything but the absolute cheapest electricity, and scalable renewable electricity is about a third the price of fossil-fuel electricity now, with the gap constantly widening. If I'm following this right, the only evidence for Bitcoin being mostly based on renewable energy is because people believe it's uneconomical to not be renewable, and not based on any actual attempt to figure out what energy types are actually being used by large mining groups? Because, especially when you compare across international countries, retail prices are only vaguely correlated with production prices. Many places subsidize the crap out of energy prices, and electricity in a subsidized place could well be much cheaper than in a non-subsidized place, even if the first plant is burning coal and other plant is using wind. For some specific data points, I believe a large clutch of miners operated out of Inner Mongolia, whose electricity capacity increases in recent years has been dominated by coal-fired power plants (because it's a coal-rich region that doesn't give two whits about environmental effects). I'll also note that there was a story a few weeks back about a coal powered plant being recommissioned solely for mining bitcoin.
    - kragen 5y ago
      > If I'm following this right, the only evidence for Bitcoin being mostly based on renewable energy is because people believe it's uneconomical to not be renewable, and not based on any actual attempt to figure out what energy types are actually being used by large mining groups? Nope, sounds like you didn't look at the references I linked at all. If you want to follow something right, try reading the references, or at least casually skimming them. https://coinshares.com/insights/beware-of-lazy-research-bitcoin-mining-update https://coinshares.com/insights/beware-of-lazy-research-bitc... is one of the sources for the percentages cited in the Harvard Business Review article explaining their methodology (in 02018). It's the polar opposite of what you're saying. It's also true that there are fundamental economic reasons that Bitcoin mining is mostly done with renewable energy; it's not just a weird coincidence. But it's not just a theoretical prediction. > retail prices are only vaguely correlated with production prices. Many places subsidize the crap out of energy prices Yeah, that does happen. Also, outright theft happens; the cheapest energy is energy that you steal. But it turns out that unprofitable subsidies and stolen energy aren't very scalable, because places where the government pays for most of the energy ① tend to have strict oversight of industrial-scale operations, ② don't generate much electricity in the first place, and ③ tend to consider entrepreneurs criminals by default because they increase wealth inequality, so they shut them down when they get found out. When Bitcoin mining (or, say, Litecoin mining) starts to scale up in such places, as it did here in Argentina some years back, the energy subsidies have a way of evaporating. > I'll also note that there was a story a few weeks back about a coal powered plant being recommissioned solely for mining bitcoin No, that was gas; my comments on it are https://news.ycombinator.com/item?id=27450889 https://news.ycombinator.com/item?id=27450889. You're right that there are a variety of unusual circumstances that can make fossil-fueled Bitcoin mining profitable at small scales in one or another place, so it's easy to find anecdotes of it. But it's not the majority of the network.
- ohhhhhh 5y ago
  no, your toaster is
- kerng 5y ago
  I see both sides throw random facts and numbers around when it comes to energy consumption - so the truth is probably somewhere in between. It's an issue, and its gonna get better over time. So I'm less sure if it's really that big of a problem. Just because I walked by a Chase bank right now... I mean, wouldn't it safe more energy if banks would start turning off their lights from 5pm to 8am and on weekends also?
- ostenning 5y ago
  The hypocrisy on this topic is unbelievable. I don't know what your portfolio looks like, but most people are happy to invest in blue chip stocks and indices that contain some of the worlds largest polluters, but, of course, as soon as they hear the word BTC, they cast judgement and throw the baby out with the bath water. If you actually cared about the environment, you would be attempting to invest money into disruptive technologies like BTC that can move money away from traditional banks that have literally funded global corruption, wars, genocide and (surprise surprise), ecocide. It makes no sense whatsoever and what it tells me is that you're just regurgitating the same dribble that you heard with no critical thought of your own
- matheusmoreira 5y ago
  Why do people keep posting this? I have no idea where this meme came from. It's not even 1% of global energy consumption. Cryptocurrencies in general are absolutely not environmental disasters. I agree, bitcoin is a useless coin but it's not even close to having any real environmental impact. Investment in environmental disasters? I'd suggest the developed world stop trading with China but we all know people can't live without cheap consumer products, including the computers we're using to post our opinions. How about we drop the USD instead? It's literally backed by petroleum and the US military. Hard to think of anything with a bigger environmental impact. It should be easy, right? Just quote petroleum prices in cryptocurrency. Simple... The hard part is surving the inevitable US invasion and destruction of your country.
adventured 5y ago
> I’d estimate the price of BTC would likely increase by two orders of magnitude I broadly agree that there's no great reason not to allocate 1-5% (I'd go higher on the range, depending on personal context) to crypto. However there's no scenario where Bitcoin can increase in value by two orders of magnitude. Literally, there is no scenario that can actually occur that will get it there. You're talking about ~$75-$100 trillion in value depending on where Bitcoin is at in a given week or month. You know what compares well to that? All the public stock holdings on planet Earth, which is just under that line. Bitcoin is going to be worth more than every publicly traded company in existence, from the US to China and everything inbetween. Not a chance that can ever happen. The odds are zero.
- adh636 5y ago
  The bond market is over 100 trillion. Why would people buy bonds returning low fixed interest rates in depreciating currencies if bitcoin with a fixed total supply becomes the global reserve currency? Gold is currently at a 10 trillion dollar market cap, and is a pretty small part of the global financial system at this point. The odds are absolutely not zero.
- intrasight 5y ago
  He was predicting BTC-USD not BTC-SPX
arcticbull 5y ago
Yes, but gold was an awful reserve, which is why we got rid of it. Replacing it, now, with the benefit of hindsight, with a digital version of an awful reserve isn't a game plan.
- lowkey 5y ago
  I've read a fair share of Austrian Economics and they certainly don't believe that gold was an awful reserve. I have yet to hear a credible argument against the use of gold as a global reserve currency other than the fact that countries can cheat by lying about their reserves such as they did during WWI. If you have reasoning to back your claim that gold was an awful reserve currency, I would love to hear it.
  - tablespoon 5y ago
    > I've read a fair share of Austrian Economics and they certainly don't believe that gold was an awful reserve. Have you read a fair share of other schools of Economics, or did you just focus on Austrian?
    - lowkey 5y ago
      I’ve read Keynes et al as well. None of them make a compelling case against the gold standard. Here is former Fed chair Alan Greenspan’s bullish case for the Gold standard for example [1] [1] http://www.altavra.com/docs/thirdparty/gold-and-economic-freedom-alan-greenspan.pdf?__cf_chl_jschl_tk__=1a52f784cea3df48eabd7cb0c05982040b880963-1623651423-0-AVT6dcrUuTtAfljBcQQvENsHagJQmo7zZGMrn2MgsX3kZVYAaq7Upj3bppElt6aRjlz2AY_GPV4F73MmsDVXprGDlFYaamsigmiZjn5rl5zStayELKAoHx4IXAHjFqEQ--Spel4tyHIAm-vqlgY-en1KaVWRGepu9w1EIwOQVlEBVPYJkPlPNWWt5gAz9ssj1s7hfm2nWICyExcUz5uqq-c3Ycjd4Lf2mdYXBZ7mfETjq6uHkrta-vAXEOHNBtyaGih2YSn1C7AGCgbnpFpYhXmfpEaAjYtCiWzYuaObIA8PZNzTvMKR3EQB3hM9zXeIDn82vSnjH4tkGtwzMZomL7nB8eyop1n9k3AJEW_wpjcNt65mybceMlxazR8UoWFQBRm3-7dlfe_xiqryS7e5BsxEiG3VjMMJ4E9nV-WoP3vUSRSAwmLLayNy7aejPu8MAps5dlxTjKaNDghQ2grkWJOCOtm62XKDl-f6MjJoHSBw http://www.altavra.com/docs/thirdparty/gold-and-economic-fre...
      - imtringued 5y ago
vbtemp 5y ago
I target about 2.5% of my portfolio to be crypto. Another 2.5% gold and silver. It's kind of amusing and baffling watching all these people speak with such certainty and conviction. If crypto currencies collapse, meh, oh well. If they spike another order of magnitude, nice, I'll just sell to keep my allocation on target. Like you, it just seems prudent to have limited downside (ie a crypto collapse won't ruin you.. at all) but also having some exposure to big positive swings, and never basing ones hopes and dreams on it. Anyway, here's to enjoying the show. Edit: when you disclose something like this, and people get viciously defensive about it, it usually means you're on course (see comments below).
- arcticbull 5y ago
  There's an entire universe of things you can invest in. Picking crypto with no real thesis except one day the entire world may be transacting 7tx/sec isn't really a good one. If you allocate 1% to every longshot you will be broke. Should I allocate 1% of my portfolio to Dentacoin in case dentists on the blockchain become the future of dental work? Especially knowing that 80% of all trading volume is against Tether, which is 3% backed by money. 95% of all trading volume in the space is fictitious, according to an ETF that tried to list a few years ago.
  - rawtxapp 5y ago
    Once again, lightning network is here and functional with growing adoption (1ml.com) and that's what they are using in El Salvador. LN can achieve almost instant and practically free Bitcoin payments.
    - arcticbull 5y ago
      Do they though? Because that's not really what I'm hearing. Strike is, in the US, a custodial US dollar wallet. You give them dollars and they keep them as dollars. You send them to another person in the US and they just amend their internal ledger. When you try and send them to El Salvador things go pear shaped. They: (1) Buy Bitcoin with those dollars. (2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. (3) To send those Bitcoin between their own two accounts. (4) And then buy Tether with them in El Salvador. You remember, the dollars that are actually 3% dollars. Strike is somehow the absolute worst case for the people of El Salvador. Centralized, permissioned, censorable (it's not available in Hawaii or New York) and backed by Tether. Not a coin that's likely to have the money (USDC) but Tether, who admits they don't. El Salvador by the way, is a dictatorship mandating their citizens use of Bitcoin. Where's the win exactly? [1] https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-passes-its-bitcoin-law-and-its-a-tether-scam/ https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-...
JumpCrisscross 5y ago
> it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto This isn’t a great heuristic. It green lights every high-gain proposal, irrespective of the risks, actual rewards and odds of success.
rawtxapp 5y ago
This is literally one of the first things that Hal Finney pointed out couple days after Bitcoin was announced publicly[1]. 1: https://twitter.com/DocumentingBTC/status/1363504478532624387/photo/1 https://twitter.com/DocumentingBTC/status/136350447853262438...
- andrewmcwatters 5y ago
  > Then the total value of the currency should be equal to the total value of all the wealth in the world. These people flat out don't understand how currency works. They don't understand where it comes from, how it's created, how it's destroyed, or what gives it intrinsic value.
  - rawtxapp 5y ago
    He made that prediction when Bitcoin was worth a big 0. Back then if you told anyone that one day it would achieve prices of 63k$ per coin, they would have told you you're just crazy, yet here we are. Let's see where we are in 10-20 years from now.
bottled_poe 5y ago
> I’d give this future a 1% of happening in the next 15 years. This will never happen. Governments won’t allow loss of control and the planet can’t support it either. If Bitcoin is not banned in all western nations within 10 years I will be very surprised.
- R0b0t1 5y ago
  It doesn't matter what they will allow. What matters is what will happen. Science fiction has explored the idea of transnational, nation-like organizations that have more real importance than an actual country. If nations reject bitcoin I suspect that is where we're going to go.
  - bottled_poe 5y ago
    Fiction is an odd place to put the trust of your future wealth. Personally, I feel very confident that those who currently hold real power will end up on top. I.e. those with a powerful military and police force who are capable of enforcing actual change. Same as it ever was.
    - R0b0t1 5y ago
      They can't enforce actual change if they can't touch it.
- fighterpilot 5y ago
  Tens of millions of voters own crypto now. Rational policy != feasible policy.
- kerng 5y ago
  I think a ban is questionable and likely backfires for those in charge. Also banning based on what grounds? The US and many others see it as an investable asset. Governments will likely start to buy/mine large amounts... that's seems more likely at this point. I'd be surprised if the US government isn't doing this very soon (or has already)
eli 5y ago
Here's the argument: I give this much MUCH less than 1% chance of happening.
ramchip 5y ago
I think the major argument against that is ethical. I wouldn't invest in something that has disastrous consequences on the environment, even if the expected returns are great.
- deleted 5y ago
  [deleted]
- atweiden 5y ago
  Much of what passes for human industry is essentially just strip mining the planet of its natural resources. I’d recommend watching Sir David Attenborough’s A Life On Our Planet for a sobering view of the ecological footprint of non-Bitcoin human economic activity, which presumably you invest in one way or the other. Moving to a global deflationary economic system per Bitcoin would at least disincentivize the rampant consumerism destroying this planet via disincentivizing capital investment and spending.
kerng 5y ago
Chances of Bitcoin being still around in 10 years and valued accordingly are a lot higher than 1%. The first 10 years were way more difficult and challenging. The market will chose, some governments will try to fight it, but its much easier for governments to stock up Bitcoin reserves and embrace it. Bitcoin now is basically too big to fail.
- jshen 5y ago
  Nope.
- senectus1 5y ago
  > Bitcoin now is basically too big to fail. That phrase, are you really going to use that without a /s ?
- JackFr 5y ago
  Bitcoin could disappear tomorrow and the biggest impact to the economy would be Tesla’s stick price.
  - atweiden 5y ago
    That’s rather uncharitable; the fallout would at least be similar to what would happen to the holders of SGD, NZD, DKK, and dozens of other currencies smaller than Bitcoin were they to implode. [1]: https://fiatmarketcap.com/ https://fiatmarketcap.com/
    - arcticbull 5y ago
      There's no such thing as market cap of a currency - just circulating supply denominated in itself. Each of those economies would be devastated and left unable to conduct commerce. Bitcoin though? A handful of speculators.
bpodgursky 5y ago
I hold a decent amount of Eth for this reason, but I actually think the biggest risk to either Bitcoin or Eth as an investment asset is not that crypto will fail, but that it will succeed enough that enough that institutional crypto users are sophisticated enough to create altcoins (or just hard forks) for these kind of banking-reserve use-cases. Market cap for crypto can go up by 100x but crypto overall could still be inflationary by adding new niche crypto asset classes.
sasaf5 5y ago
> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. The much larger than 1% probability of the current mainstream crypto being replaced by whatever new crypto is hyped in the future. Or the chance of "crypto" simply debasing itself out of existence with an infinite supply of new tokens.
rat87 5y ago
> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. sure if you like to gamble > I know many here are stridently anti-crypto, but there is some not very likely but plausible future where Bitcoin or Ethereum become the global reserve asset. Much the same way gold was in the 19th century or IMF drawing rights have operated at certain points post Breton Woods. not very plausible at all. As for a gold standard it was abandoned for good reason. You don't want a standard that is artificially limited and artificially limiting the economy, that's how you get a Great Depression

babyshake 5y ago

This lines up with the "hyperbitcoinization" narrative. It is pretty interesting to consider from a game theory perspective what sequence of events might cause this outcome to occur.

tekstar 5y ago

> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. crypto, especially bitcoin, is an intentional environmental disaster. I don't want to invest 1% of my money into an intentional environmental disaster.

thundergolfer 5y ago
Exactly the reason I don't invest. My risk appetite is more than enough to take on Bitcoin/Ethereum investment, but the environmental impact relative to its utility outside of speculative investment is insane. Did you mean to say "international environmental disaster"? I don't know in which way it's intentional that Bitcoin destroys the environment. The damage seems incidental.
- gwicks56 5y ago
  I don't understand this argument. There are lots of things people like to do that use a lot of energy that I think are stupid. Like why to people in the West drive such stupidly large cars? Surely the answer to clean the inputs, not the use case? Trying to control what people can do is just going to make the transition to a clean future impossible, because you will piss lots of people off, and make then enemies. Bitcoin uses a lot of energy because that's it's security model. Trucks use a lot of energy because they are huge. Seems a lot more productive to concentrate on moving electricity to be a clean world input ( say a carbon tax), or move to electric vehicles ( say via tax credits), than to police the actual end usage.
  - tekstar 5y ago
    I also don't drive a really big car, and I think it's stupid as well. So, now we're at two things I don't do because they're bad for the environment.
  - jcpham2 5y ago
    Internet brainwashing “ but it uses electricity” never mind the fact proof of work is on it’s fourth generation of hardware and the price absolutely coo relates with the cost to play the game. We’re opining about a system that finally, for the first time in the history of man, might accurately price the cost of the electricity consumed to power the system. It’s pretty mind boggling but that’s the internet for you.
  - TheDong 5y ago
    Bitcoin is fairly unique in its energy use. Almost every other use of resources will try to be more efficient if it can be. If, for example, it were possible to create steel alloy in a way that took 1% less energy or made less waste (and thus was presumably cheaper at scale), the trucks would use this slightly more efficient steel. On the other hand, Bitcoin relies on wasting a certain monetary value of energy for the security of the network. Its waste is adversarial. If we manage to produce 2x the electricity tomorrow and it becomes significantly cheaper, that just means a 51% attack also became much cheaper so people need to waste even more energy mining. I can't think of any other uses of energy offhand that so actively resist any improvements. I can think of other intentional forms of waste (like dumping toxic waste, "rolling coal", etc), but I can't think of any that are aligned such that making upstream production of a resource more efficient then requires producing even more waste and environmental damage.
rawtxapp 5y ago
Look at it this way, if Bitcoin/crypto fails, then you have nothing to worry about, since they'll just go away and there will be no environmental concerns. In this scenario, you lose the 1% you invested. If they succeed on the other hand at becoming world reserve currency, then that energy usage will be justified since it's replacing something that takes even more energy (current fiat system). In this scenario, your 1% investment has probably grown to be a much larger % of your portfolio.
- im_down_w_otp 5y ago
  I've never seen an energy consumption breakdown of what it takes to run the branches of the Federal Reserve or the Treasury. Do you have any primary source material on that?
  - gwicks56 5y ago
    The USA dollar is the settlement currency of the world. Which means you are really looking at the energy use of the Army/Navy/Air-force. If, in this hypothetical future, BTC became the settlement record.
    - ramchip 5y ago
      I don't follow this reasoning - why would moving to BTC as a global settlement currency make armed forces obsolete?
    - wwweston 5y ago
      If you assume: (a) the energy of the Army/Navy/Air-force supports nothing other than US currency (b) no force would be necessary to back compliance with entries in a crypto ledger
    - jayd16 5y ago
      As if BTC would somehow eliminate the army, navy and air-force.
  - FpUser 5y ago
kragen 5y ago
This is goofy. The worldwide Bitcoin network uses about 12 GW, mostly renewable, because Bitcoin mining is unprofitable if it's using anything but the absolute cheapest electricity, and scalable renewable electricity is about a third the price of fossil-fuel electricity now, with the gap constantly widening. By comparison, China built 71.7 GW(p!) of new wind energy capacity last year, and the world economy uses 18000 GW. Worrying about today's Bitcoin mining is as silly as worrying about plastic straws. Maybe in the future Bitcoin mining could become an environmental disaster, but today it's insignificant. Further details in https://news.ycombinator.com/item?id=27449443 https://news.ycombinator.com/item?id=27449443 and https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume https://hbr.org/2021/05/how-much-energy-does-bitcoin-actuall....
- jcranmer 5y ago
  > The worldwide Bitcoin network uses about 12 GW, mostly renewable, because Bitcoin mining is unprofitable if it's using anything but the absolute cheapest electricity, and scalable renewable electricity is about a third the price of fossil-fuel electricity now, with the gap constantly widening. If I'm following this right, the only evidence for Bitcoin being mostly based on renewable energy is because people believe it's uneconomical to not be renewable, and not based on any actual attempt to figure out what energy types are actually being used by large mining groups? Because, especially when you compare across international countries, retail prices are only vaguely correlated with production prices. Many places subsidize the crap out of energy prices, and electricity in a subsidized place could well be much cheaper than in a non-subsidized place, even if the first plant is burning coal and other plant is using wind. For some specific data points, I believe a large clutch of miners operated out of Inner Mongolia, whose electricity capacity increases in recent years has been dominated by coal-fired power plants (because it's a coal-rich region that doesn't give two whits about environmental effects). I'll also note that there was a story a few weeks back about a coal powered plant being recommissioned solely for mining bitcoin.
  - kragen 5y ago
    > If I'm following this right, the only evidence for Bitcoin being mostly based on renewable energy is because people believe it's uneconomical to not be renewable, and not based on any actual attempt to figure out what energy types are actually being used by large mining groups? Nope, sounds like you didn't look at the references I linked at all. If you want to follow something right, try reading the references, or at least casually skimming them. https://coinshares.com/insights/beware-of-lazy-research-bitcoin-mining-update https://coinshares.com/insights/beware-of-lazy-research-bitc... is one of the sources for the percentages cited in the Harvard Business Review article explaining their methodology (in 02018). It's the polar opposite of what you're saying. It's also true that there are fundamental economic reasons that Bitcoin mining is mostly done with renewable energy; it's not just a weird coincidence. But it's not just a theoretical prediction. > retail prices are only vaguely correlated with production prices. Many places subsidize the crap out of energy prices Yeah, that does happen. Also, outright theft happens; the cheapest energy is energy that you steal. But it turns out that unprofitable subsidies and stolen energy aren't very scalable, because places where the government pays for most of the energy ① tend to have strict oversight of industrial-scale operations, ② don't generate much electricity in the first place, and ③ tend to consider entrepreneurs criminals by default because they increase wealth inequality, so they shut them down when they get found out. When Bitcoin mining (or, say, Litecoin mining) starts to scale up in such places, as it did here in Argentina some years back, the energy subsidies have a way of evaporating. > I'll also note that there was a story a few weeks back about a coal powered plant being recommissioned solely for mining bitcoin No, that was gas; my comments on it are https://news.ycombinator.com/item?id=27450889 https://news.ycombinator.com/item?id=27450889. You're right that there are a variety of unusual circumstances that can make fossil-fueled Bitcoin mining profitable at small scales in one or another place, so it's easy to find anecdotes of it. But it's not the majority of the network.
ohhhhhh 5y ago
no, your toaster is
kerng 5y ago
I see both sides throw random facts and numbers around when it comes to energy consumption - so the truth is probably somewhere in between. It's an issue, and its gonna get better over time. So I'm less sure if it's really that big of a problem. Just because I walked by a Chase bank right now... I mean, wouldn't it safe more energy if banks would start turning off their lights from 5pm to 8am and on weekends also?
ostenning 5y ago
The hypocrisy on this topic is unbelievable. I don't know what your portfolio looks like, but most people are happy to invest in blue chip stocks and indices that contain some of the worlds largest polluters, but, of course, as soon as they hear the word BTC, they cast judgement and throw the baby out with the bath water. If you actually cared about the environment, you would be attempting to invest money into disruptive technologies like BTC that can move money away from traditional banks that have literally funded global corruption, wars, genocide and (surprise surprise), ecocide. It makes no sense whatsoever and what it tells me is that you're just regurgitating the same dribble that you heard with no critical thought of your own
matheusmoreira 5y ago
Why do people keep posting this? I have no idea where this meme came from. It's not even 1% of global energy consumption. Cryptocurrencies in general are absolutely not environmental disasters. I agree, bitcoin is a useless coin but it's not even close to having any real environmental impact. Investment in environmental disasters? I'd suggest the developed world stop trading with China but we all know people can't live without cheap consumer products, including the computers we're using to post our opinions. How about we drop the USD instead? It's literally backed by petroleum and the US military. Hard to think of anything with a bigger environmental impact. It should be easy, right? Just quote petroleum prices in cryptocurrency. Simple... The hard part is surving the inevitable US invasion and destruction of your country.

adventured 5y ago

> I’d estimate the price of BTC would likely increase by two orders of magnitude I broadly agree that there's no great reason not to allocate 1-5% (I'd go higher on the range, depending on personal context) to crypto. However there's no scenario where Bitcoin can increase in value by two orders of magnitude. Literally, there is no scenario that can actually occur that will get it there. You're talking about ~$75-$100 trillion in value depending on where Bitcoin is at in a given week or month. You know what compares well to that? All the public stock holdings on planet Earth, which is just under that line. Bitcoin is going to be worth more than every publicly traded company in existence, from the US to China and everything inbetween. Not a chance that can ever happen. The odds are zero.

adh636 5y ago
The bond market is over 100 trillion. Why would people buy bonds returning low fixed interest rates in depreciating currencies if bitcoin with a fixed total supply becomes the global reserve currency? Gold is currently at a 10 trillion dollar market cap, and is a pretty small part of the global financial system at this point. The odds are absolutely not zero.
intrasight 5y ago
He was predicting BTC-USD not BTC-SPX

arcticbull 5y ago

Yes, but gold was an awful reserve, which is why we got rid of it. Replacing it, now, with the benefit of hindsight, with a digital version of an awful reserve isn't a game plan.

lowkey 5y ago
I've read a fair share of Austrian Economics and they certainly don't believe that gold was an awful reserve. I have yet to hear a credible argument against the use of gold as a global reserve currency other than the fact that countries can cheat by lying about their reserves such as they did during WWI. If you have reasoning to back your claim that gold was an awful reserve currency, I would love to hear it.
- tablespoon 5y ago
  > I've read a fair share of Austrian Economics and they certainly don't believe that gold was an awful reserve. Have you read a fair share of other schools of Economics, or did you just focus on Austrian?
  - lowkey 5y ago
    I’ve read Keynes et al as well. None of them make a compelling case against the gold standard. Here is former Fed chair Alan Greenspan’s bullish case for the Gold standard for example [1] [1] http://www.altavra.com/docs/thirdparty/gold-and-economic-freedom-alan-greenspan.pdf?__cf_chl_jschl_tk__=1a52f784cea3df48eabd7cb0c05982040b880963-1623651423-0-AVT6dcrUuTtAfljBcQQvENsHagJQmo7zZGMrn2MgsX3kZVYAaq7Upj3bppElt6aRjlz2AY_GPV4F73MmsDVXprGDlFYaamsigmiZjn5rl5zStayELKAoHx4IXAHjFqEQ--Spel4tyHIAm-vqlgY-en1KaVWRGepu9w1EIwOQVlEBVPYJkPlPNWWt5gAz9ssj1s7hfm2nWICyExcUz5uqq-c3Ycjd4Lf2mdYXBZ7mfETjq6uHkrta-vAXEOHNBtyaGih2YSn1C7AGCgbnpFpYhXmfpEaAjYtCiWzYuaObIA8PZNzTvMKR3EQB3hM9zXeIDn82vSnjH4tkGtwzMZomL7nB8eyop1n9k3AJEW_wpjcNt65mybceMlxazR8UoWFQBRm3-7dlfe_xiqryS7e5BsxEiG3VjMMJ4E9nV-WoP3vUSRSAwmLLayNy7aejPu8MAps5dlxTjKaNDghQ2grkWJOCOtm62XKDl-f6MjJoHSBw http://www.altavra.com/docs/thirdparty/gold-and-economic-fre...
    - imtringued 5y ago

vbtemp 5y ago

I target about 2.5% of my portfolio to be crypto. Another 2.5% gold and silver. It's kind of amusing and baffling watching all these people speak with such certainty and conviction. If crypto currencies collapse, meh, oh well. If they spike another order of magnitude, nice, I'll just sell to keep my allocation on target. Like you, it just seems prudent to have limited downside (ie a crypto collapse won't ruin you.. at all) but also having some exposure to big positive swings, and never basing ones hopes and dreams on it. Anyway, here's to enjoying the show. Edit: when you disclose something like this, and people get viciously defensive about it, it usually means you're on course (see comments below).

arcticbull 5y ago
There's an entire universe of things you can invest in. Picking crypto with no real thesis except one day the entire world may be transacting 7tx/sec isn't really a good one. If you allocate 1% to every longshot you will be broke. Should I allocate 1% of my portfolio to Dentacoin in case dentists on the blockchain become the future of dental work? Especially knowing that 80% of all trading volume is against Tether, which is 3% backed by money. 95% of all trading volume in the space is fictitious, according to an ETF that tried to list a few years ago.
- rawtxapp 5y ago
  Once again, lightning network is here and functional with growing adoption (1ml.com) and that's what they are using in El Salvador. LN can achieve almost instant and practically free Bitcoin payments.
  - arcticbull 5y ago
    Do they though? Because that's not really what I'm hearing. Strike is, in the US, a custodial US dollar wallet. You give them dollars and they keep them as dollars. You send them to another person in the US and they just amend their internal ledger. When you try and send them to El Salvador things go pear shaped. They: (1) Buy Bitcoin with those dollars. (2) Use a private LN network that they don't let anyone else onto because it made it totally un-workable according to their CEO. (3) To send those Bitcoin between their own two accounts. (4) And then buy Tether with them in El Salvador. You remember, the dollars that are actually 3% dollars. Strike is somehow the absolute worst case for the people of El Salvador. Centralized, permissioned, censorable (it's not available in Hawaii or New York) and backed by Tether. Not a coin that's likely to have the money (USDC) but Tether, who admits they don't. El Salvador by the way, is a dictatorship mandating their citizens use of Bitcoin. Where's the win exactly? [1] https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-passes-its-bitcoin-law-and-its-a-tether-scam/ https://davidgerard.co.uk/blockchain/2021/06/11/el-salvador-...

JumpCrisscross 5y ago

> it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto This isn’t a great heuristic. It green lights every high-gain proposal, irrespective of the risks, actual rewards and odds of success.

rawtxapp 5y ago

This is literally one of the first things that Hal Finney pointed out couple days after Bitcoin was announced publicly[1]. 1: https://twitter.com/DocumentingBTC/status/1363504478532624387/photo/1 https://twitter.com/DocumentingBTC/status/136350447853262438...

andrewmcwatters 5y ago
> Then the total value of the currency should be equal to the total value of all the wealth in the world. These people flat out don't understand how currency works. They don't understand where it comes from, how it's created, how it's destroyed, or what gives it intrinsic value.
- rawtxapp 5y ago
  He made that prediction when Bitcoin was worth a big 0. Back then if you told anyone that one day it would achieve prices of 63k$ per coin, they would have told you you're just crazy, yet here we are. Let's see where we are in 10-20 years from now.

bottled_poe 5y ago

> I’d give this future a 1% of happening in the next 15 years. This will never happen. Governments won’t allow loss of control and the planet can’t support it either. If Bitcoin is not banned in all western nations within 10 years I will be very surprised.

R0b0t1 5y ago
It doesn't matter what they will allow. What matters is what will happen. Science fiction has explored the idea of transnational, nation-like organizations that have more real importance than an actual country. If nations reject bitcoin I suspect that is where we're going to go.
- bottled_poe 5y ago
  Fiction is an odd place to put the trust of your future wealth. Personally, I feel very confident that those who currently hold real power will end up on top. I.e. those with a powerful military and police force who are capable of enforcing actual change. Same as it ever was.
  - R0b0t1 5y ago
    They can't enforce actual change if they can't touch it.
fighterpilot 5y ago
Tens of millions of voters own crypto now. Rational policy != feasible policy.
kerng 5y ago
I think a ban is questionable and likely backfires for those in charge. Also banning based on what grounds? The US and many others see it as an investable asset. Governments will likely start to buy/mine large amounts... that's seems more likely at this point. I'd be surprised if the US government isn't doing this very soon (or has already)

eli 5y ago

Here's the argument: I give this much MUCH less than 1% chance of happening.

ramchip 5y ago

I think the major argument against that is ethical. I wouldn't invest in something that has disastrous consequences on the environment, even if the expected returns are great.

deleted 5y ago
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atweiden 5y ago
Much of what passes for human industry is essentially just strip mining the planet of its natural resources. I’d recommend watching Sir David Attenborough’s A Life On Our Planet for a sobering view of the ecological footprint of non-Bitcoin human economic activity, which presumably you invest in one way or the other. Moving to a global deflationary economic system per Bitcoin would at least disincentivize the rampant consumerism destroying this planet via disincentivizing capital investment and spending.

kerng 5y ago

Chances of Bitcoin being still around in 10 years and valued accordingly are a lot higher than 1%. The first 10 years were way more difficult and challenging. The market will chose, some governments will try to fight it, but its much easier for governments to stock up Bitcoin reserves and embrace it. Bitcoin now is basically too big to fail.

jshen 5y ago
Nope.
senectus1 5y ago
> Bitcoin now is basically too big to fail. That phrase, are you really going to use that without a /s ?
JackFr 5y ago
Bitcoin could disappear tomorrow and the biggest impact to the economy would be Tesla’s stick price.
- atweiden 5y ago
  That’s rather uncharitable; the fallout would at least be similar to what would happen to the holders of SGD, NZD, DKK, and dozens of other currencies smaller than Bitcoin were they to implode. [1]: https://fiatmarketcap.com/ https://fiatmarketcap.com/
  - arcticbull 5y ago
    There's no such thing as market cap of a currency - just circulating supply denominated in itself. Each of those economies would be devastated and left unable to conduct commerce. Bitcoin though? A handful of speculators.

bpodgursky 5y ago

I hold a decent amount of Eth for this reason, but I actually think the biggest risk to either Bitcoin or Eth as an investment asset is not that crypto will fail, but that it will succeed enough that enough that institutional crypto users are sophisticated enough to create altcoins (or just hard forks) for these kind of banking-reserve use-cases. Market cap for crypto can go up by 100x but crypto overall could still be inflationary by adding new niche crypto asset classes.

sasaf5 5y ago

> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. The much larger than 1% probability of the current mainstream crypto being replaced by whatever new crypto is hyped in the future. Or the chance of "crypto" simply debasing itself out of existence with an infinite supply of new tokens.

rat87 5y ago

> I think it’s hard to make the argument against allocating somewhere on the order of 1% of your portfolio to crypto. sure if you like to gamble > I know many here are stridently anti-crypto, but there is some not very likely but plausible future where Bitcoin or Ethereum become the global reserve asset. Much the same way gold was in the 19th century or IMF drawing rights have operated at certain points post Breton Woods. not very plausible at all. As for a gold standard it was abandoned for good reason. You don't want a standard that is artificially limited and artificially limiting the economy, that's how you get a Great Depression