4 ms·

The coin is the proof that the energy was used. You're effectively trading how much you value energy.

root_axis 5y ago
No, that's incorrect. The price of the bitcoin has no relationship to the amount of energy burned mining it; if this were true then Satoshi's wallet would be worthless.
- randomhodler84 4y ago
  I think the price of Bitcoin does have a relationship to energy consumption. It’s obvious it’s on large time scales. And unless one has a very cheap energy source it will always be cheaper to buy from the market. So it’s a good in the ball park metric, the core issue to transfer value to old coins is that older coins grow exponentially more difficult to undo — so the fact that a few kilowatts could have mined many thousand coins in the early days does not decrease those utxo security and this value. There is an additive value of every block, and while head block at difficulty D virtually upgrades all the blocks before it to D, as you would need at least D+1 to undo just head-1, we build bigger defense walls every 10 minutes on average.
  - root_axis 4y ago
    > so the fact that a few kilowatts could have mined many thousand coins in the early days does not decrease those utxo security and this value utxo security doesn't matter - a unit of bitcoin that expended a fraction of a kWh to be mined is worth the same as a unit of bitcoin that cost hundreds of thousands of kWh to mine, thus the energy spent to mine a bitcoin has no meaning with respect to its price.
    - randomhodler84 4y ago
      There are multiple feedback loops. When energy is expensive, mining slows. This impacts yields from miners, and supply of new coins to the market. Also, there is a point where it is cheaper to buy the coins at certain energy prices; thus cost to produce the coins is a component in their market price. It is ignoring reality to say they are not linked concepts. One can demonstrate this in the myriad of shitcoins over the years — their value collapsed when mining stopped. When people did not want to pay to protect the network. Exactly which leads which is probably something that will switch over time in various cycles of its adoption.
- otterley 4y ago
  That's not completely true. As soon as it costs more to mine a Bitcoin than the value of a Bitcoin is worth, nobody's going to mine it anymore. Why would anyone take a loss on that?
  - root_axis 4y ago
    > As soon as it costs more to mine a Bitcoin than the value of a Bitcoin is worth, nobody's going to mine it anymore That doesn't matter. The amount of energy burned to mine the bitcoin that already exists has no relationship to its price in the future - the "bottled energy" characterization is totally incorrect.
    - otterley 4y ago
      Only if you think the price is going to go up enough to recoup your investment, which is by no means certain. It’s a medium of exchange. Smart investors don’t invest in currency for its own sake; they invest in things that have untapped value beyond themselves. I just don’t know how much dark money remains out there to make bitcoin in particular continue to appreciate. And if it depreciates so much that it falls below the production cost, then I think people might be discouraged from producing it because they might conclude that it’s an irreversible trend. It’d be the end of the line.

No, that's incorrect. The price of the bitcoin has no relationship to the amount of energy burned mining it; if this were true then Satoshi's wallet would be worthless.

randomhodler84 4y ago
I think the price of Bitcoin does have a relationship to energy consumption. It’s obvious it’s on large time scales. And unless one has a very cheap energy source it will always be cheaper to buy from the market. So it’s a good in the ball park metric, the core issue to transfer value to old coins is that older coins grow exponentially more difficult to undo — so the fact that a few kilowatts could have mined many thousand coins in the early days does not decrease those utxo security and this value. There is an additive value of every block, and while head block at difficulty D virtually upgrades all the blocks before it to D, as you would need at least D+1 to undo just head-1, we build bigger defense walls every 10 minutes on average.
- root_axis 4y ago
  > so the fact that a few kilowatts could have mined many thousand coins in the early days does not decrease those utxo security and this value utxo security doesn't matter - a unit of bitcoin that expended a fraction of a kWh to be mined is worth the same as a unit of bitcoin that cost hundreds of thousands of kWh to mine, thus the energy spent to mine a bitcoin has no meaning with respect to its price.
  - randomhodler84 4y ago
    There are multiple feedback loops. When energy is expensive, mining slows. This impacts yields from miners, and supply of new coins to the market. Also, there is a point where it is cheaper to buy the coins at certain energy prices; thus cost to produce the coins is a component in their market price. It is ignoring reality to say they are not linked concepts. One can demonstrate this in the myriad of shitcoins over the years — their value collapsed when mining stopped. When people did not want to pay to protect the network. Exactly which leads which is probably something that will switch over time in various cycles of its adoption.
otterley 4y ago
That's not completely true. As soon as it costs more to mine a Bitcoin than the value of a Bitcoin is worth, nobody's going to mine it anymore. Why would anyone take a loss on that?
- root_axis 4y ago
  > As soon as it costs more to mine a Bitcoin than the value of a Bitcoin is worth, nobody's going to mine it anymore That doesn't matter. The amount of energy burned to mine the bitcoin that already exists has no relationship to its price in the future - the "bottled energy" characterization is totally incorrect.
  - otterley 4y ago
    Only if you think the price is going to go up enough to recoup your investment, which is by no means certain. It’s a medium of exchange. Smart investors don’t invest in currency for its own sake; they invest in things that have untapped value beyond themselves. I just don’t know how much dark money remains out there to make bitcoin in particular continue to appreciate. And if it depreciates so much that it falls below the production cost, then I think people might be discouraged from producing it because they might conclude that it’s an irreversible trend. It’d be the end of the line.