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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

#131

Post by Me1000 »

wmf wrote: post #125
Me1000 wrote: post #81

Earlier quoted context omitted.

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.

The endgame should be a global carbon tax.

In my original comment I said I favor carbon taxes (in addition to other measures to stop carbon emissions).

But the comment I'm replying to seems to imply that it doesn't matter where the electricity comes from, that bitcoin is bad regardless of how the electricity is generated.

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

#132

Post by ur-whale »

lottin wrote: post #124
ur-whale wrote: post #74

Earlier quoted context omitted.

Can't buy a car in many European countries with cash these days. The iron grip of the governments there is getting a lot tighter.

In which ones?

Italy, France for example where there is a cap on how large a cash transaction can be.

Here's a list: https://www.europe-consommateurs.eu/en/shopping-internet/cas...

[EDIT]: I should have been more precise: you can't buy a new car in those countries.

You can still probably buy a used car with 10k euro if the transaction is conducted between private persons.

But then: the seller will be left holding 10K euros in cash, which he is likely going to want to deposit into a bank and run into complications.

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

#133

Post by ur-whale »

unethical_ban wrote: post #105
ur-whale wrote: post #72

Earlier quoted context omitted.

The "fundamental value" of anything is whatever people think it's worth. I have a very hard time understanding why people can't wrap their heads around this very basic concept. It's just a restatement of the law of supply and demand.

I think there is some nuance. The fundamental value of wheat is linked to its ability to feed people. In other words, it has concrete qualitative value to human existence, with natural scarcity. BTC's scarcity is set by algorithm and BTC provides no value other than being a store for value. USD's scarcity is set by the printers and databases at the Federal Reserve, and its value is derived from the faith that the US…

Air is something that is utterly "valuable" (using your definition).

Yet it is free. How's that for value?

Again: you need to get back to the one thing that models all of these things properly: supply (currently akin to infinite for air) and demand (huge, for air, but finite, hence air is free).

This whole notion that "I can eat it therefore it has value" is simply a corollary of the law of supply and demand.

If you use the more general, more powerful paradigm, you reasoning will become crisper.

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

#134

Post by wmf »

suikadayo wrote: post #90
wmf wrote: post #9

Earlier quoted context omitted.

Bitcoin will never change. In the future we'll probably see large amounts of BTC wrapped on Ethereum/Avalanche for DeFi trading.

We’re already seeing more wrapped BTC on Ethereum, than there is BTC on Lightning, so that’s very telling.

That makes sense; people want to hodl or trade, not spend.

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

#135

Post by ineedasername »

thebean11 wrote: post #17
wmf wrote: post #14

Earlier quoted context omitted.

Gaming and computer hardware is ruthlessly optimized to be as energy-efficient as possible while Bitcoin mining is specifically designed to waste energy even though more efficient ways (PoS) exist. Cable boxes used to waste massive amounts of energy (because GI/SA don't pay your power bill) and eventually the government stepped in to force efficiency. So no, Bitcoin isn't being unfairly singled out for criticism.

Bitcoin mining does not waste energy in the same way cable boxes did. The more energy is "wasted" the more secure the network is. This isn't an argument that it's worth the energy expenditure, or that there aren't alternate ways to get the same level of security, but it's an apples and oranges comparison.

The more energy is "wasted" the more secure the network is

That's a bit like saying the more resources you spend on something, the better it is. Are there crypto currencies that have comparable levels of security with less resources spent on it? Is it theoretically possible to have a crypto currency where the resource requirements don't scale as dramatically as they do with bitcoin?

Even if we grant that more energy == greater security, there's still the question of whether or not the resources per unit of security (however you want to measure "security") might be more efficient using some other methodology.

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

#136

Post by paulgb »

Me1000 wrote: post #131
wmf wrote: post #125

Earlier quoted context omitted.

The endgame should be a global carbon tax.

In my original comment I said I favor carbon taxes (in addition to other measures to stop carbon emissions). But the comment I'm replying to seems to imply that it doesn't matter where the electricity comes from, that bitcoin is bad regardless of how the electricity is generated.

If the externalities were properly accounted for, I wouldn’t have a problem with Bitcoin. It wouldn’t be my cup of tea, but neither are lots of things. It’s purely the externalities I care about.

A global carbon tax would be great if it were enforceable but it’s not. Just look at how we treat our oceans. It’s especially a problem with Bitcoin since production will naturally shift to the cheapest location, and since it’s fungible and non-physical this can’t be accounted for with trade law/sanctions the same way it could with manufacturing.

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

#137

Post by ineedasername »

oarabbus_ wrote: post #8

Video gaming has more environmental impact than bitcoin. So do porn sites. Bitcoin just seems like an easy target because people are more directly profiting off of it.

The question really isn't whether other endeavors waste more resources, it's whether the goals of Bitcoin could be achieved with fewer resources.

Also how are you measuring the environmental impact of video gaming & or porn? Are their white papers out there with a comparative analysis?

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

#138

Post by svachalek »

jliptzin wrote: post #121
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)?

Compared to other methods of money transfer I think Bitcoin does pretty well in terms of its energy usage. How much energy is used printing money and shipping it to various banks in Brinks trucks? How much is used building and operating millions of bank branches/ATMs worldwide?

Cash is terrible. But that's not all "other methods of money transfer". Compared to an ATM debit, credit card payment, or even most modern crypto coins, the energy cost of Bitcoin is ridiculous.

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

#139

Post by svachalek »

unethical_ban wrote: post #105
ur-whale wrote: post #72

Earlier quoted context omitted.

The "fundamental value" of anything is whatever people think it's worth. I have a very hard time understanding why people can't wrap their heads around this very basic concept. It's just a restatement of the law of supply and demand.

I think there is some nuance. The fundamental value of wheat is linked to its ability to feed people. In other words, it has concrete qualitative value to human existence, with natural scarcity. BTC's scarcity is set by algorithm and BTC provides no value other than being a store for value. USD's scarcity is set by the printers and databases at the Federal Reserve, and its value is derived from the faith that the US…

The USD actually has two other major sources of value: 1. It's required to pay debts to the US government, like taxes. 2. OPEC oil is priced in dollars by an old agreement with Nixon.

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

#140

Post by notahacker »

ur-whale wrote: post #133
unethical_ban wrote: post #105

Earlier quoted context omitted.

I think there is some nuance. The fundamental value of wheat is linked to its ability to feed people. In other words, it has concrete qualitative value to human existence, with natural scarcity. BTC's scarcity is set by algorithm and BTC provides no value other than being a store for value. USD's scarcity is set by the printers and databases at the Federal Reserve, and its value is derived from the faith that the US…

Air is something that is utterly "valuable" (using your definition). Yet it is free. How's that for value? Again: you need to get back to the one thing that models all of these things properly: supply (currently akin to infinite for air) and demand (huge, for air, but finite, hence air is free). This whole notion that "I can eat it therefore it has value" is simply a corollary of the law of supply and demand. If you…

More precisely, "I can eat it therefore it has value" is a component of the demand.

"I genuinely believe that a hedge fund will be forced to pay me lot to take it off my hands" was a component of the demand for GME recently. Unfortunately this belief was not well founded, and so many buyers of GME did not realise the value expected from their purchase of GME. Of course, there is also demand for GME because it is a company with substantial assets which can plausibly return profits and pay dividends in future years, it just happens to be a lot less. The only people for whom peak price GME was worth what they thought it was worth were the people who got >$250 out of entertainment value from watching it fall.

All market prices are whatever people think its worth, but individual buyers can derive much more value than that price, or make mistakes and derive much less value.

I don't think that people talking about "fundamental value" have missed the fact that supply also affects price. I think they've avoided missing the fact that people valuing an asset based on predicting others will want it even more in future can be wrong. And that investors who are good at predicting assets other people might want more in future tend to look at intrinsic properties.

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