> The energy was already generated. Imagine you're a power company. You gotta sell your energy.
You do realize that power stations can increase and decrease production to scale with demand?
> Who do you sell it to? Locally? To that price-fixed monopoly who have exclusive control simply because they happen to be physically located near your very heavy and hard-to-move power station? Or do you mine Bitcoin?
If you re-route 50% of your power output to a server farm and jack up prices for everyone else because free market, the costs of all the goods and services that you require to maintain your power plant and your server and the salary that your staff requires to feed, bathe and house themselves will all go up.
Crypto bros are 21st century gold hoarders. The idea that the value of crypto/gold is 100% intrinsic to the commodity itself and not related to the social and economic context in which it exists myopic and a fundamental misunderstanding of the concept of value itself.
> The cost to the viewer is ultimately a few cents of electricity
And the cost to the society is few cents of electricity minus fraction of a cent the site gets, paid in fuel being wasted on producing that electricity.
Crypto mining is a disaster. If I were an evil mastermind who wanted to deepen the energy and climate problems of the world, cryptocurrencies is what I would push for.
> Would you ask the same question if the world run 100% on renewables
Opportunity cost. All that 100% renewable energy could be used for something that actually adds value to society but isn't because it is being pissed away on the Rube Goldberg invention known as Satoshi's BlockChain.
> Also they pay for all the energy they spend so what exactly is the problem?
Give me a fucking break. These miners raise the price of electricity for everybody else and produce absolutely nothing of value to society at large.
Same thing these miners have done with graphics cards -- they've made graphics cards more expensive than most people can afford... you know, people who want to use those video cards for playing games instead of sucking down large quantities of non-renewable energy in a vain attempt to Get Rich Quick.
Bitcoin and all the others in the crypto "space" add absolutely zero value to society.
Like what? You really believe people are mining BTC in Manhattan?
For mining to be profitable, cost of energy you put in must be lower than the value of a Bitcoin. Where is energy cheap? Not where there is a need for it, like you claim, but where it is wasted. You don't mine BTC in Manhattan, you put a Bitcoin farm mining off peak on a hydroelectric power plant in the middle of nowhere, China.
Please let's stop this nonsense of Bitcoin stealing energy from who needs it the most, as it is utter baseless nonsense that just betrays total ignorance on the simple concept of supply and demand, and why things are priced a certain way.
> even if it were true that cryptocurrencies ran on renewable power, the idea that it is OK for speculation to waste vast amounts of renewable power assumes that doing so doesn't compete with more socially valuable uses for renewables, or indeed for power in general
Yes, this is exactly what is going on.
If you think you have a solution to this decades old reality, then thank cryptocurrency for forcing you to notice.
Energy was being wasted, renewable energy was also being wasted, in perpetuity, forever, until cryptocurrency producers put their applications at the site and started using it. There is still a lot more energy of this kind that will be tapped into by miners.
Again, if you really think you have another economically viable alternative, emphasis on economically viable, then dont forget to thank bitcoin, and also do the thing. You’ll single handled help many people and gain leverage in public policy to enforce your dream world that excludes proof of work.
> If you know that your induced demand will be filled in the same way that current demand is being filled, then creating more demand is irresponsible, if it can be avoided. What benefit does wasting so much energy have?
I think you misunderstand PoW. Energy is not wasted, energy is spent to provide the security level that is demanded by the market. Nobody will spend a joule mining bitcoin unless it is profitable.
> At least Siberian homes using mining to heat their house in the winter have a good side effect
This is actually a bad thing, because it means mining is inefficient. Primary purpose of mining is to convert energy into PoW, if you get heat doing that - you’re not getting as much PoW as you could’ve got.
> then isn’t it the case that Bitcoin is actually using energy as the scarce commodity on which its value is based?
Bitcoin’s value isn’t coupled to energy. However, it does have a perverse incentive to miners to consume as much energy as possible.
Each additional miner that comes online doesn’t really add anything of value to the network at this point. It just consumes more energy. Each miner plays a game of maximizing their own energy usage to maximize their take of the fixed rewards structure.
It has to be the single most inefficient large-scale engineering project I can think of, and certainly the only one that literally pays people globally to make it less and less efficient.
> Do you live next to a power plant? Or even in sight of a power plant? No, because we have a power grid to move this electricity around.
Of course I do. There are solars and wind turbines all around me, not even talking about the natural gas and coal powerplants I can see right out of my window near the edge of the city. And every year there are many gigawatts of electricity from these exact powerplants right next to me that go to waste because it can't be transported nor stored economically. Thankfully now there are some Bitcoin miners paying at least something for some of that waste electricity, so my own electricity can be cheaper.
> Surely you don't think that power plants are being built in the middle of nowhere with absolutely no way to use the electricity
I don't think that's what's happening. Powerplants are built close to human settlements. Even very nasty fossil fuel powered powerplants are right there. Even the nuclear powerplants are very close to major settlements. Surely we would've built them very far away if that was a possibility. Chernobyl was the one exception, because it secretly powered a gigantic radar called Duga.
> However, you can surely agree we'd all be better off if new hydroelectric power was used to take older fossil fuel plants offline rather than performing arbitrary proof-of-work calculations.
I can assure you there isn't a single Bitcoin miner preventing that. The reasons are different - it's not easy to transport or store electricity. Any electricity used for Bitcoin mining is waste electricity - electricity that can't be put into the grid for profit and would be generated anyways, regardless of Bitcoin. It's not economical to mine Bitcoin with ordinary grid electricity.
> Please don't be facetious. Obviously I have not "forgotten" about China
Why have you tried to compare Iceland's total energy output with Bitcoin energy consumption, then? That doesn't make any sense if you had China in mind.
When I look at wholesale electricity prices, it's 3 times more than you can earn with Bitcoin mining. Please explain to me: Why would powerplants not use electricity for profit if they could? Or are you saying that Bitcoin miners are losing money to mine Bitcoin?
> do I care if crypto miners want to mine at night in west Texas when wind is generating energy and the wholesale cost is negative (I.e. there is really no marginal productive use for that generation)? Absolutely not.
This is complicated though because power grids can resell that slack capacity further away if there’s a persistent surplus and other users will notice (e.g. cheap power really incentivizes overnight EV charging or even industrial users expanding). If all of the slack is being used for unproductive purposes, those positive feedback cycles will be delayed – unlike useful work, there’s no end of cycles which bitcoin mining can use so the potential power consumption is effectively infinite.
> Except, of course, cryptocurrency isn't nearly as useful as, say, desalinated water.
I'd like to expand on this a bit.
The major problem with cryptocurrency is that the value of a typical coin seems to be ~ the cost of electricity needed to mine one.
This means that a crypto miner turns $1 of energy into ~$1 of wealth.
As far as business plans go, this is an absolutely horrific use of energy. Nearly no other business produces so little wealth, for such a high energy input.
The economy in general, by the way, turns $1 of energy into ~$17 of wealth. [1]
> And the grounds are that the system is designed in a way that you literally make money burning electricity, so as long as electricity is cheaper than payoff somewhere (or you can steal some), there's strong incentive for everyone to try and burn energy.
Which increases energy costs until that profit gets small.
As long as there is a more valuable use for energy than getting a 0.1% profit mining Bitcoin, I don't see why mining would ever consume all energy, that's ridiculous.
>Mining is scale invariant, the value of the coins tends to the value of the energy, not the quantity. Make electricity cheaper and mining will just use more of it.
Isn't the value of mining really a function of the higher of both energy and computational availability, and, to my amateur understanding, don't most cryptocurrencies self-adjust their computational difficulty in response to more mining, which the return-value of each new miner less than the one before it? I'd wager that means the combination of time and silicon availability will cap the expansion long before it eats four-fifths of 2060 US' energy generation.
>Nuclear is simply way too expensive and by far the #1 reason it's not being built is because no one wants to write the checks to build it when solar is more than an order of magnitude cheaper. Fix that problem first, then start yelling about regulation.
You don't think there's a possibility the unjustifiable cost might come from the regulation more than the lack of value in displacing almost the entire electricity market?
> The energy here is wasted because Bitcoin does almost nothing of value.
You can also argue that mining gold is a waste of resources because gold does almost nothing of value.
> Yes, there are other uses for Bitcoin. They are miniscule in comparison to its use as an investment product.
What about gold? Aren't its uses minuscule in comparision to its speculative investment value?
The point is: The market decides. One can argue that Bitcoin characteristics (encrypted, pseudo-anonymous, open source, decentralized, global, scalable, deflationary, stateless, etc.) justify its speculative price.
> Miners are already being incentivized because of economics to move to green energy sources up to 50 percent of mining is done with clean energy.
That green energy could easily be used to take coal-fired plants offline, if it wasn’t being arbitrarily consumed for crypto. Also I seriously doubt that anywhere near 50% of mining is done with clean energy.
Miners don’t care where energy comes from as long as it’s cheap. Energy consumed for one thing is energy that can’t be used for something else.
It almost doesn’t matter which power plant they’re closest to because we have a power grid that ties everything together. This idea of miners being isolated from the grid and consuming clean energy that would otherwise go to waste is pure myth.
> I've never understood this narrative. There is no narrative about other industries like gold mining that also consume exorbitant amounts of power that you could deem useless.
Gold is extremely useful in many industrial processes and many products. It’s not even close to “useless”.
Crypto mining is literally designed to burn power. No other industrial process is literally designed to be inefficient with energy consumption. Nothing compares.
Proof of work is an algorithm that burns power as an input to the algorithm. Miners have to burn power just to continue the existence of the currency, which isn’t comparable to one-time extraction costs of resources.
Worse, proof of work is literally designed to be more inefficient with every new miner while also incentivizing new miners to join. Can you name any other industry that incentivized everyone to do things to make the system less efficient while burning more power all of the time?
> By that logic, any use of electricity is a sink for power, which is ridiculous logic.
It isn't though. If you're using electricity for heat in the winter and generation is low for a few contiguous days, you can't just turn off everybody's heat. They'd freeze. But you could certainly stop mining Bitcoin for a week out of the year if the cost of electricity that week was high enough to make it unprofitable.
The problem with renewables isn't that they only generate power a small fraction of the time. It's that they generate power most of the time, but most of the time doesn't work for things that need power all of the time. So having things that can consume power most of the time, and thereby fund that amount of generating equipment, allows that consumption to be turned off so that extra generating equipment can service the things that need power all of the time when there is low generation supply.
You can't fully solve this problem with cryptocurrency, but it's because there isn't enough cryptocurrency -- cryptocurrency mining would have to be on the order of half of the power grid on a typical day, which is not going to happen. But it's a thing that can help rather than hurt to the extent that it exists.
The real problem is that we don't price carbon, so then people mine Bitcoin by burning coal. But they also run lights and computers and elevators by burning coal, which is just as bad and has the same solution.
> Would you consider gold mining a waste of energy?
If the amount of work put into getting it is not reciprocal to the value of the outcome, then yes I would consider it a waste. So would most commercial gold miners, I reckon.
> If you don't need to perform work of equivalent value to the money you are creating, what do you think will happen?
The work miners do doesn't give Bitcoin it's value, the supply and demand economy does. Miners are supposed to validate blocks and push the ledger forward, without an active trading economy their work is inherently wasted. That's like... Bitcoin 101 right there. God help you if you own any.
>What, you mean the simplified world ideologies don't hold up in practice to the real world? What kind of craziness is this?
Your derogatory tone is uncalled for, nothing in my comment was pro-crypto.
Stashing of small to moderate currency against a low-quality government or mafia (via the conversion of electricity) seems like one good use case of currencies. If this isn't the case, it would be genuinely interesting to know why.
> ...you should expect to spend something like 95¢ in electricity to make $1 of bitcoin
Got a quote for this 95% figure? Yes, I understand efficient markets. Presumably, a lot of the value of crypto is amortized from the hardware.
> When you look at that kind of power draw,
Your criticism relies on two unstated assumptions.
1. Large scale. If I can stash a small rig somewhere, then I can produce currency. This process doesn't require scale or major investment, so you could mine at a small enough scale to be below notice (see also: black markets). This seems like a viable way to save funds at a personal/family level.
2. Has electricity prices risen correspondingly with inflation? I would expect in a dev country electricity is subsidized or small relative to other living costs. The same energy it takes to run a home I could generate a few bucks here. A few bucks in our country is incredibly valuable right now in V.
> but there's no utility value whatsoever to that power
If you think about it, what you actually mean is that you don't recognise the utility, not that there isn't utility there. If we do a classic comparison with gold, pretty much nobody gets any utility out of the gold, and yet a tonne of gold still has very high intrinsic value because it has just enough utility to some rare people.
> It could, but that value would accrue to the person selling the energy and/or the hardware, not whoever held the token at that time.
That isn't how anything else works. Little of the value of the economy accrues to the people who mine coal or oil, but they provide most of the raw grunt to make all of everything work.
The economy doesn't have to directly link creation of value to who gets rewarded.
> Pricing electricity so low that bitcoin mining is profitable during peak hours is absurd.
Electricity is not just a discretionary commodity, it serves an essential need enabling our modern society. It makes no sense to increase electricity prices and hike up inflation for the common person in an effort to dissuade crypto miners. If we really wanted to go that way, a better solution IMO is to introduce two electricity rates, one for things that perform useful services (by broad positive impact to society) and one other for PoW crypto mining.
You do realize that power stations can increase and decrease production to scale with demand?
> Who do you sell it to? Locally? To that price-fixed monopoly who have exclusive control simply because they happen to be physically located near your very heavy and hard-to-move power station? Or do you mine Bitcoin?
If you re-route 50% of your power output to a server farm and jack up prices for everyone else because free market, the costs of all the goods and services that you require to maintain your power plant and your server and the salary that your staff requires to feed, bathe and house themselves will all go up.
Crypto bros are 21st century gold hoarders. The idea that the value of crypto/gold is 100% intrinsic to the commodity itself and not related to the social and economic context in which it exists myopic and a fundamental misunderstanding of the concept of value itself.
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