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Bitcoin Energy Consumption Index

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Re: Bitcoin Energy Consumption Index

#261

Post by imnotatwork »

hwillis wrote: post #152
spiorf wrote: post #123

Earlier quoted context omitted.

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…

You can't just scale the number of transactions in a block forever and still have a stable currency. If you have only a few miners working on massive blocks, then they confer very little confidence onto the transactions in the blocks. More transactions, more mining. The whole point of the system is to verify transactions and it stops working if it doesn't do that.

> You can't just scale the number of transactions in a block forever and still have a stable currency.

If you mean that over time the incentive to centralization become stronger, yes, you are right. There must be competition to enter the blocks, otherwise when mining subsidy ends, there will be no incentive to secure the ledger.

If you mean that ten times the transaction have a computational cost 10 times greater (or 5, or 2), you're wrong.

> The whole point of the system is to verify transactions and it stops working if it doesn't do that.

Plenty of cryptocurrencies are mining tons of empty blocks. on the short term, if there are no transactions, mining continues with the same difficulty.

The effect is long term: if noone is using the currency for transaction, it has no value so less and less people mine it. The difficulty drops, and the security drops, pulling value down even more.

You are almost right, but it is a very indirect effect, and takes years to manifest itself.

Re: Bitcoin Energy Consumption Index

#262

Post by synchrone »

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…

US Currency budget for 2016 was 709M USD: https://www.federalreserve.gov/foia/files/2017currency.pdf

Ecological concerns aside, this puts a bit of a perspective on the overhead costs of maintaining a currency.

Fiat currencies require a stability of power of course, which is impossible to quantify.

Re: Bitcoin Energy Consumption Index

#263

Post by mark024 »

virtuabhi wrote: post #34
mark024 wrote: post #15

demand & offer, if the energy were more expensive, fewer would mine and the difficulty would drop, I wish I could mine on my low powered laptop, but if you want to raise the pitch forks against bitcoin, on the same logic, we could stop playing computer games, watch movies/shows/tv etc, even using modern phones, the old nokias that lasted a week one one charge would do fine.

I think you are missing the point that the service which consumes so much energy should provide some value.

who decides what value is? you? if it would not provide value people would not be using/buying/mining, "one man's trash is another man's treasure", for a guy in Venezuela bitcoin can be the difference between life and death..

Re: Bitcoin Energy Consumption Index

#264

Post by hypnoce »

cma wrote: post #190
hypnoce wrote: post #91

Earlier quoted context omitted.

>Bitcoin however is money. Bitcoin is not money as we think in a modern way. If you think of money a way to exchange goods then yes Bitcoin is money. Modern money (printed piece of paper labeled in currencies in its materialized form. Just a sequence of digits on your bank account) is dept. That's why currencies have interest rates (IR). It is also possible to create money out of nothing. IR and volume are adjusted a…

> Bitcoin is closer to a commodity in the sense that it is finite Bitcoin could be forked in the future to become inflationary. It has no permanent rules, things can change through consensus. It isn't like gold (gold can be devalued through poeple losing faith in it, etc., but the supply of it doesn't inflate other than through discovery/mining).

Bitcoin can also be devaluated by lost of trust. Also the current supply of Bitcoin is through mining only.

If rules are changed by a fork then you will have 2 different coins. We already saw it with bitcoin cash. Another way would be that the current consensus on Bitcoin itself changes. But that's a risk. How can people then predict such a consensus change. How risky is it to have Bitcoin since the day after the rules may change ?

Re: Bitcoin Energy Consumption Index

#265

Post by saalweachter »

rothbardrand wrote: post #116
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?

Yeah, that's inaccurate. The major portion of that energy expenditure is keeping the bitcoins that aren't moving secure. Put another way, this is saying it is estimated to take about $800M it keep $40B of bitcoin secure. This is probably a bit expensive in terms of comparing to fiat currencies (But then we are probably not covering all the real costs of those currencies)... but bitcoin is still in the technology adop…

Prices are set by what the market is willing to pay, rather than what the service costs to run. Visa, et al, charges what it does because most merchants are willing to pay it, evidenced by the relatively few "cash/check only" businesses out there.

This doesn't mean that merchants wouldn't switch to a lower-cost payment system if it were available and there were enough customers using it, but it does mean that you can't just assume that Visa, et al, would not lower their prices if they felt the competition was serious enough. What their actually cost is, in such a circumstance, is harder to say. Their basic payment processing cost is probably quite low, even accounting for the people who maintain it, but they also provide fraud protection and frequently kickbacks to customers (cash back, airline miles, points); whether they could switch to chip-and-pin exclusively (in the US) and severely curtail kickbacks while still offering a desirable service to customers as well as merchants...

[Their credit services are presumably well-funded through their high interest rates.]

Re: Bitcoin Energy Consumption Index

#266

Post by homero »

Digiconomist wrote: post #112
aianus wrote: post #95

Earlier quoted context omitted.

> If Bitcoin didn't exist, the hydro power would still be there and would be used for something else That's not a good assumption. There are many power plants in China in the middle of nowhere unconnected to much. It's completely plausible that the entire bitcoin network could run on clean energy that otherwise couldn't be used for much else because it's too remote (geothermal in Greenland or something).

I hope we're not building hydro power plants for the sole purpose of supporting the Bitcoin network. The energy may be "clean", but these projects have their own impact on the surrounding ecosystem.

So far they're built next to pre-existing ones and using excess power

Re: Bitcoin Energy Consumption Index

#267

Post by oh_sigh »

grwthckrmstr wrote: post #249
mrb wrote: post #227

Earlier quoted context omitted.

160k merchants, 3-6 million users. https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/cen...

You should also look at this as % of merchants and users in the world. Is it 10%,50%,or 0.001%?

What percentage of merchants and users accept HKD?

Re: Bitcoin Energy Consumption Index

#269

Post by Digiconomist »

jstanley wrote: post #67
Digiconomist wrote: post #62

Earlier quoted context omitted.

Just want to note that 60% is the expected future (ultimately), but the current % is more like 22 (found by taking the total cost # divided by the total annualized mining revenue #).

So in that case it's only ~2 houses rather than 5.58? Is this your website? Do you think the figure should be made more accurate?

Ah no, it's 5.58 for the current 22%. If it actually gets to 60% it would be much worse.

Re: Bitcoin Energy Consumption Index

#270

Post by Taek »

Tomte wrote: post #242
Taek wrote: post #157

Earlier quoted context omitted.

That energy is not just confirming the transactions in the existing block, it is protecting all transactions in the blockchain history, adding security to each of them. That represents a history of more than $70 billion in value. Suddenly it doesn't seem so expensive anymore.

That's actually revealing. First people try to argue that all this gigantic energy expenditure "buys" security. And then – in the fine print – you are learning that you don't actually "buy" security, you have been sold a subscription. This gigantic waste of energy doesn't do anything unless you follow up with even more energy. So the calculations that x amount of energy "secures" y amount of economic value is flat ou…

Yeah, the inflation is a tax more or less. It's a tax on your holdings to pay for the security and integrity of the network, and to make sure things keep moving forward.

Bitcoin is nearing the point where most security will be paid by fees instead of inflation, but imo inflation is the more fair model to pay for security.

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