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If value of a commodity is predicated on scarcity - eg gold - then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its

If value of a commodity is predicated on scarcity - eg gold - then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based? Unfortunately, production of energy is one of the very things which is driving one of our biggest global problems - global warming. I don’t see how the two can be decoupled.

PragmaticPulp 5y ago
> then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based? Bitcoin’s value isn’t coupled to energy. However, it does have a perverse incentive to miners to consume as much energy as possible. Each additional miner that comes online doesn’t really add anything of value to the network at this point. It just consumes more energy. Each miner plays a game of maximizing their own energy usage to maximize their take of the fixed rewards structure. It has to be the single most inefficient large-scale engineering project I can think of, and certainly the only one that literally pays people globally to make it less and less efficient.
- ahoka 5y ago
  "Bitcoin’s value isn’t coupled to energy." Sorry, but it is? "The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended."
  - DennisP 5y ago
    They are coupled, but the BTC price is the independent variable, because of the difficulty adjustment. If the price rises, the mining becomes more profitable, more miners jump in, and mining gets more difficult so the issuance rate stays roughly constant. If the price falls, mining becomes less profitable, some miners drop out, and to keep issuance from slowing down the difficulty is decreased. Whatever the price does, the energy usage follows. So we can't really say that energy usage is the foundation of BTC's value, it's the other way around.
- hgfshfg123 5y ago
  I think it's more that case that it's a transfer mechanism. It transfers the irrefutability of transactions into an energy cost. The reason it consumes so much energy is because people really don't trust each other.
  - timeon 5y ago
    > because people really don't trust each other Not necessary people in general. But people interested in crypto certainly don't trust each other.
    - politician 5y ago
      Closer. The user-agents running Bitcoin (nodes) are performing an algorithm that was purposely designed such that all such user-agents are mutually distrusting.
      - hgfshfg123 5y ago
        My second point also includes that people are willing to spend all of this energy for mining because of the Bitcoin value. I'm suggesting that people are in because they distrust the current currency system: The more they distrust other currency, the more Bitcoin they buy, the higher the energy costs as more participate, the more irrefutable the ledger, the more energy is spent... So the more demand there is for irrefutability, the higher the energy costs.
        cuteboy19 5y ago
        Most people buy Bitcoin on exchanges. That negates trustlessness
        scottiebarnes 5y ago
        A crypto exchange is not part of a blockchain's protocol. Its a distribution layer built on top of it.
- throwhauser 5y ago
  > Bitcoin’s value isn’t coupled to energy. Then what would happen if the energy and materials needed to compute the hashes were literally zero cost?
  - SantalBlush 5y ago
    Then mining operations would expand further until they hit some other cost constraint, like labor.
wmeredith 5y ago
Energy use is being decoupled from global warming at an ever increasing pace. It may be too late, but to say it cannot be done is nonsense. There's a constellation of social reasons that it may not be done, but it can.
- timeon 5y ago
  > Energy use is being decoupled from global warming at an ever increasing pace. Unfortunately this seems to be more like wishful thinking. As one example: https://ourworldindata.org/grapher/energy-consumption-by-source-and-region?stackMode=absolute&country=~OWID_WRL https://ourworldindata.org/grapher/energy-consumption-by-sou...
vertnerd 5y ago
So we are literally killing ourselves to get rich. If a powerful alien race stumbled on the human race they would be compelled to destroy us to save the universe.
- elliotpage 5y ago
  We are now the alien species in a forgettiable early season episode of Star Trek TNG.
  - floatingatoll 5y ago
    “We mine things to make cash flow”?
- manuelabeledo 5y ago
  That reminds me of this comic strip: https://m.imgur.com/gallery/KvypGc1 https://m.imgur.com/gallery/KvypGc1
- davebailey 5y ago
  Actually, no, cryptocurrencies offer a way to monetize inexpensive energy production in places with energy surpluses that can't easily move energy to places that need it.
- helloworld11 5y ago
  We have been killing ourselves (and each other) to get rich for millenia. It's nothing new. But, we've also been doing many productive things for the sake of getting rich and accumulating useful capital, and these vastly outnumber the destructive things we do, which is why we're still here and by all measurements, better off and more peaceful than we ever have been previously as a species. That's one thing. The second thing is that there's no certainty that bitcoin mining is actually causing us to kill ourselves or that it causes meaningful levels of harm. Lots of panicky hand waving around the subject, but little concrete evidence of the hysterical thing you stated. Furthermore, energy consumption per se is not inherently bad, even for very dubious uses. It's how you procure your energy that defines harm, not that you use lots of it. If for example, we were seeing people mine bitcoin with say, solar power, or mini nuclear fusion reactors, it wouldn't matter that they choose to use energy they paid for on something some perceive as wasteful.
s_dev 5y ago
>I don’t see how the two can be decoupled. A Bitcoin miner powered by a solar panel isn't contributing to global warming beyond the manufacture of the solar panel. The problem is how we generate energy. If someone wants to consume electricity mining bitcoin thats every bit as valid use as their time as playing video games imo. I choose to play games because I prefer that.
- biztos 5y ago
  > beyond the manufacture of the solar panel Should we count the cost of manufacturing the computer(s) doing the work? More so if ASIC? The recycling-or-not of same? I’ve been thinking about “mining something” since I will soon have a surplus of solar energy I can’t sell back into the grid. Not a ton but enough to maybe join a pool and make a small profit. But even then it strikes me as wasteful… gotta do something with that box when it’s obsolete.
anm89 5y ago
a) > If value of a commodity is predicated on scarcity No economist would say the value of anything is based on scarcity. Scarcity is basically a code word for supply. The value of things is determined by the intersection of supply and demand, not supply floating in a vacuum. b) > If value of a commodity is predicated on scarcity - eg gold - then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based? What are you even trying to say here? Do we say cars are subject to some impossible contadiction because they consume energy? Do we say the heater in your home is valueless because it consumes energy? Do we say your bank is somehow invalid because it's operations consume energy? What does any of this have to do with the fact that bitcoin doesn't have an unlimited supply (ie is scarce)? This is complete gibberish.

PragmaticPulp 5y ago

> then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based? Bitcoin’s value isn’t coupled to energy. However, it does have a perverse incentive to miners to consume as much energy as possible. Each additional miner that comes online doesn’t really add anything of value to the network at this point. It just consumes more energy. Each miner plays a game of maximizing their own energy usage to maximize their take of the fixed rewards structure. It has to be the single most inefficient large-scale engineering project I can think of, and certainly the only one that literally pays people globally to make it less and less efficient.

ahoka 5y ago
"Bitcoin’s value isn’t coupled to energy." Sorry, but it is? "The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended."
- DennisP 5y ago
  They are coupled, but the BTC price is the independent variable, because of the difficulty adjustment. If the price rises, the mining becomes more profitable, more miners jump in, and mining gets more difficult so the issuance rate stays roughly constant. If the price falls, mining becomes less profitable, some miners drop out, and to keep issuance from slowing down the difficulty is decreased. Whatever the price does, the energy usage follows. So we can't really say that energy usage is the foundation of BTC's value, it's the other way around.
hgfshfg123 5y ago
I think it's more that case that it's a transfer mechanism. It transfers the irrefutability of transactions into an energy cost. The reason it consumes so much energy is because people really don't trust each other.
- timeon 5y ago
  > because people really don't trust each other Not necessary people in general. But people interested in crypto certainly don't trust each other.
  - politician 5y ago
    Closer. The user-agents running Bitcoin (nodes) are performing an algorithm that was purposely designed such that all such user-agents are mutually distrusting.
    - hgfshfg123 5y ago
      My second point also includes that people are willing to spend all of this energy for mining because of the Bitcoin value. I'm suggesting that people are in because they distrust the current currency system: The more they distrust other currency, the more Bitcoin they buy, the higher the energy costs as more participate, the more irrefutable the ledger, the more energy is spent... So the more demand there is for irrefutability, the higher the energy costs.
      - cuteboy19 5y ago
        Most people buy Bitcoin on exchanges. That negates trustlessness
        scottiebarnes 5y ago
        A crypto exchange is not part of a blockchain's protocol. Its a distribution layer built on top of it.
throwhauser 5y ago
> Bitcoin’s value isn’t coupled to energy. Then what would happen if the energy and materials needed to compute the hashes were literally zero cost?
- SantalBlush 5y ago
  Then mining operations would expand further until they hit some other cost constraint, like labor.

wmeredith 5y ago

Energy use is being decoupled from global warming at an ever increasing pace. It may be too late, but to say it cannot be done is nonsense. There's a constellation of social reasons that it may not be done, but it can.

timeon 5y ago
> Energy use is being decoupled from global warming at an ever increasing pace. Unfortunately this seems to be more like wishful thinking. As one example: https://ourworldindata.org/grapher/energy-consumption-by-source-and-region?stackMode=absolute&country=~OWID_WRL https://ourworldindata.org/grapher/energy-consumption-by-sou...

vertnerd 5y ago

So we are literally killing ourselves to get rich. If a powerful alien race stumbled on the human race they would be compelled to destroy us to save the universe.

elliotpage 5y ago
We are now the alien species in a forgettiable early season episode of Star Trek TNG.
- floatingatoll 5y ago
  “We mine things to make cash flow”?
manuelabeledo 5y ago
That reminds me of this comic strip: https://m.imgur.com/gallery/KvypGc1 https://m.imgur.com/gallery/KvypGc1
davebailey 5y ago
Actually, no, cryptocurrencies offer a way to monetize inexpensive energy production in places with energy surpluses that can't easily move energy to places that need it.
helloworld11 5y ago
We have been killing ourselves (and each other) to get rich for millenia. It's nothing new. But, we've also been doing many productive things for the sake of getting rich and accumulating useful capital, and these vastly outnumber the destructive things we do, which is why we're still here and by all measurements, better off and more peaceful than we ever have been previously as a species. That's one thing. The second thing is that there's no certainty that bitcoin mining is actually causing us to kill ourselves or that it causes meaningful levels of harm. Lots of panicky hand waving around the subject, but little concrete evidence of the hysterical thing you stated. Furthermore, energy consumption per se is not inherently bad, even for very dubious uses. It's how you procure your energy that defines harm, not that you use lots of it. If for example, we were seeing people mine bitcoin with say, solar power, or mini nuclear fusion reactors, it wouldn't matter that they choose to use energy they paid for on something some perceive as wasteful.

s_dev 5y ago

>I don’t see how the two can be decoupled. A Bitcoin miner powered by a solar panel isn't contributing to global warming beyond the manufacture of the solar panel. The problem is how we generate energy. If someone wants to consume electricity mining bitcoin thats every bit as valid use as their time as playing video games imo. I choose to play games because I prefer that.

biztos 5y ago
> beyond the manufacture of the solar panel Should we count the cost of manufacturing the computer(s) doing the work? More so if ASIC? The recycling-or-not of same? I’ve been thinking about “mining something” since I will soon have a surplus of solar energy I can’t sell back into the grid. Not a ton but enough to maybe join a pool and make a small profit. But even then it strikes me as wasteful… gotta do something with that box when it’s obsolete.

anm89 5y ago

a) > If value of a commodity is predicated on scarcity No economist would say the value of anything is based on scarcity. Scarcity is basically a code word for supply. The value of things is determined by the intersection of supply and demand, not supply floating in a vacuum. b) > If value of a commodity is predicated on scarcity - eg gold - then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based? What are you even trying to say here? Do we say cars are subject to some impossible contadiction because they consume energy? Do we say the heater in your home is valueless because it consumes energy? Do we say your bank is somehow invalid because it's operations consume energy? What does any of this have to do with the fact that bitcoin doesn't have an unlimited supply (ie is scarce)? This is complete gibberish.