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> I think once all the externalities are factored in, doing it all on a computer makes more sense even if POW is energy intensive. No, it's not even close. Bi

> I think once all the externalities are factored in, doing it all on a computer makes more sense even if POW is energy intensive. No, it's not even close. Bitcoin currently uses as much electricity as 31 million US residents. One transaction uses more than two months of average residential usage. > (including things like minting and handling physical cash and coin) Why would you include that? Do you think people won't want to carry money? Do you think bitcoin makes cards, POS processors, and cash obsolete? Do physical wallets not take energy to make and run? Regardless, the amount of energy used to make and use physical money is very small: 1. coins are irrelevant; the most expensive coins are cents, which cost about a cent to make. The total amount of coins made is much smaller than the amount of paper dollars made, so the value of energy used is small compared to the total cash made. 2. The US spends 1 billion annually to mint currency. Bitcoin spends 6.5 billion USD on electricity directly.

Karunamon 4y ago
Transactions do not have an energy cost unto themselves, blocks do. If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced. The mining process provides network security all on its own, transactions or no transactions. >Why would you include that? Because I said "all externalities". Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling. That includes not just minting, but distributing it, collecting it, counting it, securing it, and so forth. And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet. The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous. If you want to make an honest apples to apples comparison, you include everything. Mining power usage is the single largest driver of bitcoin energy footprint granted, but it has a lot less other stuff attached.
- roywiggins 4y ago
  > The mining process provides network security all on its own, transactions or no transactions. It seems to me that if nobody transacted, nobody would be able to sell Bitcoin, mining rewards would be rendered worthless, and mining would stop. Sure, you can't point at any given transaction and blame any particular emissions on it, but surely it's reasonable to amortize it and assign a fraction of the emissions during each block to each transaction, considering that Bitcoin has no value without them.
  - Karunamon 4y ago
    No, because there is no relation between transaction volume and block production times, and this is a protocol level constraint. The network aims to produce a constant number of blocks per hour, which happens no matter how many transactions are available to be included in that block. Here's an example: If, say, the maximum block size was doubled so they could hold twice as many transactions, this would cut your energy usage figure in half, but actual energy consumption by miners would barely change at all. Similarly, if the maximum block size was halved, your figure would double, but the energy consumed would not. If there were no such thing as a maximum block size, your value then scales linearly with the amount of transactions that can be crammed into 10-ish minutes of time.
    - roywiggins 4y ago
      I dunno, isn't that like saying "if planes were all half-empty, the carbon emissions of the plane would barely change, so you can't blame the carbon emissions on any of the passengers"? Yes, the "marginal carbon emissions" of a single transaction is ~0, much like the marginal carbon emission of taking an empty seat on an airplane is ~0, but by this logic nobody on the plane is responsible for any carbon emissions, which is obviously silly, so in lieu of any better accounting method, you just amortize the carbon emission of the plane across the passengers. If the block size was reduced to, say, one transaction, then the economic value of the Bitcoin network would surely drop, mining rewards would be worth less, miners would quit, and the electricity use would fall. It's the economic value of the transactions that end up rewarding miners; I can't see how people transacting on the chain aren't partly responsible for the miners' emissions. I can't think of any obviously better way to assign a number to that than just amortizing it across the number of transactions. It's a meaningful number that explains something about how much usefulness the network produces per unit of electricity. Doubling that by doubling the block size (or, halving it by halving the block size) would be a meaningful change!
- lottin 4y ago
  You're telling us that since mining costs don't vary with the number of transactions processed, they don't count. Production costs that don't depend on the level of output are called fixed costs. [1] They're still costs. Pretending that a cost doesn't exist doesn't make it cease to exist. [1] https://en.wikipedia.org/wiki/Fixed_cost https://en.wikipedia.org/wiki/Fixed_cost
  - Karunamon 4y ago
    And I'm telling you that the production cost is tied up in blocks, not transactions. This is not up for debate, it is intrinsic to how bitcoin works. If you send a transaction, the only power consumption involved in that act is involved in the transmission of the data and its broadcast to the network. The monstrous energy usage comes from trying to brute force a single hash. It is entirely decoupled from transaction volume.
    - lottin 4y ago
      You can't send a transaction without mining a block. Therefore all the costs that are incurred mining a block are costs that are incurred sending transactions.
      - Karunamon 4y ago
        Changing the maximum block size would change the "energy used by a transaction" since block production is a factor of fixed time, not transaction volume, so the comparison is absurd on its face.
        progman32 4y ago
        But what is the current block size, and what's the plan for changing it?
        lottin 4y ago
        It's not a comparison. The fact is that the costs of processing bitcoin transactions are predominantly fixed. This tells us that bitcoin doesn't have economies of scale. The average cost of a bitcoin transaction doesn't decrease as the number of transactions increases. This makes bitcoin uncompetitive in relation to pretty much any other transaction processing technology.
- hwillis 4y ago
  > The mining process provides network security all on its own, transactions or no transactions. The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing. Each individual block is secured. You can't just add more and more transactions to each block without reducing security. > Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling. Right now bitcoin competes with practically nothing. How much pizza is bought with bitcoin vs cash? You're effectively assuming that all those other functions are either irrelevant or that bitcoin can somehow do them for zero cost. Neither is true. > And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet. 60% of global federal reserves are in dollars. Dollars are the world's dominant currency. Compared to the massive disparity in energy use, it doesn't matter if even only 10% of global currency is in dollars. Dollars win. Plus, if you're trying to compare with the places where cash really matters -where they can't use VISA or cell phones to transfer money- then bitcoin is certainly at a huge disadvantage after you have to buy computers for all those people. > The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous. Again, you're not replacing coins with data. You're replacing coins with USB sticks. But you're right! It IS ridiculous, because it's completely insane how pathetically inefficient bitcoin is.
  - ashwagary 4y ago
    >The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing. Completely wrong, you cant know exactly how many transactions are processed per bitcoin block. The introduction of the lightning network and other 2nd layers mean any one of the ~1500txs per block could in reality be a batch of a 1,000,000 or more transactions being settled. There could easily be 15,000,000,000,000,000 txs per block, think about what that does to any $/tx calculation. Bitcoin is cheaper than visa because it is designed to process infinite transactions for a fixed security cost.
- FabHK 4y ago
  > If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced Yes, and then the average cost of a transaction would be even higher than the ridiculously high amount it already is.

Karunamon 4y ago

Transactions do not have an energy cost unto themselves, blocks do. If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced. The mining process provides network security all on its own, transactions or no transactions. >Why would you include that? Because I said "all externalities". Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling. That includes not just minting, but distributing it, collecting it, counting it, securing it, and so forth. And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet. The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous. If you want to make an honest apples to apples comparison, you include everything. Mining power usage is the single largest driver of bitcoin energy footprint granted, but it has a lot less other stuff attached.

roywiggins 4y ago
> The mining process provides network security all on its own, transactions or no transactions. It seems to me that if nobody transacted, nobody would be able to sell Bitcoin, mining rewards would be rendered worthless, and mining would stop. Sure, you can't point at any given transaction and blame any particular emissions on it, but surely it's reasonable to amortize it and assign a fraction of the emissions during each block to each transaction, considering that Bitcoin has no value without them.
- Karunamon 4y ago
  No, because there is no relation between transaction volume and block production times, and this is a protocol level constraint. The network aims to produce a constant number of blocks per hour, which happens no matter how many transactions are available to be included in that block. Here's an example: If, say, the maximum block size was doubled so they could hold twice as many transactions, this would cut your energy usage figure in half, but actual energy consumption by miners would barely change at all. Similarly, if the maximum block size was halved, your figure would double, but the energy consumed would not. If there were no such thing as a maximum block size, your value then scales linearly with the amount of transactions that can be crammed into 10-ish minutes of time.
  - roywiggins 4y ago
    I dunno, isn't that like saying "if planes were all half-empty, the carbon emissions of the plane would barely change, so you can't blame the carbon emissions on any of the passengers"? Yes, the "marginal carbon emissions" of a single transaction is ~0, much like the marginal carbon emission of taking an empty seat on an airplane is ~0, but by this logic nobody on the plane is responsible for any carbon emissions, which is obviously silly, so in lieu of any better accounting method, you just amortize the carbon emission of the plane across the passengers. If the block size was reduced to, say, one transaction, then the economic value of the Bitcoin network would surely drop, mining rewards would be worth less, miners would quit, and the electricity use would fall. It's the economic value of the transactions that end up rewarding miners; I can't see how people transacting on the chain aren't partly responsible for the miners' emissions. I can't think of any obviously better way to assign a number to that than just amortizing it across the number of transactions. It's a meaningful number that explains something about how much usefulness the network produces per unit of electricity. Doubling that by doubling the block size (or, halving it by halving the block size) would be a meaningful change!
lottin 4y ago
You're telling us that since mining costs don't vary with the number of transactions processed, they don't count. Production costs that don't depend on the level of output are called fixed costs. [1] They're still costs. Pretending that a cost doesn't exist doesn't make it cease to exist. [1] https://en.wikipedia.org/wiki/Fixed_cost https://en.wikipedia.org/wiki/Fixed_cost
- Karunamon 4y ago
  And I'm telling you that the production cost is tied up in blocks, not transactions. This is not up for debate, it is intrinsic to how bitcoin works. If you send a transaction, the only power consumption involved in that act is involved in the transmission of the data and its broadcast to the network. The monstrous energy usage comes from trying to brute force a single hash. It is entirely decoupled from transaction volume.
  - lottin 4y ago
    You can't send a transaction without mining a block. Therefore all the costs that are incurred mining a block are costs that are incurred sending transactions.
    - Karunamon 4y ago
      Changing the maximum block size would change the "energy used by a transaction" since block production is a factor of fixed time, not transaction volume, so the comparison is absurd on its face.
      - progman32 4y ago
        But what is the current block size, and what's the plan for changing it?
      - lottin 4y ago
        It's not a comparison. The fact is that the costs of processing bitcoin transactions are predominantly fixed. This tells us that bitcoin doesn't have economies of scale. The average cost of a bitcoin transaction doesn't decrease as the number of transactions increases. This makes bitcoin uncompetitive in relation to pretty much any other transaction processing technology.
hwillis 4y ago
> The mining process provides network security all on its own, transactions or no transactions. The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing. Each individual block is secured. You can't just add more and more transactions to each block without reducing security. > Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling. Right now bitcoin competes with practically nothing. How much pizza is bought with bitcoin vs cash? You're effectively assuming that all those other functions are either irrelevant or that bitcoin can somehow do them for zero cost. Neither is true. > And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet. 60% of global federal reserves are in dollars. Dollars are the world's dominant currency. Compared to the massive disparity in energy use, it doesn't matter if even only 10% of global currency is in dollars. Dollars win. Plus, if you're trying to compare with the places where cash really matters -where they can't use VISA or cell phones to transfer money- then bitcoin is certainly at a huge disadvantage after you have to buy computers for all those people. > The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous. Again, you're not replacing coins with data. You're replacing coins with USB sticks. But you're right! It IS ridiculous, because it's completely insane how pathetically inefficient bitcoin is.
- ashwagary 4y ago
  >The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing. Completely wrong, you cant know exactly how many transactions are processed per bitcoin block. The introduction of the lightning network and other 2nd layers mean any one of the ~1500txs per block could in reality be a batch of a 1,000,000 or more transactions being settled. There could easily be 15,000,000,000,000,000 txs per block, think about what that does to any $/tx calculation. Bitcoin is cheaper than visa because it is designed to process infinite transactions for a fixed security cost.
FabHK 4y ago
> If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced Yes, and then the average cost of a transaction would be even higher than the ridiculously high amount it already is.