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Whether PoS will work, I don't know. But the author didn't realize that PoW is certainly doomed. PoW miners tend to spend more and more resources on finding bl

Whether PoS will work, I don't know. But the author didn't realize that PoW is certainly doomed. PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger. That's why Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already. If the price were to go up tenfold, then so would electricity usage (roughly). That's not sustainable, both technically for grids and economically because electricity prices go up. Because of that, I foresee two possible futures for PoW cryptocurrencies: 1. The resource usage overshoots and PoW collapses because it gets banned everywhere. (This seems to be playing out now with China having banned crypto mining, Kazakhstan running into grid issues because of the miner influx, and Sweden arguing for a ban in the EU.) 2. The popularity of these currencies stops growing and only some niche applications remain. Speculators leave because there's no more money to be made. Prices go down.

keymone 5y ago
It’s a system with feedback loops, it’ll eventually level out at some equilibrium. You didn’t provide an actual argument for why it should definitely collapse.
- inter_netuser 5y ago
  Seems like he’s insinuating a global ban will occur.
  - lukifer 5y ago
    Interestingly enough, as the ledgers are all public by nature, there would be nothing stopping states from forking blockchains into centralized solutions, outcompeting miners by reducing transaction costs to zero. Crypto-anarchists would lose their minds, but most consumers would probably pick whatever's cheapest and which "just works". Don't get me wrong, I love the politics of decentralization. But it's worth remembering that decentralization tends to be a cost-center, not a profit-center, from the standpoint of efficiency and performance; and decentralized tech is no guarantee of decentralized results (see Amazon/Facebook/Google, who have quasi-monopolies in their niches, despite being delivered over open and federated web protocols).
- somebodythere 5y ago
  The existence of feedback loops very much doesn't imply a stable equilibrium. Actually, any system that is not overdamped will necessarily not reach an equilibrium. Or maybe the equilibrium is that no country bans it, and PoW currencies don't die on their own due to lack of financial rewards, and PoW artificially inflates the demand and therefore price of energy, leading first to widespread economic issues, then widespread ecological issues, until there is no one left buy pizza from with your BTC. Very compelling equilibrium.
  - keymone 5y ago
    point is that it's not a closed system that just blows up at some point. as long as there are people interested in keeping bitcoin running - it will keep running. for now economic incentives are enough, and it'll probably be enough forever, worst case - ideological incentives will do it.
- ced 5y ago
  Is there any forecast of where the equilibrium happen? Say, if you're in a 1000-people closed society where cryptocurrency is the only thing used to buy stuff, what's the economic calculation for the long-term energy consumption? Seems like there should be papers about that...
- naasking 5y ago
  > It’s a system with feedback loops, it’ll eventually level out at some equilibrium. An equilibrium doesn't entail that it's a sustainable point, or that it's actually providing value when you properly account for all externalities.
  - keymone 5y ago
    Good question. Some function of how much PoW each person can deploy in order to attack the chain and how much value is secured by the chain. It’s like a relation between price of a bike and price of a lock to secure the bike.
- wcoenen 5y ago
  I think you're right. I phrased my argument like all PoW must necessarily collapse once they get too popular, and that may not be true exactly. E.g. if Bitcoin had no block rewards, then the income from transaction fees alone might provide a more reasonable ceiling for miner activity. Users will only pay fees that make sense vs the utility they get. However, for Bitcoin that's not the case right now. The combination of high price and block rewards provide an enormous subsidy for miner activity. (Some back of the envelope numbers elsewhere in this thread[1].) And if Bitcoin gets banned, all PoW will likely get banned, so it doesn't matter if other PoW systems can behave better. [1] https://news.ycombinator.com/item?id=29373653 https://news.ycombinator.com/item?id=29373653
dan-robertson 5y ago
A positive side effect of your (1.) scenario is that it results in a surplus of renewable energy (mining needs the cheapest energy and renewable energy is generally the cheapest). Having a surplus of cheap green energy is probably good for the economy, though a lot more than 1% would probably be needed to see significant benefits.
- oblio 5y ago
  https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window Or we could just have a surplus of green energy for everything else we need. And how can we even have a surplus of green energy when we're probably at a 90% of world energy production deficit?
- righttoolforjob 5y ago
  > mining needs the cheapest energy and renewable energy is generally the cheapest The cheapest energy is the cheapest. It has nothing directly to do with it being renewable.
  - dan-robertson 5y ago
    Right. The point is that you get renewable energy which is desirable rather than non-renewable energy. If the latter were cheaper the situation would be less appealing.
    - righttoolforjob 5y ago
      If it was cheaper there would be no need for bitcoin as a driver (and then also to completely waste it, in the broken window fallacy sense).
      - dan-robertson 5y ago
        I feel like we’re talking past each other. I’m not saying we should want bitcoin wasting a bunch of power. I’m saying there could be positive outcomes to that power suddenly becoming available.
tommek4077 5y ago
It is not about spent electricity bills, it is about spent time. This is the problem that needs to be solved, how can you make the work more time consuming without beeing able to go around this with computing here: electric power.
- bitcurious 5y ago
  Chia uses “Proof of Space Time” which leans in the direction you’re describing.
- EVa5I7bHFq9mnYK 5y ago
  It is impossible, because time, unlike electricity, is free.
  - tommek4077 5y ago
    So, you would take a job paying a cent per day, because your time is free?
    - EVa5I7bHFq9mnYK 5y ago
      We are talking about computer time here. It's cheap to spin up 1000 tiny aws instances.
      - a9h74j 5y ago
        Waiting for PoWaaS.
        EVa5I7bHFq9mnYK 5y ago
        That exists long ago, look at nicehash.com
      - DonHopkins 5y ago
        As long as they're somebody else's instances, and you're a criminal who broke into their account. And that still destroys the environment and enriches Jeff Bezos. Forget stealing data — these hackers hijacked Amazon cloud accounts to mine bitcoin: https://www.businessinsider.com/hackers-broke-into-amazon-cloud-to-mine-bitcoin-2017-10 https://www.businessinsider.com/hackers-broke-into-amazon-cl... >A report from the security intelligence group RedLock found at least two companies which had their AWS cloud services compromised by hackers who wanted nothing more than to use the computer power to mine the cryptocurrency bitcoin. The hackers ultimately got access to Amazon's cloud servers after discovering that their administration consoles weren't password protected.
drexlspivey 5y ago
> PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger. It’s actually the opposite since the block reward goes down over time
- akhosravian 5y ago
  > It’s actually the opposite since the block reward goes down over time It is true that 10 years ago block rewards were almost 10x what they are today in terms of BTC, but by USD value new rewards are worth several orders of magnitude more today.
  - drexlspivey 5y ago
    The block reward approaches zero so no matter what the price is in the future it will amount to zero at the end.
    - earthtolazlo 5y ago
      By 2140.
- WA 5y ago
  If the price goes up, you can spend more resources to mine a block. But the cost will approach the reward.
- wcoenen 5y ago
  > It’s actually the opposite since the block reward goes down over time See history of block reward in dollars[1]. This the miner's collective budget to find blocks. It's about 350K USD per 10 minutes now, or 2.1M USD/hour. Pick an industrial electricity price, say 0.05 USD/kWh. That budget will then buy 42 GWh/hour, or 42 gigawatt of power continuously (roughly 2% of global power consumption). Of course, miners have other costs, and their growth is lagging this ceiling. But it gives you an idea. That's why I think we're heading for overshoot, and future block reward halvings will come too late. [1] https://bitcoinvisuals.com/chain-block-reward https://bitcoinvisuals.com/chain-block-reward
drclau 5y ago
> Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already And this is the reason why I cannot take any climate change conversation seriously unless it includes the topic of cryptocurrencies. Whatever the promises of cryptocurrencies were, now most (all?) degenerated into a mechanism for speculation, and effectively into a self-sustaining and self-promoting mechanism for transferring wealth from the poor to the rich. And, unfortunately, with the side effect of consuming vast amounts of energy.
- snet0 5y ago
  You can't take a discussion of climate change seriously unless it specifically addresses a single-percentage problem?
  - NovemberWhiskey 5y ago
    Air travel is about 2.5% of total carbon emissions and is incessantly discussed by climate activists.
  - orthoxerox 5y ago
    Do you think most proposed measures would have a bigger effect?
  - sandworm101 5y ago
    A rapidly-growing 1% problem, one that has the potential to nullify other costly gains. Such problems need to die young, before they grow into 5/10/50% problems.
    - semi-extrinsic 5y ago
      No, like others have stated, the climate challenge is switching our entire energy production (plus other fossile fuel end-uses) to net-zero or net-negative emissions. If Bitcoin disappeared tomorrow, it would give a small reduction in energy use, but at best it buys you 6 months extra to decarbonize electricity production.
zarzavat 5y ago
You haven't explained how mining hashrate causes popularity of the underlying cryptocurrency. The cause and effect is the other way around. Popularity of the cryptocurrency causes popularity of mining (the price goes up so mining is more profitable and more mining can happen).
aljarry 5y ago
I generally like to think about this from opposite direction: miners and bitcoin investors are incentivised for bitcoin to be used and for the price to go up. Why miners? Because their main source of income is not the transaction fee, but basecoin, the guaranteed bitcoin payout for each mined block. Due to Bitcoin being such a huge amount of money, unethical players do anything to lure people in, including MLM-style marketing, artificially inflating volume traded, and overplaying coin stats (like market cap). Then there's also media / influencers who, without second thought, introduce inexperienced people to investing in high-volatility assets.
- Applejinx 5y ago
  It's interesting how this mechanism, purportedly for grown-ass adults, is a loot box mechanic. Pump more energy in! Because you haven't hit a coin yet. And it is getting forever more unlikely that you will… but at the same time, the payoff is even greater than it was last week! Maybe you won't even hit a coin. Your operation is not big enough. But if you do…! So, MOAR… Loot box mechanic. Turns out it is not just for manipulating children.
mbar84 5y ago
It's important to remember that the direction of the causal link is from the value of each satoshi to the cost of electricity use by miners, not the other way around. People value sats, for whatever their reasons. Because they value sats, the mining costs can be financed. If people had no reason to value sats, there would be no mining. The best way to undermine Bitcoin energy use, would be to talk to your local central bank.
- wizzwizz4 5y ago
  The mining is a kind of ratchet. Not really, but psychologically, which is enough. As speculation goes up, people add more mining equipment, which “props up” the price.
globular-toast 5y ago
I don't think the author was arguing that PoW is perfect, only that PoS doesn't even solve some of the problems PoW does and is therefore even less viable as a currency.
inter_netuser 5y ago
The real question is how much longer the USD will remain the reserve currency and what will replace it. Europe is a museum. China would have to open its capital account, and that’s not going to happen. The answer is obvious by now.
- syspec 5y ago
  What's the answer?
  - tiahura 5y ago
    Indefinitely, because there is no viable alternative at this time.
AshamedCaptain 5y ago
3. Speculators move to yet another doge coin where the cost is still lower than the rewards. Hasn't that happened already a number of times? If everyone was still aboard the Bitcoin bandwagon, it would have stopped being profitable long ago; however you have plenty of other bandwagons to jump into. They are all technically practically interchangeable. I assume this is also the reason PoS will never work. People will just stay with PoW until really forced to, and if forced it's highly likely they will just jump into another PoW bandwagon. Guess this is part of the resistance seen with Ethereum. The alternative is to find a PoS schema which is even more lucrative for speculators (possible what the article is describing), and then everyone will jump into that bandwagon en-masse, but it will not have fixed anything.
- timbit42 5y ago
  If Bitcoin dropped PoW and miners switched to other PoW cryptocurrencies, then that would be a huge reduction in power consumption worldwide because all the other PoW coins combined probably don't have the transactions Bitcoin does. Additionally, the Lightning Network drastically cuts mining power consumption.
  - Kbelicius 5y ago
    This doesn't makes any sense. The amount of energy any PoW coin uses has nothing to do with the number of transactions that are made.
    - pkulak 5y ago
      It absolutely does, since mining rewards are mostly from transaction fees.
      - Kbelicius 5y ago
        No they are not. For mining a block of BTC a miner gets a reward of 6.25 BTC. Transaction fees, by looking at the past few blocks, don't go much beyond 0.05 BTC. That is not even close.
MarkPNeyer 5y ago
All of this makes sense if you assume people won’t build new power plants for bitcoin. But they already are. They are renewable plants because these are now much cheaper. Bitcoin acts as a subsidy for the construction of new green power plants.
- user-the-name 5y ago
  Nonsense. However, people are starting up coal plants that have been previously shut down in order to mine bitcoin. Bitcoin is causing massive harm.
littlestymaar 5y ago
There's also an alternative: 3. cryptocurrencies stop the Austrian economics fetishism and index the coin reward to the mining difficulty. That means getting rid of the fixed coin supply. That would stabilize the price of the token a lot (since price going up would increase the mining appeal, thus expanding the money supply, driving the price down) and also make it much more usable as a mean of payment (the number of token in circulation would grow in parallel with the growth in users). Obviously it's not gonna happen, because those people have spent a decade convincing themselves that deflation is good and fixed money supply is the righteous way to manage a currency.
- thinkloop 5y ago
  The difficulty is where the security comes from. Bitcoin's goal is to have the highest possible prices and difficulty so that nation-states and alien civilizations can't hack it. It's very easy to have a cheap low-difficulty coin. Equally worthless too. You need to understand that proof-of-work is actually proof-of-waste - the waste, the difficulty, the cost, is the security.
  - littlestymaar 5y ago
    You've misunderstood my point: I'm not talking about reducing the difficulty, I'm talking about (sub-linearly) increasing the mining reward as the difficulty grow. Also the difficulty scaling is important even if you don't take security into account: if you don't raise it, then the block mining frequency rise progressively, and then you end up with more and more orphaned blocks, until you end up with parallel chains that don't really converge to a single coherent one.
    - thinkloop 5y ago
      I see what you mean now. Interesting thought to peg inflation to difficulty. I think the main issue is that Bitcoin is not, and will not be, a means of payment. So price stability doesn't matter much. The nature of the system favors few, large transactions. The small-block size crystalized that. Bitcoin is truly suited as a clearing layer. Eventually it will process just the largest most expensive transactions in the world. Which is good since that's the only way miners will get paid and the high transaction costs will ensure continued security.
bitxbitxbitcoin 5y ago
The assumption that a 10x increase in price results in a 10x increase in electricity usage is incorrect. There is some correlation but it is definitely not 1:1 as insinuated.
poontang1 5y ago
Bitcoin uses about .1% of the worlds power currently. 10x less than you have suggested: https://nydig.com/research/report-bitcoin-net-zero https://nydig.com/research/report-bitcoin-net-zero The bitcoin reward also halves every 4 year, so even if price continues to appreciate, the effect is evened out by the fact that less is created every block over time. Lastly, bitcoin mining to could sustained solely by using stranded energy, which would otherwise be unused. Flared gas in texas, for instance, could provide more power than the network currently uses. There is no reason bitcoin mining has to take power from anyone, and it will trend this way over time because the economics are in favor of finding the cheapest power source.
- mschuster91 5y ago
  > Flared gas in texas, for instance, could provide more power than the network currently uses. While the amount of gas that is flared off is immense (25-30% of the actual consumption of the US and Europe), the problem is that it is only flared off because there are no pipelines to transport the gas away and the amount that the small oil wells produce is too low to justify the cost. If it were for me I'd force oil well operators to either build a small secondary pipeline for flare gas alongside oil pipelines or place a small power generator to contribute to the electric grid, but unfortunately "regulation" of any kind is seen as a bad thing in wide parts of the US.
  - claytongulick 5y ago
    > the amount that the small oil wells produce is too low to justify the cost. > but unfortunately "regulation" of any kind is seen as a bad thing in wide parts of the US. So you would have them be regulated out of business? Most of us in the U.S. do indeed see that as a bad thing.
  - mastax 5y ago
    If you put the miners in a shack next to the well, you don't need a pipeline. Still need a generator and other infrastructure though.
  - radu_floricica 5y ago
Geee 5y ago
PoW generates heat, which is not waste, if it is utilized. The endgame of Bitcoin mining is that every bit of heat is utilized, because that's the only way mining will be profitable. Running these miners is profitable even without block rewards (heat alone is sold at a profit). You didn't take into account, that: - Bitcoin price growth won't continue forever; it'll find a stable price - Mining rewards halve every 4 years Therefore, it seems that the heat demand of humans can run the Bitcoin network securely, even without block rewards. It won't "eat the world", but find a beautiful balance.
- DennisP 5y ago
  You would think then that large bitcoin miners would already be doing this. Maybe installing their miners in large office buildings in cold climates. In theory they could eliminate their cost of electricity and outcompete other miners. Why isn't this happening?
  - analog31 5y ago
    If they could generate electricity with the heat from the miners, they could use it to power the miners. ... Oh.
  - mastax 5y ago
    There was a startup on here a year or so ago with this idea. They built self-contained cabinets and put them in people's houses as heaters. Wonder how they're doing. Sounds like an ops nightmare.
  - Geee 5y ago
    It doesn't make sense yet, because it's currently too profitable to warrant such optimizations. Cheap energy is enough to be competitive.
- arbuge 5y ago
  > PoW generates heat, which is not waste, if it is utilized. There are far more energy-efficient ways of generating that heat than PoW. This is an (extremely) flawed argument. PoW is roughly akin to resistive heating. Heat pumps are about three times as energy-efficient as resistive heating. This does not even begin to take into account that there is no practical way to transfer the heat generated in massive server farm installations to where it would actually be useful without incurring massive losses.
mrkramer 5y ago
>PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger. Are Google and Facebook eating the world? They are processing petabytes of data on daily basis and every year there is more data and information being shared on the internet. Moore's law is our friend because as long we have better chips more data can be processed and analyzed. Bitcoin's PoW is based on economy and game theory meaning if people do not find Bitcoin useful they will stop processing transactions or in reality they will stop investing and spending computation power and electricity.
- fuy 5y ago
  What you're saying is tautological in a sense that for for it to be true, you need to postulate that every human activity is also based on economy and game theory (otherwise, why would people behave as you say they would behave) . So your argument essentially is that governments banning bitcoin is also based on economy and game theory. Which is fine by me.
  - mrkramer 5y ago
    I'm saying that market needs to decide whether Bitcoin is toxic commodity or not and what I mean by not is Bitcoin being useful like oil and gas are or any other commodity. And yes majority of people behave according to game theory because if they do not then they lose or in extreme cases die.
    - ajuc 5y ago
      If people behaved like game theory says they should then lottery, addictions and casinos wouldn't exist.
      - mrkramer 5y ago
        Read again what I wrote >majority of people behave according to game theory because if they do not then they lose or in extreme cases die. Majority of people are not addicts but those who are lose or in extreme cases die like for example alcohol addicts, drug addicts even casino gambling addicts who tend to suicide when losses amass and loans come due.
butMyside 5y ago
Using the same environmental concern logic, the carbon footprint of traditional banking, which still hauls around, protects, and produces real currency, plastic cards, and financing for every other destructive activity… rather dwarfs Bitcoin. Where are all your posts pointedly taking apart the system you are surely heavily invested in? You’re part of the problem by being part of human society. Collective economic inaction must be part of the solution. Producing less superfluous junk at scale must be part of the solution. That means our individual narratives around value stores must change; traditional banking scales even worse than Bitcoin.
rufi 5y ago
Electricity will not be a problem for the world in the next 30 years... 1. We will all move to renewal or nuclear 2. Bitcoin will decentralize more as the miners will move where electricity is cheaper and thus will cover geography of whole world hydro,thermal,solar,wind etc.. 3. Bitcoin can be the main chain and all side chains can rollup and commits. 4. The btc uses will be huge and there will be no dearth of transaction fees..
- codyb 5y ago
  On point 4, when do these “huge uses” start to appear? Bitcoin’s been around for what… 13 years now? Seems to be speculators, scammers, money launderers, and phishing/hacking rings still. Everything that tries to accept bitcoin for payment seems to stop doing so relatively quickly. It’s intentionally deflationary so anyone who holds a bitcoin is incentivized to hold it, not use it. Just bizarre.
  - kneel 5y ago
    Companies are holding BTC instead of treasuries, nations are issuing Bitcoin bonds, millions of people are buying in as governments print themselves into sinkholes.. Where is the use case? Bitcoin already proved its use case years ago, it already won. The only question now is how far can it go.
politician 5y ago
PoW is the optimal strategy for searching physics for the most effective means of transforming energy to electricity. There’s zero waste in this search — it directly converts electricity into money driving pure demand for more electricity which motivates the search for more efficient generation. It’s more efficient than Aluminum production in this regard— the economy can only absorb a certain amount of Aluminum. A carbon tax would effectively and immediately steer this search away from using fossil fuels for generation. People who clutch their pearls over PoW are unwitting Malthusians lacking an appreciation for E=mc^2.
kneel 5y ago
>1. The resource usage overshoots and PoW collapses because it gets banned everywhere. Bitcoin difficulty adjusts dynamically with available hashpower, in other words if miners started to shut down the network would lower it's difficulty to keep blocktimes stable. The chain will not collapse because someone somewhere will always keep it going.
- pkulak 5y ago
  > Bitcoin difficulty adjusts dynamically As does the energy use by miners. So, energy use reacts to price, and then difficulty reacts to energy use. That's OP's point. > if miners started to shut down... Actually, that would be _very_ interesting. Then you'd have millions of dollars of hardware doing nothing. And doing nothing is losing money. Maybe at that point attacking the network is more profitable than watching your hardware depreciate.
  - kneel 5y ago
    Would be interesting to watch someone try to amass ~0.5% of the world's energy/miners to perform a 51% attack on Bitcoin.
dcow 5y ago
Why is nobody talking about XCH (or XFX if you don’t like the size of the pre-mine)? It will have similar issues as PoW in the long long run (at a fraction of the cost), but it’s a clear iteration on the energy consumption issue of PoW chains that doesn’t concede the entire consensus idea is broken and advocate for switching to an oligarchy.

keymone 5y ago

It’s a system with feedback loops, it’ll eventually level out at some equilibrium. You didn’t provide an actual argument for why it should definitely collapse.

inter_netuser 5y ago
Seems like he’s insinuating a global ban will occur.
- lukifer 5y ago
  Interestingly enough, as the ledgers are all public by nature, there would be nothing stopping states from forking blockchains into centralized solutions, outcompeting miners by reducing transaction costs to zero. Crypto-anarchists would lose their minds, but most consumers would probably pick whatever's cheapest and which "just works". Don't get me wrong, I love the politics of decentralization. But it's worth remembering that decentralization tends to be a cost-center, not a profit-center, from the standpoint of efficiency and performance; and decentralized tech is no guarantee of decentralized results (see Amazon/Facebook/Google, who have quasi-monopolies in their niches, despite being delivered over open and federated web protocols).
somebodythere 5y ago
The existence of feedback loops very much doesn't imply a stable equilibrium. Actually, any system that is not overdamped will necessarily not reach an equilibrium. Or maybe the equilibrium is that no country bans it, and PoW currencies don't die on their own due to lack of financial rewards, and PoW artificially inflates the demand and therefore price of energy, leading first to widespread economic issues, then widespread ecological issues, until there is no one left buy pizza from with your BTC. Very compelling equilibrium.
- keymone 5y ago
  point is that it's not a closed system that just blows up at some point. as long as there are people interested in keeping bitcoin running - it will keep running. for now economic incentives are enough, and it'll probably be enough forever, worst case - ideological incentives will do it.
ced 5y ago
Is there any forecast of where the equilibrium happen? Say, if you're in a 1000-people closed society where cryptocurrency is the only thing used to buy stuff, what's the economic calculation for the long-term energy consumption? Seems like there should be papers about that...
naasking 5y ago
> It’s a system with feedback loops, it’ll eventually level out at some equilibrium. An equilibrium doesn't entail that it's a sustainable point, or that it's actually providing value when you properly account for all externalities.
- keymone 5y ago
  Good question. Some function of how much PoW each person can deploy in order to attack the chain and how much value is secured by the chain. It’s like a relation between price of a bike and price of a lock to secure the bike.
wcoenen 5y ago
I think you're right. I phrased my argument like all PoW must necessarily collapse once they get too popular, and that may not be true exactly. E.g. if Bitcoin had no block rewards, then the income from transaction fees alone might provide a more reasonable ceiling for miner activity. Users will only pay fees that make sense vs the utility they get. However, for Bitcoin that's not the case right now. The combination of high price and block rewards provide an enormous subsidy for miner activity. (Some back of the envelope numbers elsewhere in this thread[1].) And if Bitcoin gets banned, all PoW will likely get banned, so it doesn't matter if other PoW systems can behave better. [1] https://news.ycombinator.com/item?id=29373653 https://news.ycombinator.com/item?id=29373653

dan-robertson 5y ago

A positive side effect of your (1.) scenario is that it results in a surplus of renewable energy (mining needs the cheapest energy and renewable energy is generally the cheapest). Having a surplus of cheap green energy is probably good for the economy, though a lot more than 1% would probably be needed to see significant benefits.

oblio 5y ago
https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window Or we could just have a surplus of green energy for everything else we need. And how can we even have a surplus of green energy when we're probably at a 90% of world energy production deficit?
righttoolforjob 5y ago
> mining needs the cheapest energy and renewable energy is generally the cheapest The cheapest energy is the cheapest. It has nothing directly to do with it being renewable.
- dan-robertson 5y ago
  Right. The point is that you get renewable energy which is desirable rather than non-renewable energy. If the latter were cheaper the situation would be less appealing.
  - righttoolforjob 5y ago
    If it was cheaper there would be no need for bitcoin as a driver (and then also to completely waste it, in the broken window fallacy sense).
    - dan-robertson 5y ago
      I feel like we’re talking past each other. I’m not saying we should want bitcoin wasting a bunch of power. I’m saying there could be positive outcomes to that power suddenly becoming available.

tommek4077 5y ago

It is not about spent electricity bills, it is about spent time. This is the problem that needs to be solved, how can you make the work more time consuming without beeing able to go around this with computing here: electric power.

bitcurious 5y ago
Chia uses “Proof of Space Time” which leans in the direction you’re describing.
EVa5I7bHFq9mnYK 5y ago
It is impossible, because time, unlike electricity, is free.
- tommek4077 5y ago
  So, you would take a job paying a cent per day, because your time is free?
  - EVa5I7bHFq9mnYK 5y ago
    We are talking about computer time here. It's cheap to spin up 1000 tiny aws instances.
    - a9h74j 5y ago
      Waiting for PoWaaS.
      - EVa5I7bHFq9mnYK 5y ago
        That exists long ago, look at nicehash.com
    - DonHopkins 5y ago
      As long as they're somebody else's instances, and you're a criminal who broke into their account. And that still destroys the environment and enriches Jeff Bezos. Forget stealing data — these hackers hijacked Amazon cloud accounts to mine bitcoin: https://www.businessinsider.com/hackers-broke-into-amazon-cloud-to-mine-bitcoin-2017-10 https://www.businessinsider.com/hackers-broke-into-amazon-cl... >A report from the security intelligence group RedLock found at least two companies which had their AWS cloud services compromised by hackers who wanted nothing more than to use the computer power to mine the cryptocurrency bitcoin. The hackers ultimately got access to Amazon's cloud servers after discovering that their administration consoles weren't password protected.

drexlspivey 5y ago

akhosravian 5y ago
> It’s actually the opposite since the block reward goes down over time It is true that 10 years ago block rewards were almost 10x what they are today in terms of BTC, but by USD value new rewards are worth several orders of magnitude more today.
- drexlspivey 5y ago
  The block reward approaches zero so no matter what the price is in the future it will amount to zero at the end.
  - earthtolazlo 5y ago
    By 2140.
WA 5y ago
If the price goes up, you can spend more resources to mine a block. But the cost will approach the reward.
wcoenen 5y ago
> It’s actually the opposite since the block reward goes down over time See history of block reward in dollars[1]. This the miner's collective budget to find blocks. It's about 350K USD per 10 minutes now, or 2.1M USD/hour. Pick an industrial electricity price, say 0.05 USD/kWh. That budget will then buy 42 GWh/hour, or 42 gigawatt of power continuously (roughly 2% of global power consumption). Of course, miners have other costs, and their growth is lagging this ceiling. But it gives you an idea. That's why I think we're heading for overshoot, and future block reward halvings will come too late. [1] https://bitcoinvisuals.com/chain-block-reward https://bitcoinvisuals.com/chain-block-reward

drclau 5y ago

> Bitcoin is already approaching 1% of global electricity consumption, if it hasn't passed that point already And this is the reason why I cannot take any climate change conversation seriously unless it includes the topic of cryptocurrencies. Whatever the promises of cryptocurrencies were, now most (all?) degenerated into a mechanism for speculation, and effectively into a self-sustaining and self-promoting mechanism for transferring wealth from the poor to the rich. And, unfortunately, with the side effect of consuming vast amounts of energy.

snet0 5y ago
You can't take a discussion of climate change seriously unless it specifically addresses a single-percentage problem?
- NovemberWhiskey 5y ago
  Air travel is about 2.5% of total carbon emissions and is incessantly discussed by climate activists.
- orthoxerox 5y ago
  Do you think most proposed measures would have a bigger effect?
- sandworm101 5y ago
  A rapidly-growing 1% problem, one that has the potential to nullify other costly gains. Such problems need to die young, before they grow into 5/10/50% problems.
  - semi-extrinsic 5y ago
    No, like others have stated, the climate challenge is switching our entire energy production (plus other fossile fuel end-uses) to net-zero or net-negative emissions. If Bitcoin disappeared tomorrow, it would give a small reduction in energy use, but at best it buys you 6 months extra to decarbonize electricity production.

zarzavat 5y ago

You haven't explained how mining hashrate causes popularity of the underlying cryptocurrency. The cause and effect is the other way around. Popularity of the cryptocurrency causes popularity of mining (the price goes up so mining is more profitable and more mining can happen).

aljarry 5y ago

I generally like to think about this from opposite direction: miners and bitcoin investors are incentivised for bitcoin to be used and for the price to go up. Why miners? Because their main source of income is not the transaction fee, but basecoin, the guaranteed bitcoin payout for each mined block. Due to Bitcoin being such a huge amount of money, unethical players do anything to lure people in, including MLM-style marketing, artificially inflating volume traded, and overplaying coin stats (like market cap). Then there's also media / influencers who, without second thought, introduce inexperienced people to investing in high-volatility assets.

Applejinx 5y ago
It's interesting how this mechanism, purportedly for grown-ass adults, is a loot box mechanic. Pump more energy in! Because you haven't hit a coin yet. And it is getting forever more unlikely that you will… but at the same time, the payoff is even greater than it was last week! Maybe you won't even hit a coin. Your operation is not big enough. But if you do…! So, MOAR… Loot box mechanic. Turns out it is not just for manipulating children.

mbar84 5y ago

It's important to remember that the direction of the causal link is from the value of each satoshi to the cost of electricity use by miners, not the other way around. People value sats, for whatever their reasons. Because they value sats, the mining costs can be financed. If people had no reason to value sats, there would be no mining. The best way to undermine Bitcoin energy use, would be to talk to your local central bank.

wizzwizz4 5y ago
The mining is a kind of ratchet. Not really, but psychologically, which is enough. As speculation goes up, people add more mining equipment, which “props up” the price.

globular-toast 5y ago

I don't think the author was arguing that PoW is perfect, only that PoS doesn't even solve some of the problems PoW does and is therefore even less viable as a currency.

inter_netuser 5y ago

The real question is how much longer the USD will remain the reserve currency and what will replace it. Europe is a museum. China would have to open its capital account, and that’s not going to happen. The answer is obvious by now.

syspec 5y ago
What's the answer?
- tiahura 5y ago
  Indefinitely, because there is no viable alternative at this time.

AshamedCaptain 5y ago

3. Speculators move to yet another doge coin where the cost is still lower than the rewards. Hasn't that happened already a number of times? If everyone was still aboard the Bitcoin bandwagon, it would have stopped being profitable long ago; however you have plenty of other bandwagons to jump into. They are all technically practically interchangeable. I assume this is also the reason PoS will never work. People will just stay with PoW until really forced to, and if forced it's highly likely they will just jump into another PoW bandwagon. Guess this is part of the resistance seen with Ethereum. The alternative is to find a PoS schema which is even more lucrative for speculators (possible what the article is describing), and then everyone will jump into that bandwagon en-masse, but it will not have fixed anything.

timbit42 5y ago
If Bitcoin dropped PoW and miners switched to other PoW cryptocurrencies, then that would be a huge reduction in power consumption worldwide because all the other PoW coins combined probably don't have the transactions Bitcoin does. Additionally, the Lightning Network drastically cuts mining power consumption.
- Kbelicius 5y ago
  This doesn't makes any sense. The amount of energy any PoW coin uses has nothing to do with the number of transactions that are made.
  - pkulak 5y ago
    It absolutely does, since mining rewards are mostly from transaction fees.
    - Kbelicius 5y ago
      No they are not. For mining a block of BTC a miner gets a reward of 6.25 BTC. Transaction fees, by looking at the past few blocks, don't go much beyond 0.05 BTC. That is not even close.

MarkPNeyer 5y ago

All of this makes sense if you assume people won’t build new power plants for bitcoin. But they already are. They are renewable plants because these are now much cheaper. Bitcoin acts as a subsidy for the construction of new green power plants.

user-the-name 5y ago
Nonsense. However, people are starting up coal plants that have been previously shut down in order to mine bitcoin. Bitcoin is causing massive harm.

littlestymaar 5y ago

There's also an alternative: 3. cryptocurrencies stop the Austrian economics fetishism and index the coin reward to the mining difficulty. That means getting rid of the fixed coin supply. That would stabilize the price of the token a lot (since price going up would increase the mining appeal, thus expanding the money supply, driving the price down) and also make it much more usable as a mean of payment (the number of token in circulation would grow in parallel with the growth in users). Obviously it's not gonna happen, because those people have spent a decade convincing themselves that deflation is good and fixed money supply is the righteous way to manage a currency.

thinkloop 5y ago
The difficulty is where the security comes from. Bitcoin's goal is to have the highest possible prices and difficulty so that nation-states and alien civilizations can't hack it. It's very easy to have a cheap low-difficulty coin. Equally worthless too. You need to understand that proof-of-work is actually proof-of-waste - the waste, the difficulty, the cost, is the security.
- littlestymaar 5y ago
  You've misunderstood my point: I'm not talking about reducing the difficulty, I'm talking about (sub-linearly) increasing the mining reward as the difficulty grow. Also the difficulty scaling is important even if you don't take security into account: if you don't raise it, then the block mining frequency rise progressively, and then you end up with more and more orphaned blocks, until you end up with parallel chains that don't really converge to a single coherent one.
  - thinkloop 5y ago
    I see what you mean now. Interesting thought to peg inflation to difficulty. I think the main issue is that Bitcoin is not, and will not be, a means of payment. So price stability doesn't matter much. The nature of the system favors few, large transactions. The small-block size crystalized that. Bitcoin is truly suited as a clearing layer. Eventually it will process just the largest most expensive transactions in the world. Which is good since that's the only way miners will get paid and the high transaction costs will ensure continued security.

bitxbitxbitcoin 5y ago

The assumption that a 10x increase in price results in a 10x increase in electricity usage is incorrect. There is some correlation but it is definitely not 1:1 as insinuated.

poontang1 5y ago

Bitcoin uses about .1% of the worlds power currently. 10x less than you have suggested: https://nydig.com/research/report-bitcoin-net-zero https://nydig.com/research/report-bitcoin-net-zero The bitcoin reward also halves every 4 year, so even if price continues to appreciate, the effect is evened out by the fact that less is created every block over time. Lastly, bitcoin mining to could sustained solely by using stranded energy, which would otherwise be unused. Flared gas in texas, for instance, could provide more power than the network currently uses. There is no reason bitcoin mining has to take power from anyone, and it will trend this way over time because the economics are in favor of finding the cheapest power source.

mschuster91 5y ago
> Flared gas in texas, for instance, could provide more power than the network currently uses. While the amount of gas that is flared off is immense (25-30% of the actual consumption of the US and Europe), the problem is that it is only flared off because there are no pipelines to transport the gas away and the amount that the small oil wells produce is too low to justify the cost. If it were for me I'd force oil well operators to either build a small secondary pipeline for flare gas alongside oil pipelines or place a small power generator to contribute to the electric grid, but unfortunately "regulation" of any kind is seen as a bad thing in wide parts of the US.
- claytongulick 5y ago
  > the amount that the small oil wells produce is too low to justify the cost. > but unfortunately "regulation" of any kind is seen as a bad thing in wide parts of the US. So you would have them be regulated out of business? Most of us in the U.S. do indeed see that as a bad thing.
- mastax 5y ago
  If you put the miners in a shack next to the well, you don't need a pipeline. Still need a generator and other infrastructure though.
- radu_floricica 5y ago

Geee 5y ago

PoW generates heat, which is not waste, if it is utilized. The endgame of Bitcoin mining is that every bit of heat is utilized, because that's the only way mining will be profitable. Running these miners is profitable even without block rewards (heat alone is sold at a profit). You didn't take into account, that: - Bitcoin price growth won't continue forever; it'll find a stable price - Mining rewards halve every 4 years Therefore, it seems that the heat demand of humans can run the Bitcoin network securely, even without block rewards. It won't "eat the world", but find a beautiful balance.

DennisP 5y ago
You would think then that large bitcoin miners would already be doing this. Maybe installing their miners in large office buildings in cold climates. In theory they could eliminate their cost of electricity and outcompete other miners. Why isn't this happening?
- analog31 5y ago
  If they could generate electricity with the heat from the miners, they could use it to power the miners. ... Oh.
- mastax 5y ago
  There was a startup on here a year or so ago with this idea. They built self-contained cabinets and put them in people's houses as heaters. Wonder how they're doing. Sounds like an ops nightmare.
- Geee 5y ago
  It doesn't make sense yet, because it's currently too profitable to warrant such optimizations. Cheap energy is enough to be competitive.
arbuge 5y ago
> PoW generates heat, which is not waste, if it is utilized. There are far more energy-efficient ways of generating that heat than PoW. This is an (extremely) flawed argument. PoW is roughly akin to resistive heating. Heat pumps are about three times as energy-efficient as resistive heating. This does not even begin to take into account that there is no practical way to transfer the heat generated in massive server farm installations to where it would actually be useful without incurring massive losses.

mrkramer 5y ago

>PoW miners tend to spend more and more resources on finding blocks, until the cost approaches the rewards. But the rewards go up as the cryptocurrency becomes more popular, because the price and transaction fees go up. Therefore, a PoW cryptocurrency tends to "eat the world" as it becomes bigger. Are Google and Facebook eating the world? They are processing petabytes of data on daily basis and every year there is more data and information being shared on the internet. Moore's law is our friend because as long we have better chips more data can be processed and analyzed. Bitcoin's PoW is based on economy and game theory meaning if people do not find Bitcoin useful they will stop processing transactions or in reality they will stop investing and spending computation power and electricity.

fuy 5y ago
What you're saying is tautological in a sense that for for it to be true, you need to postulate that every human activity is also based on economy and game theory (otherwise, why would people behave as you say they would behave) . So your argument essentially is that governments banning bitcoin is also based on economy and game theory. Which is fine by me.
- mrkramer 5y ago
  I'm saying that market needs to decide whether Bitcoin is toxic commodity or not and what I mean by not is Bitcoin being useful like oil and gas are or any other commodity. And yes majority of people behave according to game theory because if they do not then they lose or in extreme cases die.
  - ajuc 5y ago
    If people behaved like game theory says they should then lottery, addictions and casinos wouldn't exist.
    - mrkramer 5y ago
      Read again what I wrote >majority of people behave according to game theory because if they do not then they lose or in extreme cases die. Majority of people are not addicts but those who are lose or in extreme cases die like for example alcohol addicts, drug addicts even casino gambling addicts who tend to suicide when losses amass and loans come due.

butMyside 5y ago

Using the same environmental concern logic, the carbon footprint of traditional banking, which still hauls around, protects, and produces real currency, plastic cards, and financing for every other destructive activity… rather dwarfs Bitcoin. Where are all your posts pointedly taking apart the system you are surely heavily invested in? You’re part of the problem by being part of human society. Collective economic inaction must be part of the solution. Producing less superfluous junk at scale must be part of the solution. That means our individual narratives around value stores must change; traditional banking scales even worse than Bitcoin.

rufi 5y ago

Electricity will not be a problem for the world in the next 30 years... 1. We will all move to renewal or nuclear 2. Bitcoin will decentralize more as the miners will move where electricity is cheaper and thus will cover geography of whole world hydro,thermal,solar,wind etc.. 3. Bitcoin can be the main chain and all side chains can rollup and commits. 4. The btc uses will be huge and there will be no dearth of transaction fees..

codyb 5y ago
On point 4, when do these “huge uses” start to appear? Bitcoin’s been around for what… 13 years now? Seems to be speculators, scammers, money launderers, and phishing/hacking rings still. Everything that tries to accept bitcoin for payment seems to stop doing so relatively quickly. It’s intentionally deflationary so anyone who holds a bitcoin is incentivized to hold it, not use it. Just bizarre.
- kneel 5y ago
  Companies are holding BTC instead of treasuries, nations are issuing Bitcoin bonds, millions of people are buying in as governments print themselves into sinkholes.. Where is the use case? Bitcoin already proved its use case years ago, it already won. The only question now is how far can it go.

politician 5y ago

PoW is the optimal strategy for searching physics for the most effective means of transforming energy to electricity. There’s zero waste in this search — it directly converts electricity into money driving pure demand for more electricity which motivates the search for more efficient generation. It’s more efficient than Aluminum production in this regard— the economy can only absorb a certain amount of Aluminum. A carbon tax would effectively and immediately steer this search away from using fossil fuels for generation. People who clutch their pearls over PoW are unwitting Malthusians lacking an appreciation for E=mc^2.

kneel 5y ago

>1. The resource usage overshoots and PoW collapses because it gets banned everywhere. Bitcoin difficulty adjusts dynamically with available hashpower, in other words if miners started to shut down the network would lower it's difficulty to keep blocktimes stable. The chain will not collapse because someone somewhere will always keep it going.

pkulak 5y ago
> Bitcoin difficulty adjusts dynamically As does the energy use by miners. So, energy use reacts to price, and then difficulty reacts to energy use. That's OP's point. > if miners started to shut down... Actually, that would be _very_ interesting. Then you'd have millions of dollars of hardware doing nothing. And doing nothing is losing money. Maybe at that point attacking the network is more profitable than watching your hardware depreciate.
- kneel 5y ago
  Would be interesting to watch someone try to amass ~0.5% of the world's energy/miners to perform a 51% attack on Bitcoin.

dcow 5y ago

Why is nobody talking about XCH (or XFX if you don’t like the size of the pre-mine)? It will have similar issues as PoW in the long long run (at a fraction of the cost), but it’s a clear iteration on the energy consumption issue of PoW chains that doesn’t concede the entire consensus idea is broken and advocate for switching to an oligarchy.