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].
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.
> 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.
> 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.
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.
> 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).
> 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.
> Um, no. That presumes there is somewhere cheaper to move, for one.
If you assume this isn't the case, then the original comment I was responding to would imply that bitcoin mining is raising the price of energy for the entire world. At 0.5% of global energy consumption, this seems pretty unrealistic. The overhead of moving is obviously not zero, but my point is mostly that bitcoin miners will in general tend to flow to where there is cheaper and less demand for electricity. This in general should cause less tension between where energy is needed. More modern regulated bitcoin miners will generally only exist where there are periods of excess power, eg from wind or solar. They will often sell to the grid operator the ability to interrupt their power when electricity becomes scarce. I completely agree that miners shouldn't be sucking up subsidized hydro power, but also that hydro power shouldn't be subsidized in the first place.
> 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
This would be true only if people and Bitcoin miners bid in the same market. They do not.
If a BitCoin mining company has x year contract with an utility at some fixed price then they get that electricity at that rate. This has an disproportionate impact on the price consumers have to pay. To meet consumer demands electricity suppliers buy electricity from electricity producers. If BitCoin miners have contracts for all electricity generated in a region cheaper then x cents per unit that means that electricity suppliers can only begin to meet their customers demand with electricity more expensive than x. This means it might be necessary to buy electricity from really expensive sources (for example far away sources) they wouldn't have to rely upon with the cheaper then x electricity was available.
The fact that the cheaper then x electricity producers could get more money if they wouldn't have signed long term contracts is in an environment with multiple such sellers a tragedy of the commons like situation which can not be fixed by the market alone. What makes it even worse is that perverse incentives exist where a company by selling all their cheap electricity to miners can keep assets which would otherwise be stranded (coal power plants) produce electricity at a premium rate because electricity supplies must meet the customer household demands.
Yeah, that kind of contract is not really good. There are much better arrangements out there that leverage the fact that bitcoin mining is an interruptible load.
>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.
If that logic were sound, I struggle to see how the price of any fungible good could ever increase in response to demand. There is some energy price at which the profitability of mining becomes marginal. Won't the amount of mining grow until all the electricity cheaper than that is being wasted calculating hashes?
Are you sure that energy is a fungible good? Energy is neither free to transport, nor is demand for energy insensitive to location. If energy were fungible, you wouldn't see energy pricing that varies by an order of magnitude or more. Something like oil on the other hand is quite fungible, but kwh of electricity is not. Note that fungibility depends on the user: Bitcoin miners are fungible consumers, a house in Hudson Valley is not.
> Won't the amount of mining grow until all the electricity cheaper than that is being wasted calculating hashes?
No, there is an upper bound (negating transaction fees, which are negligable) in that the cost of the energy used will never be larger than the block reward times the bitcoin price. There are estimates that this actually isn't a large enough market for the situations where bitcoin mining is actually a very beneficial consumer in terms of environmental concerns-- e.g to consume all of the methane flare gas (that would otherwise be burned off).
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.
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-...