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I'm consistently surprised on certain tech communities including this one's mostly negative view on crypto energy consumption. The positions are typically frame

by beau_g 3y ago

I'm consistently surprised on certain tech communities including this one's mostly negative view on crypto energy consumption. The positions are typically framed as cryptos transaction cost is wasteful compared to legacy solutions. With crypto though, that cost encompasses the infrastructure AND transaction cost. It's often compared to just the pure transaction cost of say, VISA. What is the HVAC cost to cool and heat every VISA commercial property? What is the energy cost of all their employees commuting to those offices? How efficient is VISA generally as a company, is every manager and IC being cooled and heated and driving to the office actively keeping their transaction cost at a global minimum? Given all that multiplied by every company that is needed to maintain the legacy finance global infrastructure, I'm skeptical that crypto is even worse even if it incorporates wasting energy by design, would like to see any projections/numbers around this if anyone has looked into it with infrastructure energy cost considered in this way.

Consultant32452 3y ago
What’s the cost of global war to maintain the petrodollar?
brenns10 3y ago
The issue with your argument is that transaction fees are pretty much the most obvious example of market forces at work. If it were unsustainable for Visa to operate with its low transaction fees, then it wouldn't be in business. If it were possible for a good crypto product to offer lower transaction fees, they would do it. Literally right now we're looking at the proof. The data/experiment is already here. When you hear people talking about how wasteful crypto is, it's because the data are already in and we're on to the analysis.
JKCalhoun 3y ago
> I'm skeptical that crypto is even worse even if it incorporates wasting energy by design The legacy transaction industry, if it does consume more energy, can move to begin to conserve energy because consuming energy is not in its design.
- beau_g 3y ago
  How? Their inefficiency is tied to their design of having millions of people being employed keeping it afloat. What does hackernews think about the efficiency of 100k+ people orgs? I don't see much positive sentiment on that. Ultimately transactions still just abide by the laws of physics. If you live in Florida and I live in California, I want to trade my potted plant for your alligator egg, we can both walk and met in the middle, the transaction cost being the amount of calories we need to have the energy to walk 3000 miles. Efficiencies are found in bundling, we jump on a train full of people that want to go to Kansas to make other trades, or send a trading representative in a solar powered plane, but have to pay for solar powered plane crash insurance and escrow fee, etc. etc. So ultimately we are looking at legacy finance with massive baked in inefficiency of people, vs crypto with hard coded inefficiency by design. Is bucket 1 really going to beat bucket 2 if the volumes were similar? My intuition is no but would love to see real data.
Nursie 3y ago
Given that bitcoin mining takes more energy than some mid sized countries now, and serves comparatively few people doing comparatively little, I think we can happily draw the conclusion that it's massively wasteful already. It's designed to be wasteful. PoW is a race to burn as much energy as possible to get an edge on the other guy.
callalex 3y ago
How many bitcoin transactions are for the purchase of goods and services (useful work) compared to the VISA network where that number is somewhere near 100%?
woodruffw 3y ago
If we're counting offices and cars for Visa, it seems only fair to do the same for cryptocurrency companies. Close to 200,000 people work on or with cryptocurrencies[1]. Visa employs around 27,000[2], some of whom are no doubt being double-counted here. (But note: this is still a pointless comparison. Even an absurdly wasteful Visa facilitates more value-per-watt-second than cryptocurrencies do.) [1]: https://blockworks.co/news/190k-people-work-in-crypto https://blockworks.co/news/190k-people-work-in-crypto [2]: https://en.wikipedia.org/wiki/Visa_Inc https://en.wikipedia.org/wiki/Visa_Inc.
phire 3y ago
First, Bitcoin transaction fees aren't even paying for the most of the infrastructure and energy costs It's massively subsidised from block rewards. Coins created out of thin air. Checking this chart [1], historically, block-rewards are almost always a 90% or larger subsidy, except in cases where there massive congestion is forcing high fees. As the block reward subsidy is phased out over the next hundred years, the transaction fees will have to go up to compensate. Second, where do you think Visa is getting the money to run all their datacenter and offices? Visa don't have any alternative source of funding for operating costs, so it all comes from the visa transaction fees that you pay. [1] https://charts.bitbo.io/fees-percent-of-reward/ https://charts.bitbo.io/fees-percent-of-reward/
- nullc 3y ago
  > the transaction fees will have to go up to compensate. Will they? Bitcoin's difficulty can go up and down to adapt to the offered supply of mining. Currently the fees (no subsidy) Bitcoin mining earns are about $657k/day. This comparable to the total income with subsidy of other cryptocurrencies (and substantially larger than most). Any argument that Bitcoin couldn't exist on the current level of fee income alone ought to explain the other systems that bring in significantly less e.g. BCH has $175k/day in subsidy and essentially no fee income because their design makes the rational fee rate approximately zero.
  - phire 3y ago
    Sure, difficulty can adjust down. But can the security of bitcoin afford the loss of that hashrate? It really depends on how much value Bitcoin is securing at the time. Because the amount paid out for mining rewards is also the rough cost for someone to execute a 51% attack. If miners can produce X hashes/sec for an easy profit at $Y, then an attacker should also be able to produce slightly more than X hashes/sec for about the same cost of $Y, or at least in the same order of magnitude. So, can the attacker make more than $Y profit/day from exploiting double-spends? The security of bitcoin becomes an economic problem. ------------------ On a related tangent, I used to track random shitcoins as a hobby. And you might be shocked at just how many 51% attacks happened. Many of the shittest shitcoins were secured by no more than a few hundred dollars per day of hashrate. Super-easy for someone to rent that off nicehash. Some of the reorgs I saw were multiple days long, and the attacker would continue attacking the same chain until their victim noticed, or ran out of money. I saw this done on dozens of shitcoins in the few months I was tracking. Based on that experience, I wouldn't trust any PoW blockchain that didn't have the majority of hardware miners for a given algorithm. So I would not trust BCH... how long before some medium sized bitcoin miner decided they could get more profit by 51%ing BCH for $175k/day? You can assume bitcoin is somewhat safe right now, but only because most of the SHA256 miners are already mining bitcoin. It would take a massive upfront investment for someone to create enough SHA256 miners to execute a 51% attack. But in your suggested scenario where the hashrate of BTC is dropping? Where are those older SHA256 miners going? The second hand market? What if someone buys them all up? And what if Bitcoin becomes actually successful? Becomes the backbone of the world economy and doing trillions per day in transactions? Someone might decide that upfront cost of creating miners is worth it, especially if they only need $657k of hashrate.
quickthrower2 3y ago
Bitcoin (et al) is not compatible VISA by a long shot. It doesn’t have the affordances of credit cards like refunds/chargebacks/AML/KYC/simplicity/speed etc.

by beau_g 3y ago

Consultant32452 3y ago

What’s the cost of global war to maintain the petrodollar?

brenns10 3y ago

The issue with your argument is that transaction fees are pretty much the most obvious example of market forces at work. If it were unsustainable for Visa to operate with its low transaction fees, then it wouldn't be in business. If it were possible for a good crypto product to offer lower transaction fees, they would do it. Literally right now we're looking at the proof. The data/experiment is already here. When you hear people talking about how wasteful crypto is, it's because the data are already in and we're on to the analysis.

JKCalhoun 3y ago

> I'm skeptical that crypto is even worse even if it incorporates wasting energy by design The legacy transaction industry, if it does consume more energy, can move to begin to conserve energy because consuming energy is not in its design.

beau_g 3y ago
How? Their inefficiency is tied to their design of having millions of people being employed keeping it afloat. What does hackernews think about the efficiency of 100k+ people orgs? I don't see much positive sentiment on that. Ultimately transactions still just abide by the laws of physics. If you live in Florida and I live in California, I want to trade my potted plant for your alligator egg, we can both walk and met in the middle, the transaction cost being the amount of calories we need to have the energy to walk 3000 miles. Efficiencies are found in bundling, we jump on a train full of people that want to go to Kansas to make other trades, or send a trading representative in a solar powered plane, but have to pay for solar powered plane crash insurance and escrow fee, etc. etc. So ultimately we are looking at legacy finance with massive baked in inefficiency of people, vs crypto with hard coded inefficiency by design. Is bucket 1 really going to beat bucket 2 if the volumes were similar? My intuition is no but would love to see real data.

Nursie 3y ago

Given that bitcoin mining takes more energy than some mid sized countries now, and serves comparatively few people doing comparatively little, I think we can happily draw the conclusion that it's massively wasteful already. It's designed to be wasteful. PoW is a race to burn as much energy as possible to get an edge on the other guy.

callalex 3y ago

How many bitcoin transactions are for the purchase of goods and services (useful work) compared to the VISA network where that number is somewhere near 100%?

woodruffw 3y ago

If we're counting offices and cars for Visa, it seems only fair to do the same for cryptocurrency companies. Close to 200,000 people work on or with cryptocurrencies[1]. Visa employs around 27,000[2], some of whom are no doubt being double-counted here. (But note: this is still a pointless comparison. Even an absurdly wasteful Visa facilitates more value-per-watt-second than cryptocurrencies do.) [1]: https://blockworks.co/news/190k-people-work-in-crypto https://blockworks.co/news/190k-people-work-in-crypto [2]: https://en.wikipedia.org/wiki/Visa_Inc https://en.wikipedia.org/wiki/Visa_Inc.

phire 3y ago

First, Bitcoin transaction fees aren't even paying for the most of the infrastructure and energy costs It's massively subsidised from block rewards. Coins created out of thin air. Checking this chart [1], historically, block-rewards are almost always a 90% or larger subsidy, except in cases where there massive congestion is forcing high fees. As the block reward subsidy is phased out over the next hundred years, the transaction fees will have to go up to compensate. Second, where do you think Visa is getting the money to run all their datacenter and offices? Visa don't have any alternative source of funding for operating costs, so it all comes from the visa transaction fees that you pay. [1] https://charts.bitbo.io/fees-percent-of-reward/ https://charts.bitbo.io/fees-percent-of-reward/

nullc 3y ago
> the transaction fees will have to go up to compensate. Will they? Bitcoin's difficulty can go up and down to adapt to the offered supply of mining. Currently the fees (no subsidy) Bitcoin mining earns are about $657k/day. This comparable to the total income with subsidy of other cryptocurrencies (and substantially larger than most). Any argument that Bitcoin couldn't exist on the current level of fee income alone ought to explain the other systems that bring in significantly less e.g. BCH has $175k/day in subsidy and essentially no fee income because their design makes the rational fee rate approximately zero.
- phire 3y ago
  Sure, difficulty can adjust down. But can the security of bitcoin afford the loss of that hashrate? It really depends on how much value Bitcoin is securing at the time. Because the amount paid out for mining rewards is also the rough cost for someone to execute a 51% attack. If miners can produce X hashes/sec for an easy profit at $Y, then an attacker should also be able to produce slightly more than X hashes/sec for about the same cost of $Y, or at least in the same order of magnitude. So, can the attacker make more than $Y profit/day from exploiting double-spends? The security of bitcoin becomes an economic problem. ------------------ On a related tangent, I used to track random shitcoins as a hobby. And you might be shocked at just how many 51% attacks happened. Many of the shittest shitcoins were secured by no more than a few hundred dollars per day of hashrate. Super-easy for someone to rent that off nicehash. Some of the reorgs I saw were multiple days long, and the attacker would continue attacking the same chain until their victim noticed, or ran out of money. I saw this done on dozens of shitcoins in the few months I was tracking. Based on that experience, I wouldn't trust any PoW blockchain that didn't have the majority of hardware miners for a given algorithm. So I would not trust BCH... how long before some medium sized bitcoin miner decided they could get more profit by 51%ing BCH for $175k/day? You can assume bitcoin is somewhat safe right now, but only because most of the SHA256 miners are already mining bitcoin. It would take a massive upfront investment for someone to create enough SHA256 miners to execute a 51% attack. But in your suggested scenario where the hashrate of BTC is dropping? Where are those older SHA256 miners going? The second hand market? What if someone buys them all up? And what if Bitcoin becomes actually successful? Becomes the backbone of the world economy and doing trillions per day in transactions? Someone might decide that upfront cost of creating miners is worth it, especially if they only need $657k of hashrate.

quickthrower2 3y ago

Bitcoin (et al) is not compatible VISA by a long shot. It doesn’t have the affordances of credit cards like refunds/chargebacks/AML/KYC/simplicity/speed etc.