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Bitcoin's fundamental value is negative given its environmental impact

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Re: Bitcoin's fundamental value is negative given its environmental impact

#91

Post by ufo »

ballenf wrote: post #60
paulgb wrote: post #31

Earlier quoted context omitted.

This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). When water prices are lower people water their lawns more and take more baths. When shipping ePackets from China is cheap, people buy more stuff from there. I just don’t see how Bitcoin responding to supply and demand is different from…

I think this is not what the parent poster was saying. The problem of bitcoin is not one of induced demand, where cheaper goods means that people become willing to use it less efficiently. Difficulty adjustment is as if every car monitored its MPG and then dynamically adjusted the engine until it became as efficient as a 2003 hummer.

When the mining efficiency is increased, that isn't translated into more bitcoins being mined or more people benefiting from bitcoin. The matching mining difficulty increase ensures that all that extra efficiency will be turned into waste heat.

Re: Bitcoin's fundamental value is negative given its environmental impact

#94

Post by paulgb »

Me1000 wrote: post #81
paulgb wrote: post #31

Earlier quoted context omitted.

This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

This is both a good and a fair critique of bitcoin. But I don't understand the endgame. Should the use of bitcoin be banned or just shamed? Let's assume for a moment that I live "off the grid" and run my full BTC node using my own solar power. Is that something that should be banned? Should it be shamed? I don't know where to draw the line.

This is a great question and I don’t have all the answers, but I’d at least like to see CEOs who put it on their balance sheet put to task for it. E.g. putting it on your books should be penalized by ESG funds. Elon Musk shouldn’t get away with greenwashing it through Tesla’s (possibly overrated anyway) environmental halo. Nor should California taxpayers be subsidizing electric vehicles if the carbon benefits are negated by the manufacturer’s Bitcoin holdings.

Re: Bitcoin's fundamental value is negative given its environmental impact

#95

Post by ardy42 »

ballenf wrote: post #60
paulgb wrote: post #31

Earlier quoted context omitted.

This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). When water prices are lower people water their lawns more and take more baths. When shipping ePackets from China is cheap, people buy more stuff from there. I just don’t see how Bitcoin responding to supply and demand is different from…

>> This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

> Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively).

I don't think that's true, or it's only true if you look at it from a consumption perspective that ignores important parts of the picture.

When gas prices fall, more energy is used, but travel miles increase. More work gets done per dollar.

When bitcoin mining gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant, because the difficulty changes to compensate. It's like if roads got longer the cheaper gas gets.

Re: Bitcoin's fundamental value is negative given its environmental impact

#96

Post by yrral »

This is a rehash of a previous post of mine regarding electricity consumption. Just wanted to repost this to get more eyeballs and critiques:

Back in the days where all our electricity came from fossil fuels, I completely agree that marginal electricity usage was bad for the environment. However I think that thought has persisted with us even though it is no longer true 100% of the time. With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)

I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.

For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.

Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.

It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.

Here are 2 articles of a bitcoin mining company doing just this: https://www.bloomberg.com/news/articles/2020-09-01/bitcoin-m... https://www.forbes.com/sites/christopherhelman/2020/05/21/ho...

Re: Bitcoin's fundamental value is negative given its environmental impact

#97

Post by tomjen3 »

I love the angle these attacks on BTC has been taking lately, it really seems somebody is getting desparate for it not to succeed.

This however seems a particularly bad attack on BTC, because we are not (spoilers) going to be able to to solve global warming, or even to mitigate it much. That ship has sailed, if it ever existed at all.

Re: Bitcoin's fundamental value is negative given its environmental impact

#98

Post by lottin »

ballenf wrote: post #60
paulgb wrote: post #31

Earlier quoted context omitted.

This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively). When water prices are lower people water their lawns more and take more baths. When shipping ePackets from China is cheap, people buy more stuff from there. I just don’t see how Bitcoin responding to supply and demand is different from…

A fall in the price of a product (say, as a consequence of efficiency gains in the production process that shift the supply curve) increases the quantity demanded for that product. The end result of the efficiency gain is an increased consumption at a lower cost.

Re: Bitcoin's fundamental value is negative given its environmental impact

#100

Post by fl0wenol »

frongpik wrote: post #59
thatguy0900 wrote: post #49

Earlier quoted context omitted.

I mean is it not a good narrative to push? Someone in another comment pointed out each transaction uses so much energy it would be more effecient to just drive 600 miles in a tesla to hand deliver them money. That is awful, and basically for no reason, a digital currency could be designed without that entirely. There is no way to fix it, as proof of work demands that much energy be used no matter how effecient comput…

An important nuance: such a bitcoin transaction is worth about a billion dollars. It's not a grocery store kind of transaction.

That's also a separate issue, it _also_ requires trusted 3rd parties to broker small, everyday transactions, which has it's own costs (energy and otherwise) and fundamentally requires some centralization and/or escrow, which kind of defeats the purpose.
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