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Bitcoin mining and energy consumption

blog.bitcoin.org.hk

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Re: Bitcoin mining and energy consumption

#31

Post by Slartie »

seanwilson wrote: post #22

One of the big selling points of Bitcoin is that it's meant to be decentralised but it doesn't look like this plays out. Proof of work seems to inevitably lead to all the power going to parties that can afford specialised hardware who are in countries with low electricity costs. Running a Bitcoin miner on commodity hardware now is pointless which seems to go against the spirit of Bitcoin when it started. Was this pre…

That highly depends on the hashing algorithm used. For Bitcoin this is SHA256, which is very well-suited for ASIC implementation. The algorithm of Ethereum was deliberately designed to be ASIC-resistant, but GPU-friendly, therefore GPUs (which are kind of a commodity) are the hardware of choice for Ethereum mining. Monero takes this one step further by having an algorithm that is ASIC-resistant and that can be mined just as well on GPUs as on CPUs, which is probably the best you can get with regard of mining decentralization. The result is that Monero mining is much more spread-out and distributed over the world than Bitcoin mining.

The advantage of low electricity cost is of course something that cannot be eliminated without eliminating Proof of Work entirely.

Re: Bitcoin mining and energy consumption

#32

Post by gtrubetskoy »

Another aspect that is frequently overlooked is that keeping bitcoin requires no energy at all (literally you can write the key on a piece of paper), and a transfer (not considering the mining aspect) requires very little as well (it can be an SMS message).

Contrast that with the all the office buildings (e.g. Manhattan) and computer systems required by banks, ongoing. The banking industry has google-size datacenters as well, they just don't like to talk about it. As well as the energy to print the paper/plastic cash and all the statements, etc. It is very difficult to estimate the true energy consumed by fiat, while bitcoin energy is in the hashrate, and that's pretty much it.

Re: Bitcoin mining and energy consumption

#33

Post by 6d6b73 »

"Also, one can argue that Bitcoin actually saves energy. The world’s financial system requires many resources beyond the electricity to run servers."

What a bunch of crap. Bitcoin also needs servers (i.e exchanges, uses computers, routers, switches etc. )

Re: Bitcoin mining and energy consumption

#34

Post by 6d6b73 »

gtrubetskoy wrote: post #32

Another aspect that is frequently overlooked is that keeping bitcoin requires no energy at all (literally you can write the key on a piece of paper), and a transfer (not considering the mining aspect) requires very little as well (it can be an SMS message). Contrast that with the all the office buildings (e.g. Manhattan) and computer systems required by banks, ongoing. The banking industry has google-size datacenters…

You don't need banks to store cash. Bitcoin without electricity is useless, cash on the other hand is not.

Re: Bitcoin mining and energy consumption

#35

Post by matt4077 »

vog wrote: post #17
joss82 wrote: post #7

From a quick research online, it seems that most mining pools are located in China [1] Roughly 2/3rd of electricity in China is produced from burning coal or gas, which, upon combustion, emit their own weight in CO2, basically. [2] From this two facts, one can conclude that Bitcoin has a pretty huge carbon footprint overall. This is not the impression that I got from reading that article. [1] https://bit-media.org/bi…

If I remember correctly, mining farms (and data centers in general) are usually colocated to an energy source, i.e. a plant. Some of those plants are not fully stretched, because there's almost no civilization nearby, so delivering to the next city comes with a huge loss in the energy network. So miners can get cheap energy from those plants - energy that would otherwise be unused or lost anyway. Not sure how much th…

That's a very convenient myth.

It misses the fact that China didn't build power plants out where it's too far away from civilisation to be useful.

Transmission losses are also nowhere near the suggested values. 1.5% per 200 miles is today's standard. Meaning you could cross all of China with a loss of:

    east-west axis: 2200 miles
    0.985^(2200 miles / 200miles) = 0.846 = 15.4% loss
(and that's from the farthest desert to the east coast. Go south instead, or note that there actually are a billion people living in inland China, and actual losses are <5%)

Re: Bitcoin mining and energy consumption

#36

Post by bkolobara »

seanwilson wrote: post #22

One of the big selling points of Bitcoin is that it's meant to be decentralised but it doesn't look like this plays out. Proof of work seems to inevitably lead to all the power going to parties that can afford specialised hardware who are in countries with low electricity costs. Running a Bitcoin miner on commodity hardware now is pointless which seems to go against the spirit of Bitcoin when it started. Was this pre…

There are a bunch of consensus protocols out there already. My favourite is the Stellar Consensus Protocol[1]. I think that modelling your consensus around entities you trust, instead of the most power or most most money, is more natural.

[1]: https://www.stellar.org/papers/stellar-consensus-protocol.pd...

Re: Bitcoin mining and energy consumption

#37

Post by gtrubetskoy »

seanwilson wrote: post #22

One of the big selling points of Bitcoin is that it's meant to be decentralised but it doesn't look like this plays out. Proof of work seems to inevitably lead to all the power going to parties that can afford specialised hardware who are in countries with low electricity costs. Running a Bitcoin miner on commodity hardware now is pointless which seems to go against the spirit of Bitcoin when it started. Was this pre…

> Proof of stake is meant to consume less resources but then the power is then handed to people with the most money?

I'm surprised nobody has caught on to the fact that the present fiat system is in essence a Proof-of-Stake one.

> Coming up with a way to have a decentralised currency where everyone involved gets a fair say without consuming too many resources is a super interesting problem.

Indeed. I almost wonder if it can be proven that thermodynamics is in fact the only possible way to verifiably make something take considerable time and energy, i.e. actually cost in resources that we have no way of faking, especially time.

Re: Bitcoin mining and energy consumption

#38

Post by ethagknight »

seanwilson wrote: post #22

One of the big selling points of Bitcoin is that it's meant to be decentralised but it doesn't look like this plays out. Proof of work seems to inevitably lead to all the power going to parties that can afford specialised hardware who are in countries with low electricity costs. Running a Bitcoin miner on commodity hardware now is pointless which seems to go against the spirit of Bitcoin when it started. Was this pre…

I remember reading that a key weakness to bitcoin was its susceptibility to fraud if a group of nefarious miners control a significant portion of compute power on chain, because verification is based on consensus. As such, a properly motivated bad actor can produce fraudulent results that can only be disproven by exorbitant compute resources. Obviously this would destroy the value of btc but they only need to keep it going long enough to cash out. If mining is heavily focused in certain areas of extensively overbuilt power generation centers (rural China) using mass custom ASICs, then it sounds to me like Bitcoin has a fundamental flaw in its market realities.

GRANTED: more severe opportunities for fraud, unfairness and bad acting are available to Wall Street

NOTE: I find bitcoin fascinating and I really want it to work, but it has seriously flaws that aren’t being seriously acknowledged by the people willing to buy in at $15,000+ per BTC. Not trying to be a naysayer to crypto currency

Re: Bitcoin mining and energy consumption

#39

Post by seanwilson »

Slartie wrote: post #31
seanwilson wrote: post #22

One of the big selling points of Bitcoin is that it's meant to be decentralised but it doesn't look like this plays out. Proof of work seems to inevitably lead to all the power going to parties that can afford specialised hardware who are in countries with low electricity costs. Running a Bitcoin miner on commodity hardware now is pointless which seems to go against the spirit of Bitcoin when it started. Was this pre…

That highly depends on the hashing algorithm used. For Bitcoin this is SHA256, which is very well-suited for ASIC implementation. The algorithm of Ethereum was deliberately designed to be ASIC-resistant, but GPU-friendly, therefore GPUs (which are kind of a commodity) are the hardware of choice for Ethereum mining. Monero takes this one step further by having an algorithm that is ASIC-resistant and that can be mined…

> That highly depends on the hashing algorithm used. For Bitcoin this is SHA256, which is very well-suited for ASIC implementation. The algorithm of Ethereum was deliberately designed to be ASIC-resistant, but GPU-friendly, therefore GPUs (which are kind of a commodity) are the hardware of choice for Ethereum mining.

Is it possible to create ASIC resistant algorithms? Litecoin was meant to be resistant by using scrypt but there's ASICs out for that now I believe.

Could you not create a protocol that constantly changes its hashing algorithm to combat ASICs?

> The advantage of low electricity cost is of course something that cannot be eliminated without eliminating Proof of Work entirely.

Any views on what the ideal system would be? I've heard of using a combination of proof of stake and proof of work. Proof of stake will mean people with more money get more power and proof of work means people with lower electricity costs get more power so neither seems ideal. I think ideally each person in the world would get an equal vote in how the protocol progresses but it's not obvious how you could enforce that.

Re: Bitcoin mining and energy consumption

#40

Post by gtrubetskoy »

6d6b73 wrote: post #34
gtrubetskoy wrote: post #32

Another aspect that is frequently overlooked is that keeping bitcoin requires no energy at all (literally you can write the key on a piece of paper), and a transfer (not considering the mining aspect) requires very little as well (it can be an SMS message). Contrast that with the all the office buildings (e.g. Manhattan) and computer systems required by banks, ongoing. The banking industry has google-size datacenters…

You don't need banks to store cash. Bitcoin without electricity is useless, cash on the other hand is not.

But you do need banks to store cash. And the bank better have a secure vault and security guards and cameras and all that.

An elliptic curve key, which is what possession of bitcoin is, is just a large number. To send a bitcoin you need to create a "transaction", and in fact the only aspect of generating a bitcoin transaction that requires energy is the SHA calculation, not something you can do in pencil, the EC math is actually simple enough that a computer is not required.

Also your argument that cash does not require energy does not apply to the cashless society we have become today, when was the last time you actually used cash? Credit cards are useless without electricity.

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