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Bitcoin Energy Consumption Index

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Re: Bitcoin Energy Consumption Index

#131

Post by moobyfrong »

pedrocr wrote: post #69
alister wrote: post #44

You can't compare Bitcoin to Visa. Visa is merely a payment sytem -- a means of transfer of money that already exists. Visa is not money. Bitcoin however is money. As well as being a payment system. The correct comparison would be to compare the cost of Bitcoin to U.S. dollars or gold. Gold requires hundreds of dollars per ounce and untold energy to extract. U.S. dollars require the existence of a powerful economy an…

>Gold requires hundreds of dollars per ounce and untold energy to extract. The gold you trade is already almost all extracted, I doubt there's 1B$ a year in gold extraction investment but maybe there is. >U.S. dollars require the existence of a powerful economy and trillion dollar military to keep the currency secure and desirable. All currencies require a relevant economy using them to be valuable so that's not a re…

Accurate figures exist. In 2016 world gold production was 3,100 metric tons, worth US$128 billion. Above ground gold stock is something over 180,000 metric tons.

New mining increases gold stock 1-2% per year, but very dependent on market conditions.

Gold has double the volatility of equities with less total return than U.S. treasuries. It doesn't really belong in most people's portfolios.

Re: Bitcoin Energy Consumption Index

#132

Post by jaekwon »

justinzollars wrote: post #70
amelius wrote: post #68

> Electricity consumed per transaction: 165 kWh Thats about $20 in the US. If a transaction is that expensive, how can this system even work for transactions with a value of that order? Are large transactions "sponsoring" small transactions? What happens if more people use the system for small transactions? Will BTC become unusable?

Wow. Nice rough math! Thats ridiculous. Hopefully Ethereums POS (proof of stake) system will fix this.

Check out Tendermint and the Cosmos Network.

Re: Bitcoin Energy Consumption Index

#133

Post by mrb »

BECI is flawed, I wrote a critic of it some months ago: http://blog.zorinaq.com/serious-faults-in-beci

This motivated me to research and publish a more precise energy comsumption estimate, and I have been published in Bitcoin Magazine: http://blog.zorinaq.com/bitcoin-electricity-consumption https://bitcoinmagazine.com/articles/op-ed-bitcoin-miners-co...

I always like to remind people that Bitcoin miners consume about the same amount of energy as Christmas decorative lights in the US. Kinda puts things in perspective...

Re: Bitcoin Energy Consumption Index

#134

Post by akvadrako »

leroman wrote: post #121
alister wrote: post #44

You can't compare Bitcoin to Visa. Visa is merely a payment sytem -- a means of transfer of money that already exists. Visa is not money. Bitcoin however is money. As well as being a payment system. The correct comparison would be to compare the cost of Bitcoin to U.S. dollars or gold. Gold requires hundreds of dollars per ounce and untold energy to extract. U.S. dollars require the existence of a powerful economy an…

The fairer comparison would be Bitcoin vs Visa the corporation, which includes buildings, people, air-con, employee traveling for work, to begin with. Still, let's hope Bitcoin moves away from wasting energy soon.

Bitcoin can't move away from wasting energy - the entire design is based on that aspect.

Re: Bitcoin Energy Consumption Index

#135

Post by avar »

amelius wrote: post #68

> Electricity consumed per transaction: 165 kWh Thats about $20 in the US. If a transaction is that expensive, how can this system even work for transactions with a value of that order? Are large transactions "sponsoring" small transactions? What happens if more people use the system for small transactions? Will BTC become unusable?

A transaction here is a block. A block averages 2000 or so transfers, so that $20 becomes $0.01 for any individual transfer in the block.

Electricity price in the US is also irrelevant. As the article shows just over 0% of blocks are mined in the US, or a rounding error. Bitcoin mining chases cheap electricity.

Re: Bitcoin Energy Consumption Index

#136

Post by Retric »

spiorf wrote: post #123
hwillis wrote: post #107

Earlier quoted context omitted.

The hashing is merely a way to choose a random block. It's not a proof and it doesn't do anything fancy. It just picks a random computer to say "this is how the transaction history looks". The energy increases with the volume of transactions because there will be more people calculating hashes. The more people mining, the harder they make the hash calculation so that the target is ten minutes. More transactions = mor…

I repeat, you got it very wrong. Transaction number is not correlated with mining energy expenditure. Mining is used to secure the ledger in a way that the same amount of energy is needed to alter it. The block hash begins with a number of zeros. Try for yourself how many tries it takes to find a string that hashes to a hash beginning with 3 zeros. Bitcoin block hashes begin with 13 or 14 zeros IIRC. This means that…

Hash costs are a large fraction of overall costs, but not 100%. Network bandwidth is not free. The more transactions the more beefy the full nodes must be, worse every node pays the full costs or lose out on some transaction fees.

But, it gets worse simply maintaining value takes hashing power to avoid a bad actor double spending and destroying faith in the system. Thus, even as a value store you need to pay for large scale hashing.

Re: Bitcoin Energy Consumption Index

#137

Post by SimonPStevens »

hwillis wrote: post #107
spiorf wrote: post #89

Earlier quoted context omitted.

This is very wrong. It does not work that way at all. Volume or value of transactions has nothing to do with the energy expended. The energy is needed to calculate a mathematic proof that makes sure your transaction cannot be reversed or tampered with. This mathematic proof on average is calculated every 10 minutes, with no correlation to the number of transactions. You make a transaction, and if the bitcoin network…

The hashing is merely a way to choose a random block. It's not a proof and it doesn't do anything fancy. It just picks a random computer to say "this is how the transaction history looks". The energy increases with the volume of transactions because there will be more people calculating hashes. The more people mining, the harder they make the hash calculation so that the target is ten minutes. More transactions = mor…

You have a very distorted view of how it works.

The number of transactions is entirely unrelated to the number of people mining. There could be an increase in transactions while the number of miners falls, or vice a versa. This is why the hash difficulty adjusts, to ensure that the new block rate (and therefore the transaction rate) stays the the same regardless of the number of miners.

If the number of miners dropped, energy use would drop, but transaction throughput would remain exactly the same.

Also, transaction size (in value) is entirely unrelated to transaction size (in kilobytes) which is what effects the number of transactions that can happen. Most transactions that just transfer some bitcoin from one assess to another are exactly the same number of kilobytes irrespective of how many bitcoin are being transferred.

Re: Bitcoin Energy Consumption Index

#138

Post by jcfrei »

tylersmith wrote: post #113
jcfrei wrote: post #71

Earlier quoted context omitted.

This is a misleading argument. Yes, miners will always spend more until marginal revenue == marginal cost. The problem with the proof of work system of bitcoin (and many others) is its inefficiency that only allows for a low transactions throughput. Proof of work has no inherent value for the system, it's simply a way to cap the network throughput to about 1MB per 10 minutes because anything lower than 10 minutes wil…

The point is expend work to create signatures, creating a crytoeconomic cost to state changes.

The purpose of PoW is to reduce the number of forks and also making double spending attacks very expensive. Why can't the computing power of the entire network be used to just verify the integrity of all transactions and skip the nonce finding part? This would immensely increase network throughput. The reason is because Bitcoin's PoW implementation can't provide the same level of consensus and security with a higher number of transactions. Newer PoS systems might.

Re: Bitcoin Energy Consumption Index

#139

Post by chrisallenlane »

1001101 wrote: post #43
givinguflac wrote: post #3

That is an absurd amount of energy. This really changes my opinion on this being a feasible currency.

I agree. I've been racking my brain on ways to connect proof of work to something useful (like folding proteins, general purpose distributed computing, etc.)

There's Gridcoin, which, if I understand correctly, is essentially the "coinification" of BOINC:

http://www.gridcoin.us/

It would be great if it ever became profitable to mine this.

Re: Bitcoin Energy Consumption Index

#140

Post by Taek »

leroman wrote: post #121
alister wrote: post #44

You can't compare Bitcoin to Visa. Visa is merely a payment sytem -- a means of transfer of money that already exists. Visa is not money. Bitcoin however is money. As well as being a payment system. The correct comparison would be to compare the cost of Bitcoin to U.S. dollars or gold. Gold requires hundreds of dollars per ounce and untold energy to extract. U.S. dollars require the existence of a powerful economy an…

The fairer comparison would be Bitcoin vs Visa the corporation, which includes buildings, people, air-con, employee traveling for work, to begin with. Still, let's hope Bitcoin moves away from wasting energy soon.

Also the courts that enforce the contracts visa makes, the FBI that chases people who commit fraud, the police and jails who enforce the decisions of the court, etc etc.

Blockchains can operate without all of those.

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