News NYT: Bitcoin Using More Electricity Than Finland Each Year Is Kinda Intentional

[Admin]

The New York Times reported that Bitcoin using more electricity in a year than Finland is part of its design.

NYT: Bitcoin Using More Electricity Than Finland Each Year Is Kinda Intentional : Read more

 

[USAFRet]

"In [Bitcoin creator Satoshi] Nakamoto’s system, it would make more economic sense for a hacker to spend the resources on mining Bitcoin and collecting the rewards, rather than on attacking the system itself. [...] This is how Bitcoin mining turns electricity into security. It’s also why the system wastes energy by design."


"This is how Bitcoin mining turns electricity into security. "

Now that I've stopped laughing...

 

[mikewinddale]

The NYT analysis seems pretty much correct, but the ultimate blame rests with governments who inflated their own currencies.

Economists sometimes say that fiat currency (i.e. currency not backed by any commodity) is superior to a gold standard because it has reduced resource costs. A gold standard requires mining gold, and some of the gold must be used for money instead of for other purposes, such as jewelry and electrical contacts. Using fiat currency allows all that gold to be used for other purposes, and the cost of money is reduced to the cost of paper and ink.

The problem is that fiat currency is inflationary. Not only that, but as Lawrence White has shown, more gold is being hoarded today as a hedge against inflation than was ever stored in bank vaults during the gold standard. This is demonstrated by the fact that the real (inflation-adjusted) price of gold today is higher than it was under the gold standard. In other words, the resource cost of fiat currency - measured in gold - is actually higher today than it was under a gold standard.

I would say that the electricity costs of cryptocurrencies should be added to the ledger as another cost of fiat currency. The fear of inflation has not only driven people into hoarding gold - which subtracts from the gold available for other consumptive and industrial purposes - but it has also driven people into consuming massive quantities of electricity.

Any useless waste of electricity should be ultimately blamed on governments which abused their monopoly on money to engage in inflationary finance.

If we are concerned about the electricity costs of cryptocurrency, then the solution is to privatize currency so that governments can no longer inflate. Milton Friedman proposed one feasible means of doing this: first, freeze the monetary base by prohibiting the government (and their subordinates, the central banks with government charters) from ever issuing any more currency, ever again. Second, permit private banks and financial institutions to issue their own private currency that may or may not be backed by the fixed-supply public currency. The private currency will have no legal tender law; any individual will be free to accept or reject any private currency which is offered them. Only the public currency will be a legal tender, but its supply will be frozen and fixed. Changes in the supply of money will be accommodated by changes in the supply of competitive private currencies.

Indeed, we have a historical precedent for Friedman's proposal: for most of US history, the only legal money was gold and silver coins. But for daily transactions, most people used private banknotes, not gold and silver coins. The banknotes - which were issued by private banks and had no legal tender - were essentially warehouse receipts for gold and silver that the bank stored in its vaults. And competition among banks ensured that only trustworthy banks survived, so most private banknotes traded at par, i.e. without any discount below its face value. For most Americans, a private banknote saying "1 dollar" was as good as a 1 dollar gold coin.

 

[JamesJones44]

The NYT analysis seems pretty much correct, but the ultimate blame rests with governments who inflated their own currencies.

Economists sometimes say that fiat currency (i.e. currency not backed by any commodity) is superior to a gold standard because it has reduced resource costs. A gold standard requires mining gold, and some of the gold must be used for money instead of for other purposes, such as jewelry and electrical contacts. Using fiat currency allows all that gold to be used for other purposes, and the cost of money is reduced to the cost of paper and ink.

The problem is that fiat currency is inflationary. Not only that, but as Lawrence White has shown, more gold is being hoarded today as a hedge against inflation than was ever stored in bank vaults during the gold standard. This is demonstrated by the fact that the real (inflation-adjusted) price of gold today is higher than it was under the gold standard. In other words, the resource cost of fiat currency - measured in gold - is actually higher today than it was under a gold standard.

I would say that the electricity costs of cryptocurrencies should be added to the ledger as another cost of fiat currency. The fear of inflation has not only driven people into hoarding gold - which subtracts from the gold available for other consumptive and industrial purposes - but it has also driven people into consuming massive quantities of electricity.

Any useless waste of electricity should be ultimately blamed on governments which abused their monopoly on money to engage in inflationary finance.

If we are concerned about the electricity costs of cryptocurrency, then the solution is to privatize currency so that governments can no longer inflate. Milton Friedman proposed one feasible means of doing this: first, freeze the monetary base by prohibiting the government (and their subordinates, the central banks with government charters) from ever issuing any more currency, ever again. Second, permit private banks and financial institutions to issue their own private currency that may or may not be backed by the fixed-supply public currency. The private currency will have no legal tender law; any individual will be free to accept or reject any private currency which is offered them. Only the public currency will be a legal tender, but its supply will be frozen and fixed. Changes in the supply of money will be accommodated by changes in the supply of competitive private currencies.

Indeed, we have a historical precedent for Friedman's proposal: for most of US history, the only legal money was gold and silver coins. But for daily transactions, most people used private banknotes, not gold and silver coins. The banknotes - which were issued by private banks and had no legal tender - were essentially warehouse receipts for gold and silver that the bank stored in its vaults. And competition among banks ensured that only trustworthy banks survived, so most private banknotes traded at par, i.e. without any discount below its face value. For most Americans, a private banknote saying "1 dollar" was as good as a 1 dollar gold coin.

While I agree that fiat currency and it's manipulation is a problem, I don't believe fiat manipulation is the primary driver for Crypto (it's a driver but not the primary driver). If you removed criminal activity and get rich speculation, BitCoin would probably be closer to 6000 US than 45000 US. It's become yet another asset bubble that is going to hurt a lot of people one day (along with all of the other asset bubbles out there, housing, stocks, etc.).

 

[MMorris666]

to me there isn't much difference between miners and factory's dumping waste in the sea. all for greed...

 

[Deleted member 14196]

"This is how Bitcoin mining turns electricity into security. "

Now that I've stopped laughing...

I’m still laughing

 

[PapaCrazy]

Redundancy is part of the design, not necessarily waste. Not a fan of Chia and its effect of drive prices, but at least it tried to address the energy issue by moving data away from processors and volatile storage. Oversimplifying the problem won't lead to better solutions.

 

[Deleted member 2783327]

And governments are bringing in social credit scores and going to limit how much meat you can eat, how far you can drive and other "carbon taxes". They say the we are the problem. I think they've got things wrong!

 

[Simon_78]

The NYT analysis seems pretty much correct, but the ultimate blame rests with governments who inflated their own currencies.

Economists sometimes say that fiat currency (i.e. currency not backed by any commodity) is superior to a gold standard because it has reduced resource costs. A gold standard requires mining gold, and some of the gold must be used for money instead of for other purposes, such as jewelry and electrical contacts. Using fiat currency allows all that gold to be used for other purposes, and the cost of money is reduced to the cost of paper and ink.

The problem is that fiat currency is inflationary. Not only that, but as Lawrence White has shown, more gold is being hoarded today as a hedge against inflation than was ever stored in bank vaults during the gold standard. This is demonstrated by the fact that the real (inflation-adjusted) price of gold today is higher than it was under the gold standard. In other words, the resource cost of fiat currency - measured in gold - is actually higher today than it was under a gold standard.

I would say that the electricity costs of cryptocurrencies should be added to the ledger as another cost of fiat currency. The fear of inflation has not only driven people into hoarding gold - which subtracts from the gold available for other consumptive and industrial purposes - but it has also driven people into consuming massive quantities of electricity.

Any useless waste of electricity should be ultimately blamed on governments which abused their monopoly on money to engage in inflationary finance.

If we are concerned about the electricity costs of cryptocurrency, then the solution is to privatize currency so that governments can no longer inflate. Milton Friedman proposed one feasible means of doing this: first, freeze the monetary base by prohibiting the government (and their subordinates, the central banks with government charters) from ever issuing any more currency, ever again. Second, permit private banks and financial institutions to issue their own private currency that may or may not be backed by the fixed-supply public currency. The private currency will have no legal tender law; any individual will be free to accept or reject any private currency which is offered them. Only the public currency will be a legal tender, but its supply will be frozen and fixed. Changes in the supply of money will be accommodated by changes in the supply of competitive private currencies.

Indeed, we have a historical precedent for Friedman's proposal: for most of US history, the only legal money was gold and silver coins. But for daily transactions, most people used private banknotes, not gold and silver coins. The banknotes - which were issued by private banks and had no legal tender - were essentially warehouse receipts for gold and silver that the bank stored in its vaults. And competition among banks ensured that only trustworthy banks survived, so most private banknotes traded at par, i.e. without any discount below its face value. For most Americans, a private banknote saying "1 dollar" was as good as a 1 dollar gold coin.

I am often in stunned wonder at the way some people can almost sound reasonable while essentially just trying to push their own interests and ideologies that would not only ultimately solve none of the root causes of the problems their alleged solution would allegedly solve, but let those root causes fester even more, worsening the problems.

I can't help but clap and bow at their thought processes pretzel contorting skills. Respect.

I’m still laughing

I would laugh too if the whole thing wasn't so egregiously wasteful and self-destructive.

 

[escksu]

Not this crap again....

If you want to compare, how about other uses of electricity? Eg. gaming and entertainment? How much electricity we use on entertaining and amusing ourselves?

Then there is smoking... How much electricity was used to power the machines used to create the cigarettes? Not to mention the amount of raw materials.... all the paper etc.... So, this is not a waste?

Don't get me started on street lightning in the middle of the night when there are hardly any cars on the street, no people as well.....

 

[drtweak]

Wonder what Doc Brown would think. That's enough to power 75,206 DeLorean's back to 1955! XD

 

[voyteck]

[...]
If you want to compare, how about other uses of electricity? Eg. gaming and entertainment? How much electricity we use on entertaining and amusing ourselves?
[...]

This. And how would you explain to someone from a Third World or developing country who works 8 hours a day or more for 100-150 dollars or less a month that he or she should care more for the environment? How would someone with a given or inherited flat or house would explain it to someone who can't afford more than a rented <Mod Edit> single-room flat? (I'm talking about both mining and investing).

Is this greed?

Most people have no idea how lucky they are to be born at the right place and time.

 

[InvalidError]

Took NYT long enough, I reached the same conclusions pretty much as soon as I learned what crypto-mining was about five years ago.

 

[bigdragon]

"But in general, experts say, using renewable energy to power Bitcoin mining means it won’t be available to power a home, a factory or an electric car."

The above quote is the key. If you care about the environment then you can drive an electric vehicle, install solar panels, buy efficient home appliances, reduce your water consumption, fill your yard with native vegetation, and take other steps to reduce your impact on the environment. Miners can reverse your savings and nullify your efforts instantly, all in the pursuit of crypto money. Governments trying to address climate concerns need to step up and take action.

 

[InvalidError]

Governments trying to address climate concerns need to step up and take action.

If governments were truly serious about protecting the environment, they should have banned crypto-mining about as soon as it appeared to prevent it from ever becoming a substantial resource hog.

 

[Simon_78]

Not this crap again....

If you want to compare, how about other uses of electricity? Eg. gaming and entertainment? How much electricity we use on entertaining and amusing ourselves?

Then there is smoking... How much electricity was used to power the machines used to create the cigarettes? Not to mention the amount of raw materials.... all the paper etc.... So, this is not a waste?

Don't get me started on street lightning in the middle of the night when there are hardly any cars on the street, no people as well.....

Check this out: https://digiconomist.net/bitcoin-energy-consumption

There are plenty of comparisons there that will put it into clear perspective.

For example... How much carbon is released to mine the equivalent of 1 bitcoin worth of gold VS how much carbon is released mining 1 bitcoin? You got it there. And I'll tell you right away, the comparisons aren't pretty for bitcoin.

Here are a few:

A single bitcoin transaction siphons enough energy to power an average US household for TWO MONTHS. It also releases as much carbon as 1.8 million traditionally encrypted transactions. Or as much as watching 136k hours of Youtube. ONE TRANSACTION, ONE!

A single transaction's energy cost ( 1.726 mWh ) would also power an average gaming console for:

Average console consumption per YEAR: 70 kWh.

1726 / 70 = 24.657 years.

You'd have to game on a console for more than 24 years ( the average usage of an average user, not 24/7 ) to rival ONE bitcoin transaction energy usage today ( it's only going to get exponentially worse, see below ).

We were talking about gold mining earlier? Want the figures?

CO2 for mining 1 bitcoin worth of gold: 19 tons.

CO2 for mining 1 bitcoin: 232 tons.

I checked last year, before the recent spike in bitcoin network energy usage ( it was in the 70 tWh range back then, now around 159 tWh ), and it was far from 232 tons, it's just increasing, and increasing... and increasing!

Bitcoin's network power usage since april 2017 has increased more than 16 times! 16 times in 4 years.

In math we call that exponential growth. This is pure madness.

Even those who want to push bitcoin as some kind of replacement for gold are DELUSIONAL.

I calculated the energy usage that would be necessary to transfer all transactions to bitcoin last year. If I remember well, it would take the energy generation of the whole planet ~24 times over. That was when the network was around 73tWh, which means it must be around 50 times the whole planet's energy generation now, perhaps more.

What will it take for people to realize that cryptos are good for 1 thing and 1 thing only? To the trash, never to be seen again and with a giant warning sign for all the future generations saying "NEVER AGAIN YOU IDIOTS".