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Bitcoin Energy Consumption Index

digiconomist.net

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Re: Bitcoin Energy Consumption Index

#61

Post by jstanley »

hwillis wrote: post #56
GBiT wrote: post #25

Earlier quoted context omitted.

Energy is whats backing Bitcoins value. You need a lot of energy to create this valuable document - block

Energy doesn't back bitcoin, it just stops the currency from inflating. Or it would, if mining could always produce new bitcoins, but IIRC its supposed to stop after a while. The difference being that a bitcoin does not entitle you to some unit of energy or work produced from it. The energy used to verify bitcoin transactions is just lost.

Energy backs bitcoin in the sense that "cheating" (reversing transactions or double spending) costs inordinate amounts of energy.

Re: Bitcoin Energy Consumption Index

#62

Post by Digiconomist »

maxerickson wrote: post #19

So the calculation is incredibly sensitive to the assumptions, that miners spend 60% of revenues on electricity and that they have an average cost of $0.05 per kw-h. Anyone have any sense of how accurate either of those is?

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 #).

Re: Bitcoin Energy Consumption Index

#63

Post by homero »

hjnilsson wrote: post #27
givinguflac wrote: post #3

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

1/1000th of global energy production. Or the output of one nuclear power plant, or the same as all energy lost to friction for every car in the world. That really puts it into perspective.

Much of the mining is done next to hydro plants in China.

Re: Bitcoin Energy Consumption Index

#64

Post by TekMol »

iaw wrote: post #50
TekMol wrote: post #21

Earlier quoted context omitted.

Obviously it generates enough value for some people that they are willing to pay for it. Watching television probably uses up even more energy. And I would argue it has a negative impact on life quality. But who am I to decide what people should value?

Watching television does not use up more energy than mining bitcoin, that's the point of the linked article.

The article states that the "electricity consumed for a single transaction" is equivalent to what 5 households use up in 5 days. Which seems to make you think that one would "use up" less energy by watching TV then by doing a Bitcoin transaction. But that is not true.

Making a Bitcoin transaction uses up hardly any energy.

The miners mine for the block reward. That is completely unrelated to transactions. They even mine if there are no transactions and generate empty blocks.

If nobody made a Bitcoin transaction for a month, the energy consumption of that month would stay pretty much the same.

Re: Bitcoin Energy Consumption Index

#65

Post by Digiconomist »

jstanley wrote: post #29
iaw wrote: post #14

Earlier quoted context omitted.

Does that justify wasting enough electricity to power Dallas, Texas in the mean time?

It's not "wasted". The miners wouldn't spend the energy if they weren't getting a good return on their investment. Just because you don't like bitcoin doesn't make it a "waste" of energy, any more than mining gold is a "waste" of energy if you don't like gold.

"Wasting" energy is required to make PoW work, but if we could achieve the same with PoS (and that seems to be the case since ETH is switching too) then it would really be a waste.

Re: Bitcoin Energy Consumption Index

#66

Post by GBiT »

hwillis wrote: post #56
GBiT wrote: post #25

Earlier quoted context omitted.

Energy is whats backing Bitcoins value. You need a lot of energy to create this valuable document - block

Energy doesn't back bitcoin, it just stops the currency from inflating. Or it would, if mining could always produce new bitcoins, but IIRC its supposed to stop after a while. The difference being that a bitcoin does not entitle you to some unit of energy or work produced from it. The energy used to verify bitcoin transactions is just lost.

The more energy Bitcoin network uses, the more valuable Bitcoins are... If Bitcoins value falls down, energy usage will fall down too. Energy is used to create valuable document - The Block. And block is not necessary new Bitcoins, its transactions too.

Re: Bitcoin Energy Consumption Index

#67

Post by jstanley »

Digiconomist wrote: post #62
maxerickson wrote: post #19

So the calculation is incredibly sensitive to the assumptions, that miners spend 60% of revenues on electricity and that they have an average cost of $0.05 per kw-h. Anyone have any sense of how accurate either of those is?

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?

Re: Bitcoin Energy Consumption Index

#68

Post by amelius »

> 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?

Re: Bitcoin Energy Consumption Index

#69

Post by pedrocr »

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 real requirement. As for a trillion dollar military that's doubtfull. There are plenty of currencies with the market cap of Bitcoin that don't have nearly as much of a military backing them.

Re: Bitcoin Energy Consumption Index

#70

Post by justinzollars »

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.
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