5 ms·

Do we really need to run a power station just for Bitcoin?

20 points by jason_neylon 13y ago

mistercow 13y ago
>so why not go for a nice central-custodian system like that run by VISA, Mastercard, or your friendly neighbourhood bank which is protected by the state, rather than for one that relies on the fact that protecting it wastes so much money that every attack will be very costly (if this was not clear, I have explained this in detail here) This article brings up a good point about consumption, but this introductory question is dumb. The short answer is "because that's the entire point".
- dllthomas 13y ago
  That's the entire point for (most? all?) the people involved in creating bitcoin. It's the central point for many of the people involved in bitcoin today. But there's a large number of people who just want a cheap and easy means of electronic payment.
  - icebraining 13y ago
    They have that, it's called VISA, Mastercard, etc.
    - dllthomas 13y ago
      Bitcoin promises to be cheaper, and to not require blessing of payer or payee.
      - icebraining 13y ago
        Yes, and one of the reasons BTC is cheaper is because it's a market, and not "a nice central-custodian system like that run by VISA, Mastercard" or any other monopolist.
        dllthomas 13y ago
        Yes, but from the point of view of the people I am describing that is an implementation detail, not "the entire point."
Osiris 13y ago
It does seem a bit wasteful, but companies producing ASICs are fighting for lower power consumption. I would expect future power consumption per GH/s to go down.
- dllthomas 13y ago
  Watts/(GH/s) will go down because of ASICs, but that will make mining more lucrative and they will have to up the difficulty which raises Watts/(GH/s).
  - danielharan 13y ago
    While making GFlops/watt cheaper for all number crunching applications, no?
    - dllthomas 13y ago
      Not if it's just because we're building bitcoin-specific ASICs. It might help push technology, but it'll also pull brain-power that would otherwise have been focused elsewhere. It's hard to know what the counterfactual would actually look like.
- ars 13y ago
  > future power consumption per GH/s to go down. But you'll need more hashes, so it'll go back up. The current price of a bitcoin is almost exactly equal to its energy cost, and that's not going to change because if the price was higher people would spend more energy, if lower people will cut back.
drewblaisdell 13y ago
Do we really need a power station just for [more popular and frivolous technology than Bitcoin]?
- dnautics 13y ago
  high frequency trading (e.g.) Why not just throttle the markets so that trades are resolved discretely, at a human interval, say at 5 second increments?
loarake 13y ago
I don't get the argument. The power requirement of running the entire world's monetary infrastructure is probably much bigger, no?
- jason_neylon 13y ago
  Yep that is true. The author discusses this here: http://www.oditorium.com/ou/2013/04/krugman-bitcoin-resources-waste/ http://www.oditorium.com/ou/2013/04/krugman-bitcoin-resource...
  - dllthomas 13y ago
    That's kind of a weird post - it conflates very different things. Mining burns power to protect against a specific class of attack, not any and all attacks. Bitcoin isn't magically immune to heists, and physical protection may be slightly easier (in that you don't need physical access as frequently) but no less necessary for large wallets.
nemochev 13y ago
"So currently mining Bitcoins requires power levels somewhere between the one produced by the Hoover Dam, and the world’s larges coal fired power station." Emphasis on "currently" Disruptive technologies are almost always costly in some way or another until more widely adopted.
- bct 13y ago
  Show your work. Why do you expect the power consumption of the Bitcoin network to go down? When specific costs of a technology decrease it's for reasons specific to that technology. Yes, cell phones have gotten smaller & less expensive (as one example), but that doesn't tell us anything about the power consumption of the Bitcoin network.
Sambdala 13y ago
The current cost of fraud from chargebacks and identity theft from traditional credit cards seems like it would dwarf any eventual power consumption of Bitcoin miners.
- lambda 13y ago
  You realize that Bitcoin isn't immune to fraud, it just puts the fraud burden on the consumer rather than the merchant, right? There have already been plenty of Bitcoin frauds; pyramid schemes, merchants disappearing, computers hacked and Bitcoins stolen, entire exchanges disappearing, etc.
  - Sambdala 13y ago
    Sure; there's a reason I specified chargebacks and identity theft. These are two areas that are largely solved with a push payment system rather than a pull payment system. I'm looking forward to seeing how other types of fraud are addressed in the future, but it's fairly predictable we'll see further scams and fraud along the way.
    - lambda 13y ago
      Why do you think that Bitcoin fraud would be handled differently that fiat currency fraud; that is, by offering credit, doing chargebacks, and so on, just like people do with fiat currency? I mean, it's not like we don't have options like wire transfers for transmitting currency without the possibility of chargebacks; but as you notice, most people choose to use credit cards, which offer the buyer protection, rather than using wire transfers for purchasing goods online. Bitcoin isn't a particularly good payment system, and I can't imagine that most people will wind up sending Bitcoins directly as payment for the vast majority of purchases. It's more of a replacement of bank transfers or wire transfers, which are used in particular specialized circumstances but not by the average consumer.
tlb 13y ago
Interesting numbers. Still, it's pretty benign compared to the costs and environmental horrors of gold mining. https://en.wikipedia.org/wiki/Gold_cyanidation https://en.wikipedia.org/wiki/Gold_cyanidation
kalleboo 13y ago
The Blockchain.info number he bases it on comes from: * Electricity consumption is estimated based on power consumption of 650 Watts per gigahash and electricity price of 15 cent per kilowatt hour. In reality some miners will be more or less efficient. ASICs (which I believe are the majority of the hashrate nowadays) are more on the order of 10 W/GH (Block Erupter claims 7.5 W/GH/s, the Butterfly Labs 5 GH/s ASIC looks like it's around 6.5 W/GH/s).
dmerfield 13y ago
Based on an electricity price of $125/mWh and power consumption of 650W/gigahash, Bitcoin costs $9m a day, or about $3.3b a year to run. The total value of Bitcoin is about $7.5b. Incidentally, the US mint and federal reserve combined 2013 budget was $8.1b for 2013 and the total value of US currency in circulation is about $800b. This raises a few interesting questions: will the logistical cost of running Bitcoin rise linearly with its total value? If so, are Bitcoin's running costs too great to make it a viable global currency? Sources: http://www.federalreserve.gov/publications/budget-review/files/2013-budget-review.pdf http://www.federalreserve.gov/publications/budget-review/fil... http://www.treasury.gov/about/budget-performance/Documents/20%20-%20FY%202013%20US%20Mint%20CJ.pdf http://www.treasury.gov/about/budget-performance/Documents/2... http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2...
- Retric 13y ago
  The fundamental problem with bit-coin is anyone willing to pay for twice the current mining costs can double spend and destroy the currency. As such there is no way even 100 billion in mining can protect 10 trillion in value. QED: the long term viability of bit-coin as a cheap world wide currency is impossible. Anyway, the secret service and possibly the FBI one run anti counterfeiting operations so it's slightly higher than that. Beyond that, I think there is a fair amount of diplomatic operations that support the USD but it's still far far cheaper to run relative to value than bit-coin right now.
  - rfugger 13y ago
    A 51% attack only gives you the ability to double-spend coins you already control. It doesn't give you the ability to crack the private keys of others. So there is no straightforward economic incentive for a 51% attack unless you own a huge amount of Bitcoin, and thus would be hurting yourself.
    - Retric 13y ago
      You can double spend with wallets you own so 1BTC > 2BTC > 4BTC ... any number you want fairly quickly.
ljlolel 13y ago
The financial industry uses up 20+% of US population (albeit this is more than just the currency), but it gives you an idea of how many resources need to be diverted to the process of allocating capital. Many communism nations failed because (along with many many other reasons) there weren't a lot of people figuring out the best allocation of resources.
1053r 13y ago
So the biggest problem with this post is that blockchain.info specifically says that they assume 650W per GigaHash. This is just out of date. Modern ASIC miners (which are doing the majority of the mining) are doing more like 10W per GigaHash.[1] So we only need 1/65th of what is being estimated. 1) http://millybitcoin.com/does-bitcoin-mining-use-a-large-amount-of-electricity/ http://millybitcoin.com/does-bitcoin-mining-use-a-large-amou...
- mahyarm 13y ago
  10W/GH is a pretty old number. A lot of miners are now around 6W/GH on average from butterfly labs & asicminer. Newer miners that have been released in last few months are 1.5W/GH from KNC & BitFury. In a couple of months it's going to be 0.7W/GH from Cointerra and Hashfast. The amount of hash power in reaction to these cheaper and more efficient miners is going to go up although, so the total power consumed is going to be similar in the end.
- FireBeyond 13y ago
  What’s the source of that - that the majority of Bitcoin miners are using ASICs? From everything I’ve read they’re new, in scarce supply with lead times of up to a year, and expensive.
  - dllthomas 13y ago
    "The majority of Bitcoin miners are using ASICs" and "the majority of the mining is being done by ASIC miners" are two distinct claims.
- ScottBurson 13y ago
  I assume you mean 10 joules per GigaHash (with ASICs), a joule being a watt-second. Put another way, such an ASIC doing a GigaHash per second would consume 10W. It's bad enough that science journalists routinely confuse energy and power units -- let's not do it here on HN!
marze 13y ago
Do we really need to dig massive open pits, extract 3 ppm gold molecules, dump the rest, cast the gold into blocks and store them in locked vaults to have gold reserves?
neals 13y ago
Has anybody mentioned the power costs of all the different payment methods? I mean, datacenters, helpdesk-offices, sales and marketing. I think Bitcoin does a way better job.
- biot 13y ago
  How is that different for bitcoin? Accepting bitcoin payments for purchases still requires datacenters as well as support, sales, and marketing staff given that the products/services being sold don't automagically market, sell, and support themselves just because you accept bitcoin. It might even be worse as a transaction needs to be verified by the rest of the network, not just by a single authority.
  - neals 13y ago
    Bitcoin would work perfectly well without datacenters. The client is all you need, you can run it on your computer. I'm talking about the people from VISA that have to store and maintain accountholders data. None of this exists for Bitcoin.
    - biot 13y ago
      Each bitcoin transaction needs to be verified by a majority of the network in order to mitigate the risk of a fraudulent transaction. Does the energy required to do this exceed Visa's per-transaction energy requirements?
deleted 13y ago
[deleted]
rfugger 13y ago
Ripple contains a Bitcoin-like cryptocurrency called XRP that only takes a few seconds to confirm transactions and does not require mining: https://ripple.com/ https://ripple.com/ https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiner... It also allows accounting in any units.
- oleganza 13y ago
  Ripple moves IOUs based on trust, not hard gold-like asset.
  - rfugger 13y ago
    XRP is trustless, like Bitcoin.
oleganza 13y ago
You don't need to run a power station if you don't want to. Like people are not forced to make lolcat videos for everyone's amusement. They do so voluntarily. What's the problem?
haberman 13y ago
I'm sure people have thought about this before, but is there no way for bitcoin mining to be performing useful computational work? Some algorithm that is CPU-intensive and verifiable, but also beneficial to humanity?
- Anderkent 13y ago
  Indeed they have https://en.bitcoin.it/wiki/FAQ#Why_don.27t_we_use_calculations_that_are_also_useful_for_some_other_purpose.3F https://en.bitcoin.it/wiki/FAQ#Why_don.27t_we_use_calculatio...
maxk42 13y ago
How can I be the first one to notice how fucked this math is? > Blockchain.info estimates the energy usage of Bitcoin miners to be 74,204.76 megawatt hours for a period of 24 hours. Now 74.2 / 24 = 3.1, so this corresponds to a power requirement of 3.1 GW.
asn0 13y ago
What about the costs of market distortions and mis-allocation of resources when a fiat currency can be inflated with almost no cost? How much energy (and other resources) were expended in the dot-com boom, and the housing boom? Think of all the houses that were built to replace houses that were perfectly usable, and are now empty? And all the IT equipment built for dot-coms that died after 6 or 12 months? Probably need to include at least some of the costs of wars and military forces, as those are necessary to maintain the "full faith and credit of the XYZ government" that is the fiat currency. And definitely need to factor in all of the energy and materials put into huge volumes of cheaply imported products (including oil), that is only possible because fiat currencies enable huge trade imbalances. And all of the energy and materials put into re-creating the manufacturing industry in other countries, as those products become "cheaper", enabled by fiat currencies. And all of the energy used by those products, as their "low" prices make them more pervasive than they would normally be. You don't have to continue this train of thought too far to realize that the costs of maintaining Bitcoin are minuscule when compared to the true costs of using and maintaining a fiat currency.
fat0wl 13y ago
what's the conversion rate on unicorns to leprechauns? i'm gonna need a perpetual motion machine to figure this one out...
fnordfnordfnord 13y ago
How much effort is spent on the equivalent administrative tasks for other currencies such as the USD?
oditorium 13y ago
First of all, thank you all for the insightful and civilised discussion of my recent post, and than you for pointing out that the number on blockchain.info is off by almost two orders of magnitude. I have updated my post to account for this. My main argument was actually slightly tangential to this, in that I am arguing that Bitcoin still needs the protection of the state to survive. I have expanded on this topic in my post today http://www.oditorium.com/ou/2013/11/what-does-it-take-to-attack-bitcoin-a-power-station/ http://www.oditorium.com/ou/2013/11/what-does-it-take-to-att... and back in April I have written a more general post on the various threats to Bitcoin http://www.oditorium.com/ou/2013/04/fifty-ways-to-kill-bitcoin/ http://www.oditorium.com/ou/2013/04/fifty-ways-to-kill-bitco... So my central point is: those 50MW (or whatever they will be when the price/hashrate goes up) are simply the costs of maintaining the ledger. As I have noted in the comments to my post, I agree that this is lower than the energy expended handling cash. However, and this is crucial, it is probably about 50MW higher than the cost of maintaining the ledger in a trust-based system that relies on the courts to maintain the integrity of the ledger. I am all for running an electronic currency, but IMO the hash-rate protection feature of bitcoin is redundant and wasteful. PS. If anyone reading this know the guys at blockchain.info can you ask them to update their site? It is not helpful if the information on what is arguably the #1 source for bitcoin related data is off by a factor of 50x for the better part of the year now.

20 points by jason_neylon 13y ago

>so why not go for a nice central-custodian system like that run by VISA, Mastercard, or your friendly neighbourhood bank which is protected by the state, rather than for one that relies on the fact that protecting it wastes so much money that every attack will be very costly (if this was not clear, I have explained this in detail here) This article brings up a good point about consumption, but this introductory question is dumb. The short answer is "because that's the entire point".

dllthomas 13y ago
That's the entire point for (most? all?) the people involved in creating bitcoin. It's the central point for many of the people involved in bitcoin today. But there's a large number of people who just want a cheap and easy means of electronic payment.
- icebraining 13y ago
  They have that, it's called VISA, Mastercard, etc.
  - dllthomas 13y ago
    Bitcoin promises to be cheaper, and to not require blessing of payer or payee.
    - icebraining 13y ago
      Yes, and one of the reasons BTC is cheaper is because it's a market, and not "a nice central-custodian system like that run by VISA, Mastercard" or any other monopolist.
      - dllthomas 13y ago
        Yes, but from the point of view of the people I am describing that is an implementation detail, not "the entire point."

Osiris 13y ago

It does seem a bit wasteful, but companies producing ASICs are fighting for lower power consumption. I would expect future power consumption per GH/s to go down.

dllthomas 13y ago
Watts/(GH/s) will go down because of ASICs, but that will make mining more lucrative and they will have to up the difficulty which raises Watts/(GH/s).
- danielharan 13y ago
  While making GFlops/watt cheaper for all number crunching applications, no?
  - dllthomas 13y ago
    Not if it's just because we're building bitcoin-specific ASICs. It might help push technology, but it'll also pull brain-power that would otherwise have been focused elsewhere. It's hard to know what the counterfactual would actually look like.
ars 13y ago
> future power consumption per GH/s to go down. But you'll need more hashes, so it'll go back up. The current price of a bitcoin is almost exactly equal to its energy cost, and that's not going to change because if the price was higher people would spend more energy, if lower people will cut back.

drewblaisdell 13y ago

Do we really need a power station just for [more popular and frivolous technology than Bitcoin]?

dnautics 13y ago
high frequency trading (e.g.) Why not just throttle the markets so that trades are resolved discretely, at a human interval, say at 5 second increments?

loarake 13y ago

I don't get the argument. The power requirement of running the entire world's monetary infrastructure is probably much bigger, no?

jason_neylon 13y ago
Yep that is true. The author discusses this here: http://www.oditorium.com/ou/2013/04/krugman-bitcoin-resources-waste/ http://www.oditorium.com/ou/2013/04/krugman-bitcoin-resource...
- dllthomas 13y ago
  That's kind of a weird post - it conflates very different things. Mining burns power to protect against a specific class of attack, not any and all attacks. Bitcoin isn't magically immune to heists, and physical protection may be slightly easier (in that you don't need physical access as frequently) but no less necessary for large wallets.

nemochev 13y ago

"So currently mining Bitcoins requires power levels somewhere between the one produced by the Hoover Dam, and the world’s larges coal fired power station." Emphasis on "currently" Disruptive technologies are almost always costly in some way or another until more widely adopted.

bct 13y ago
Show your work. Why do you expect the power consumption of the Bitcoin network to go down? When specific costs of a technology decrease it's for reasons specific to that technology. Yes, cell phones have gotten smaller & less expensive (as one example), but that doesn't tell us anything about the power consumption of the Bitcoin network.

Sambdala 13y ago

The current cost of fraud from chargebacks and identity theft from traditional credit cards seems like it would dwarf any eventual power consumption of Bitcoin miners.

lambda 13y ago
You realize that Bitcoin isn't immune to fraud, it just puts the fraud burden on the consumer rather than the merchant, right? There have already been plenty of Bitcoin frauds; pyramid schemes, merchants disappearing, computers hacked and Bitcoins stolen, entire exchanges disappearing, etc.
- Sambdala 13y ago
  Sure; there's a reason I specified chargebacks and identity theft. These are two areas that are largely solved with a push payment system rather than a pull payment system. I'm looking forward to seeing how other types of fraud are addressed in the future, but it's fairly predictable we'll see further scams and fraud along the way.
  - lambda 13y ago
    Why do you think that Bitcoin fraud would be handled differently that fiat currency fraud; that is, by offering credit, doing chargebacks, and so on, just like people do with fiat currency? I mean, it's not like we don't have options like wire transfers for transmitting currency without the possibility of chargebacks; but as you notice, most people choose to use credit cards, which offer the buyer protection, rather than using wire transfers for purchasing goods online. Bitcoin isn't a particularly good payment system, and I can't imagine that most people will wind up sending Bitcoins directly as payment for the vast majority of purchases. It's more of a replacement of bank transfers or wire transfers, which are used in particular specialized circumstances but not by the average consumer.

tlb 13y ago

Interesting numbers. Still, it's pretty benign compared to the costs and environmental horrors of gold mining. https://en.wikipedia.org/wiki/Gold_cyanidation https://en.wikipedia.org/wiki/Gold_cyanidation

kalleboo 13y ago

The Blockchain.info number he bases it on comes from: * Electricity consumption is estimated based on power consumption of 650 Watts per gigahash and electricity price of 15 cent per kilowatt hour. In reality some miners will be more or less efficient. ASICs (which I believe are the majority of the hashrate nowadays) are more on the order of 10 W/GH (Block Erupter claims 7.5 W/GH/s, the Butterfly Labs 5 GH/s ASIC looks like it's around 6.5 W/GH/s).

dmerfield 13y ago

Based on an electricity price of $125/mWh and power consumption of 650W/gigahash, Bitcoin costs $9m a day, or about $3.3b a year to run. The total value of Bitcoin is about $7.5b. Incidentally, the US mint and federal reserve combined 2013 budget was $8.1b for 2013 and the total value of US currency in circulation is about $800b. This raises a few interesting questions: will the logistical cost of running Bitcoin rise linearly with its total value? If so, are Bitcoin's running costs too great to make it a viable global currency? Sources: http://www.federalreserve.gov/publications/budget-review/files/2013-budget-review.pdf http://www.federalreserve.gov/publications/budget-review/fil... http://www.treasury.gov/about/budget-performance/Documents/20%20-%20FY%202013%20US%20Mint%20CJ.pdf http://www.treasury.gov/about/budget-performance/Documents/2... http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2...

Retric 13y ago
The fundamental problem with bit-coin is anyone willing to pay for twice the current mining costs can double spend and destroy the currency. As such there is no way even 100 billion in mining can protect 10 trillion in value. QED: the long term viability of bit-coin as a cheap world wide currency is impossible. Anyway, the secret service and possibly the FBI one run anti counterfeiting operations so it's slightly higher than that. Beyond that, I think there is a fair amount of diplomatic operations that support the USD but it's still far far cheaper to run relative to value than bit-coin right now.
- rfugger 13y ago
  A 51% attack only gives you the ability to double-spend coins you already control. It doesn't give you the ability to crack the private keys of others. So there is no straightforward economic incentive for a 51% attack unless you own a huge amount of Bitcoin, and thus would be hurting yourself.
  - Retric 13y ago
    You can double spend with wallets you own so 1BTC > 2BTC > 4BTC ... any number you want fairly quickly.

ljlolel 13y ago

The financial industry uses up 20+% of US population (albeit this is more than just the currency), but it gives you an idea of how many resources need to be diverted to the process of allocating capital. Many communism nations failed because (along with many many other reasons) there weren't a lot of people figuring out the best allocation of resources.

1053r 13y ago

So the biggest problem with this post is that blockchain.info specifically says that they assume 650W per GigaHash. This is just out of date. Modern ASIC miners (which are doing the majority of the mining) are doing more like 10W per GigaHash.[1] So we only need 1/65th of what is being estimated. 1) http://millybitcoin.com/does-bitcoin-mining-use-a-large-amount-of-electricity/ http://millybitcoin.com/does-bitcoin-mining-use-a-large-amou...

mahyarm 13y ago
10W/GH is a pretty old number. A lot of miners are now around 6W/GH on average from butterfly labs & asicminer. Newer miners that have been released in last few months are 1.5W/GH from KNC & BitFury. In a couple of months it's going to be 0.7W/GH from Cointerra and Hashfast. The amount of hash power in reaction to these cheaper and more efficient miners is going to go up although, so the total power consumed is going to be similar in the end.
FireBeyond 13y ago
What’s the source of that - that the majority of Bitcoin miners are using ASICs? From everything I’ve read they’re new, in scarce supply with lead times of up to a year, and expensive.
- dllthomas 13y ago
  "The majority of Bitcoin miners are using ASICs" and "the majority of the mining is being done by ASIC miners" are two distinct claims.
ScottBurson 13y ago
I assume you mean 10 joules per GigaHash (with ASICs), a joule being a watt-second. Put another way, such an ASIC doing a GigaHash per second would consume 10W. It's bad enough that science journalists routinely confuse energy and power units -- let's not do it here on HN!

marze 13y ago

Do we really need to dig massive open pits, extract 3 ppm gold molecules, dump the rest, cast the gold into blocks and store them in locked vaults to have gold reserves?

neals 13y ago

Has anybody mentioned the power costs of all the different payment methods? I mean, datacenters, helpdesk-offices, sales and marketing. I think Bitcoin does a way better job.

biot 13y ago
How is that different for bitcoin? Accepting bitcoin payments for purchases still requires datacenters as well as support, sales, and marketing staff given that the products/services being sold don't automagically market, sell, and support themselves just because you accept bitcoin. It might even be worse as a transaction needs to be verified by the rest of the network, not just by a single authority.
- neals 13y ago
  Bitcoin would work perfectly well without datacenters. The client is all you need, you can run it on your computer. I'm talking about the people from VISA that have to store and maintain accountholders data. None of this exists for Bitcoin.
  - biot 13y ago
    Each bitcoin transaction needs to be verified by a majority of the network in order to mitigate the risk of a fraudulent transaction. Does the energy required to do this exceed Visa's per-transaction energy requirements?

deleted 13y ago

[deleted]

rfugger 13y ago

Ripple contains a Bitcoin-like cryptocurrency called XRP that only takes a few seconds to confirm transactions and does not require mining: https://ripple.com/ https://ripple.com/ https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiners https://ripple.com/wiki/Introduction_to_Ripple_for_Bitcoiner... It also allows accounting in any units.

oleganza 13y ago
Ripple moves IOUs based on trust, not hard gold-like asset.
- rfugger 13y ago
  XRP is trustless, like Bitcoin.

oleganza 13y ago

You don't need to run a power station if you don't want to. Like people are not forced to make lolcat videos for everyone's amusement. They do so voluntarily. What's the problem?

haberman 13y ago

I'm sure people have thought about this before, but is there no way for bitcoin mining to be performing useful computational work? Some algorithm that is CPU-intensive and verifiable, but also beneficial to humanity?

Anderkent 13y ago
Indeed they have https://en.bitcoin.it/wiki/FAQ#Why_don.27t_we_use_calculations_that_are_also_useful_for_some_other_purpose.3F https://en.bitcoin.it/wiki/FAQ#Why_don.27t_we_use_calculatio...

maxk42 13y ago

How can I be the first one to notice how fucked this math is? > Blockchain.info estimates the energy usage of Bitcoin miners to be 74,204.76 megawatt hours for a period of 24 hours. Now 74.2 / 24 = 3.1, so this corresponds to a power requirement of 3.1 GW.

asn0 13y ago

What about the costs of market distortions and mis-allocation of resources when a fiat currency can be inflated with almost no cost? How much energy (and other resources) were expended in the dot-com boom, and the housing boom? Think of all the houses that were built to replace houses that were perfectly usable, and are now empty? And all the IT equipment built for dot-coms that died after 6 or 12 months? Probably need to include at least some of the costs of wars and military forces, as those are necessary to maintain the "full faith and credit of the XYZ government" that is the fiat currency. And definitely need to factor in all of the energy and materials put into huge volumes of cheaply imported products (including oil), that is only possible because fiat currencies enable huge trade imbalances. And all of the energy and materials put into re-creating the manufacturing industry in other countries, as those products become "cheaper", enabled by fiat currencies. And all of the energy used by those products, as their "low" prices make them more pervasive than they would normally be. You don't have to continue this train of thought too far to realize that the costs of maintaining Bitcoin are minuscule when compared to the true costs of using and maintaining a fiat currency.

fat0wl 13y ago

what's the conversion rate on unicorns to leprechauns? i'm gonna need a perpetual motion machine to figure this one out...

fnordfnordfnord 13y ago

How much effort is spent on the equivalent administrative tasks for other currencies such as the USD?

oditorium 13y ago

First of all, thank you all for the insightful and civilised discussion of my recent post, and than you for pointing out that the number on blockchain.info is off by almost two orders of magnitude. I have updated my post to account for this. My main argument was actually slightly tangential to this, in that I am arguing that Bitcoin still needs the protection of the state to survive. I have expanded on this topic in my post today http://www.oditorium.com/ou/2013/11/what-does-it-take-to-attack-bitcoin-a-power-station/ http://www.oditorium.com/ou/2013/11/what-does-it-take-to-att... and back in April I have written a more general post on the various threats to Bitcoin http://www.oditorium.com/ou/2013/04/fifty-ways-to-kill-bitcoin/ http://www.oditorium.com/ou/2013/04/fifty-ways-to-kill-bitco... So my central point is: those 50MW (or whatever they will be when the price/hashrate goes up) are simply the costs of maintaining the ledger. As I have noted in the comments to my post, I agree that this is lower than the energy expended handling cash. However, and this is crucial, it is probably about 50MW higher than the cost of maintaining the ledger in a trust-based system that relies on the courts to maintain the integrity of the ledger. I am all for running an electronic currency, but IMO the hash-rate protection feature of bitcoin is redundant and wasteful. PS. If anyone reading this know the guys at blockchain.info can you ask them to update their site? It is not helpful if the information on what is arguably the #1 source for bitcoin related data is off by a factor of 50x for the better part of the year now.