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> 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. Ho

> 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.
        cuteboy19 5y ago
        That's fine, I'm just telling you that these people clearly are not interested in the properties of the blockchain itself
  - 5y ago
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.

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.
        cuteboy19 5y ago
        That's fine, I'm just telling you that these people clearly are not interested in the properties of the blockchain itself
- 5y ago

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.