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Jack Dorsey says Square is ‘considering’ building a Bitcoin mining system
- joelbondurant 5y agoUltimate censorship will be the legacy of Censorship Jack.
- RedBeetDeadpool 5y agoDorsey's giving out some narrative of reducing pollution by making mining more efficient. This has to be him just saying things the media wants to hear, because that simply doesn't work. The pollution generated by bitcoin is not a factor of mining efficiency, its a factor of its price. When bitcoin reaches $100,000, its pollution will be roughly equivalent to the pollution created from making $100,000 worth of energy. Obviously this is a rough estimation, but its pretty close. As a miner, if it only costs $80,000 in energy to produce one bitcoin, and you can sell it for $100,000, then you're gonna crank up the heat until you're closer to breaking even. So when 1 bitcoin reaches $1,000,000 it will take roughly $1,000,000 worth of energy to mine, and thereby create the pollution equivalent of $1,000,000 worth of energy. Kind of makes you wonder if nakamoto saw this as a property of bitcoin, because that is one helluva cost if you think about it.
- aserafini 5y agoI think in the even longer term, when the price stabilises (ie. we are not in this growth/adoption phase) the transaction volume will dominate. And that’s because there will be no more Bitcoin to mine and the price will not be going ‘up’ by default, so mining will be chasing fees only. And the fees are related only to transaction volume.
- itake 5y agoMaybe I’m confused. I thought there is a finite supply of bitcoins. If they stop mining / hit the limit, the supply becomes fixed but the demand may increase. What happens then to the value of the coin?
- aserafini 5y agoThe price of a coin will go up but it won’t necessarily stimulate more expenditure of ‘mining’ energy because there are no more coins to ‘mine’. At that point the activity of miners would be better described as ‘transaction processors’ and in this phase, energy expended will be directly correlated with transaction fees. Yes you could say coin higher value would make the transaction fees ‘worth more’ but this effect will be completely dominated by the volume of the transactions themselves which will be much more variable. It’s like saying Western Union’s server costs can be affected by the USD/GBP exchange price. Sure, they can be but the far more dominant effect will be transaction volume.
- bko 5y agoIf the energy comes from a clean source, what does it matter? I think Dorsey believes that if there were cost effective mining equipment that requires little maintenance and is simple to maintain, you'd be able to use it in places that have abundant cheap and renewable resources. The cheapest forms of power are likely the ones that are going to go to waste anyway. Sure you'll still bid up the price you consume, but that's the point of the difficulty adjustment. The more valuable the network, the more valuable prize for a 51% attack. So you have to rely on market forces to ensure the network remains secure
- rz2k 5y agoThe opportunity cost means there is effectively no difference. A megawatt hour used to mine from a clean source means that a megawatt hour used for something else doesn't come from a clean energy source. Even if this project is the difference between building additional clean energy capacity or not, the resources for building that capacity have an opportunity cost—something that can't be built that would create value. Mining cryptocurrency doesn't create wealth any more than mining gold or printing money, it creates value in a zero sum manner, by discounting the value of all other currencies by a very tiny amount.
- aserafini 5y ago> Resources of building clean energy capacity have an opportunity cost I don’t understand this point, are you saying a project that stimulates additional clean energy capacity is a net negative somehow? Why?
- petmon 5y agoYes and very much so. Look at the GPU market: probably crypto has stimulated some GPU additional capacity, but overall crypto has been highly net-negative for non-crypto GPU uses. Imagine if crypto did to the solar market what it has already done to the GPU market.
- motioncuty 5y agoThis isnt true at all, theres tons of stranded energy production sources that are not being used now that would be made viable through mining crypto and transferring that "work" electronically rather than over wire.
- reginold 5y agoSquare has written a memo titled "Bitcoin is Key to an Abundant, Clean Energy Future". What are your thoughts on the piece? https://squareup.com/us/en/press/bcei-white-paper https://squareup.com/us/en/press/bcei-white-paper
- theK 5y agoI think there are a number of fallacies in this white paper. For one, energy consumed by pow is just spent energy, it does not contribute to societal development. Also, this sort of consumer specific investment disregards society because it disregards where society needs the energy (since society is not the target group). On another hand, this whole paper seems very short sighted and rand-ish. The fact of the matter is that the only effect that scaling PoW more will have is scorching the earth, so why not just invest in tech that actually can make a difference like all the working PoS projects?
- reginold 5y ago> energy consumed by pow is just spent energy, it does not contribute to societal development Can you explain more about what you mean by this? Would the same apply to a gallon of gas burned in a car for example?
- bloqs 5y agoProof of work is computing. Like any computing, like your home PC or laptop, running an application costs electricity, and perhaps slightly warms its nearby vicinity. A gallon of gas or a battery in a car may have a similar impact. A gallon of gas may have further negative externalities like the destruction of the atmosphere etc.
- ashtonkem 5y agoBut a gallon of gas does something useful; it enables someone to be mobile and go about their daily activities. Bitcoin is fundamentally a casino. It’s only legitimate function is betting on a number that’s not connected with anything else, also known as gambling. The energy we spend there does much less for a society than allowing people to move around and go about their daily lives.
- webinvest 5y agoThis is correct. But every 4 years, there is a halving. If the price of Bitcoin were to stay the same after each halving, then mining would be half as profitable so the amount of energy used by Bitcoin miners would drop by half. In 2012, the amount of new bitcoins issued every 10 minutes dropped from 50 bitcoins to 25. In 2016, it dropped from 25 to 12.5. In the most recent May 11, 2020 halving, the reward dropped from 12.5 to 6.25 BTC per block. In the 2024 halving, the reward will drop from 6.25 BTC per block to 3.125 BTC. An unsolved problem with Bitcoin is that in 15-20 years, Bitcoin may no longer be profitable to mine. People speculate that fees will increase. If people have already invested in solar panels, windmills, hydro electric, volcanic energy and already bought their Bitcoin miners, they might just leave them all on. Even if it only earns them a few dollars a day, the opportunity cost could very well be zero.
- ashtonkem 5y ago> Even if it only earns them a few dollars a day, the opportunity cost could very well be zero. You forgot the opportunity cost of the datacenter itself. It would be much more profitable to turn that into a colo or a VPS host with some new hardware. Regardless, once the bitcoin reward goes low enough Bitcoin will probably become worthless. It's already not usable as a currency, and without the distributed ponzi system ofhanding out blocks to miners, what motive will anyone have to buy it?
- herendin2 5y ago"2/Mining needs to be more efficient. Driving towards clean and efficient energy use is great for Bitcoin’s economics, impact, and scalability." This seems like Dorsey doesn't understand how Bitcoin works, which is surprising Making a more efficient miner will not reduce energy consumption, no more than designing lightweight bricks would allow you to build cheaper bank vaults
- TwiceCubed 5y agoAs it happens, the most widespread piece of employee feedback the last time Square surveyed, was that Jack is wasting too much of his time on crypto nonsense that has nothing to do with Square's actual business competencies. I guess it wasn't taken to heart.
- reginold 5y agooo interesting, source? Wonder what Twitter employee survey says too.
- literallyaduck 5y agoEven if energy was free to mine, the hardware manufacturing for the GPUs would be problematic.
- ac29 5y agoBitcoin mining hasnt used GPUs in a long time. Its worse - it uses fully custom ASICs that still take up fab time and raw materials, but when they are no longer economical to run, they cant be reused for anything else.
- deleted 5y ago[deleted]
- pornel 5y agoUltimately, PoW systems have to hit a scarce resource. If power became free, it'd change into a race for chips. If we figured out super cheap ways of making chips, the endless race would move to building factories or repurposing land for the whole system. It has to grow until it hits something hard to grow further. Security of the system depends on using so much resources all the time that an attacker can't waste resources any faster.