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It blows my mind how well-known all the problems there are with crypto and yet it's become so huge while solving virtually no problem other than avoiding laws a

by jmyeet 5y ago

It blows my mind how well-known all the problems there are with crypto and yet it's become so huge while solving virtually no problem other than avoiding laws about the movement of money and capital. The Bitcoin network in particular uses more electricty than Argentina. Defenders will point out that it's majority renewable. That's intellectually dishonest because Bitcoin is simply chasing cheap power and hydro power is among the cheapest. Bitcoin miners will happily use coal if it's sufficiently cheap. Also, use of certain renewables comes at the expense of other people. In the Hudson Valley, miners have raised the electricty prices for other residents in those towns. Bitcoins transactions consume an enormous amount of electricity. Defenders will also claim we'll move to Proof of Stake ("PoS") over Proof of Waste but this too is a myth. For one, Bitcoin's massive computational and electricity waste is key to defending the network. I don't know what happens when we run out of coins to mine. Also, if it's as simple as that, why haven't we simply moved to PoS for everything? PoS ultimately is a rich-gets-richer scenario is why. It's really no different to the Luna anchor stakers getting 20% returns at the expense of everyone else who comes along later. And for all of this waste we get what? Transactions that can only be guaranteed if they're entirely contained within the network because as soon as you want to include something outside of that (eg converting crypto to or from cash) you've just added the same trust issue that is intrinsic to every traditional financial transaction. And what fuels this continued mass delusion is the fabric of American beliefs that every American is just a temporarily embarassed millionaire [1]. [1]; https://www.goodreads.com/quotes/328134-john-steinbeck-once-said-that-socialism-never-took-root-in https://www.goodreads.com/quotes/328134-john-steinbeck-once-...

ollieglass 5y ago
> solving virtually no problem other than avoiding laws about the movement of money and capital This is a tremendously valuable problem to solve for some.
- jmyeet 5y ago
  But at what cost? This [1] estimates the annual Bitcoin energy consumption at 145TWh. If the Bitcoin network were a country it would rank 25 in the world by energy consumption [2]. The cost of that electricity is hard to estimate but if you use a ballpark of $0.10/kWh that puts the cost of the Bitcoin network at almost $15 billion annually just for the electricity. [1]: https://ccaf.io/cbeci/index https://ccaf.io/cbeci/index [2]: https://en.wikipedia.org/wiki/List_of_countries_by_electricity_consumption https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
  - deleted 5y ago
    [deleted]
- rodgerd 5y ago
  Yes, it's certainly provided North Korea with a reliable flow of funds for their nuclear weapons program.
datadata 5y ago
> That's intellectually dishonest because Bitcoin is simply chasing cheap power and hydro power is among the cheapest. Bitcoin miners will happily use coal if it's sufficiently cheap. Also, use of certain renewables comes at the expense of other people. In the Hudson Valley, miners have raised the electricty prices for other residents in those towns. If bitcoin miners are chasing cheap power (which I believe they are), then it shouldn't be possible for miners to increase the price of power in a fixed area, as they would immediately migrate elsewhere where power is cheaper. You can't have it both ways. Interestingly, the cheapest power is where supply completely dwarfs demand. Bitcoin miners should ultimately migrate to those areas of stranded power, and thus under optimal conditions bitcoin miners shouldn't compete with any other buyer of energy-- it would only be efficient to preform bitcoin mining for the lowest possible cost of energy where there is no other customer. It is largely looking like renewables would fit that bill, as the era of low hanging fossil fuels is long gone (aside from government subsidies).
- rr808 5y ago
  > the cheapest power is where supply completely dwarfs demand. Bitcoin miners should ultimately migrate to those areas of stranded power There are lots of other uses for surplus power eg Aluminium smelters, desalination plants, decarbonization machines, cracking H20.
  - datadata 5y ago
    Sure, but there are areas where it is not economical to actually make use of that power. For example, you could place a bitcoin mining solar powered installation in the middle of a desert where there would be no need for desalinized water and where there is no rail or road access needed for something like aluminum smelting. I think the evidence of bitcoin mining being powered by methane flare gas is irrefutable evidence of that: The methane flare gas just been being burned off for decades, it wasn't until bitcoin mining that there was a marketable use for this energy.
- jmyeet 5y ago
  > If bitcoin miners are chasing cheap power ... then it shouldn't be possible for miners to increase the price of power in a fixed area as they would immediately migrate elsewhere where power is cheaper Um, no. That presumes there is somewhere cheaper to move, for one. If powers costs $0.08/kWh in one place and the next best option is $0.12/kWh then even if you assume no moving costs you've got all that headroom before it even makes sense to move. But consider the concrete example of Pittsburgh [1] (emphasis added): > A few years ago, miners “descended upon” the city of Plattsburgh, New York, about a hundred and fifty miles north of Albany, which gets much of its electricity from hydroelectric dams on the St. Lawrence River. The power is relatively inexpensive, but, once Plattsburgh uses up its allotment, it has to purchase more at higher rates. Bitcoin mining drove up the cost of electricity in the city so dramatically that, in 2018, Plattsburgh enacted a moratorium on new mining operations. [1]: https://www.newyorker.com/news/daily-comment/why-bitcoin-is-bad-for-the-environment https://www.newyorker.com/news/daily-comment/why-bitcoin-is-...
dlubarov 5y ago
> Also, if it's as simple as that, why haven't we simply moved to PoS for everything? More modern blockchains do use PoS for the most part -- Solana, Cardano, Polkadot, Cosmos, Avalanche, NEAR, etc. Just Bitcoin in particular is unlikely to make such a major change. > PoS ultimately is a rich-gets-richer scenario is why. In well-designed PoS systems, anyone can stake (perhaps with delegation) and access the same rate of return. If everyone stakes, noone is actually getting richer after we adjust for dilution.
- AlexandrB 5y ago
  > In well-designed PoS systems, anyone can stake (perhaps with delegation) and access the same rate of return. If everyone stakes, noone is actually getting richer after we adjust for dilution. This is fine in a vacuum where no one needs the money they make staking, but someone who is not rich is presumably staking to make money that they will spend on food/clothing/shelter. The wealthy can stake indefinitely.
  - dlubarov 5y ago
    Lockup periods aren't really inherent to PoS though. In Eth2 exits are rate limited, but they should be quick under normal conditions, and only delayed (for security reasons) if many stakers try to exit at once. For even greater liquidity, one can use a paltform like Lido, and just sell stETH at any time.
- influxmoment 5y ago
  Bitcoin will not change to PoS because it doesn't work and is only promoted by charlatans trying to sell tokens
  - dlubarov 5y ago
    Despite theoretical concerns, it seems to be working fine for the aforementioned projects! It's been used in production for about a decade now.
    - 4y ago
HeadsUpHigh 5y ago
>PoS ultimately is a rich-gets-richer scenario is why. Are you under the assumption that crypto is supposed to be socialist somehow?

by jmyeet 5y ago

ollieglass 5y ago

> solving virtually no problem other than avoiding laws about the movement of money and capital This is a tremendously valuable problem to solve for some.

jmyeet 5y ago
But at what cost? This [1] estimates the annual Bitcoin energy consumption at 145TWh. If the Bitcoin network were a country it would rank 25 in the world by energy consumption [2]. The cost of that electricity is hard to estimate but if you use a ballpark of $0.10/kWh that puts the cost of the Bitcoin network at almost $15 billion annually just for the electricity. [1]: https://ccaf.io/cbeci/index https://ccaf.io/cbeci/index [2]: https://en.wikipedia.org/wiki/List_of_countries_by_electricity_consumption https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
- deleted 5y ago
  [deleted]
rodgerd 5y ago
Yes, it's certainly provided North Korea with a reliable flow of funds for their nuclear weapons program.

datadata 5y ago

> That's intellectually dishonest because Bitcoin is simply chasing cheap power and hydro power is among the cheapest. Bitcoin miners will happily use coal if it's sufficiently cheap. Also, use of certain renewables comes at the expense of other people. In the Hudson Valley, miners have raised the electricty prices for other residents in those towns. If bitcoin miners are chasing cheap power (which I believe they are), then it shouldn't be possible for miners to increase the price of power in a fixed area, as they would immediately migrate elsewhere where power is cheaper. You can't have it both ways. Interestingly, the cheapest power is where supply completely dwarfs demand. Bitcoin miners should ultimately migrate to those areas of stranded power, and thus under optimal conditions bitcoin miners shouldn't compete with any other buyer of energy-- it would only be efficient to preform bitcoin mining for the lowest possible cost of energy where there is no other customer. It is largely looking like renewables would fit that bill, as the era of low hanging fossil fuels is long gone (aside from government subsidies).

rr808 5y ago
> the cheapest power is where supply completely dwarfs demand. Bitcoin miners should ultimately migrate to those areas of stranded power There are lots of other uses for surplus power eg Aluminium smelters, desalination plants, decarbonization machines, cracking H20.
- datadata 5y ago
  Sure, but there are areas where it is not economical to actually make use of that power. For example, you could place a bitcoin mining solar powered installation in the middle of a desert where there would be no need for desalinized water and where there is no rail or road access needed for something like aluminum smelting. I think the evidence of bitcoin mining being powered by methane flare gas is irrefutable evidence of that: The methane flare gas just been being burned off for decades, it wasn't until bitcoin mining that there was a marketable use for this energy.
jmyeet 5y ago
> If bitcoin miners are chasing cheap power ... then it shouldn't be possible for miners to increase the price of power in a fixed area as they would immediately migrate elsewhere where power is cheaper Um, no. That presumes there is somewhere cheaper to move, for one. If powers costs $0.08/kWh in one place and the next best option is $0.12/kWh then even if you assume no moving costs you've got all that headroom before it even makes sense to move. But consider the concrete example of Pittsburgh [1] (emphasis added): > A few years ago, miners “descended upon” the city of Plattsburgh, New York, about a hundred and fifty miles north of Albany, which gets much of its electricity from hydroelectric dams on the St. Lawrence River. The power is relatively inexpensive, but, once Plattsburgh uses up its allotment, it has to purchase more at higher rates. Bitcoin mining drove up the cost of electricity in the city so dramatically that, in 2018, Plattsburgh enacted a moratorium on new mining operations. [1]: https://www.newyorker.com/news/daily-comment/why-bitcoin-is-bad-for-the-environment https://www.newyorker.com/news/daily-comment/why-bitcoin-is-...

dlubarov 5y ago

> Also, if it's as simple as that, why haven't we simply moved to PoS for everything? More modern blockchains do use PoS for the most part -- Solana, Cardano, Polkadot, Cosmos, Avalanche, NEAR, etc. Just Bitcoin in particular is unlikely to make such a major change. > PoS ultimately is a rich-gets-richer scenario is why. In well-designed PoS systems, anyone can stake (perhaps with delegation) and access the same rate of return. If everyone stakes, noone is actually getting richer after we adjust for dilution.

AlexandrB 5y ago
> In well-designed PoS systems, anyone can stake (perhaps with delegation) and access the same rate of return. If everyone stakes, noone is actually getting richer after we adjust for dilution. This is fine in a vacuum where no one needs the money they make staking, but someone who is not rich is presumably staking to make money that they will spend on food/clothing/shelter. The wealthy can stake indefinitely.
- dlubarov 5y ago
  Lockup periods aren't really inherent to PoS though. In Eth2 exits are rate limited, but they should be quick under normal conditions, and only delayed (for security reasons) if many stakers try to exit at once. For even greater liquidity, one can use a paltform like Lido, and just sell stETH at any time.
influxmoment 5y ago
Bitcoin will not change to PoS because it doesn't work and is only promoted by charlatans trying to sell tokens
- dlubarov 5y ago
  Despite theoretical concerns, it seems to be working fine for the aforementioned projects! It's been used in production for about a decade now.
  - 4y ago

HeadsUpHigh 5y ago

>PoS ultimately is a rich-gets-richer scenario is why. Are you under the assumption that crypto is supposed to be socialist somehow?