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.<p>Bitcoin however <i>is</i> money. As well as being a payment system.<p>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 and trillion dollar military to keep the currency secure and desirable.
> Electricity consumed per transaction: 165 kWh<p>Thats about $20 in the US.<p>If a transaction is <i>that</i> expensive, how can this system even work for transactions with a value of that order? Are large transactions "sponsoring" small transactions?<p>What happens if more people use the system for small transactions? Will BTC become unusable?
The statistic that stands out to me from this article is that 1 bitcoin transaction uses enough energy to power 5.58 us households for a day.<p>I'm hoping someone more knowledgeable about bitcoin can comment - is it likely that this will continue as the mining reward decreases? How expensive will transactions be after that happens? And if smaller rewards reduce total mining and power consumption, how vulnerable does the blockchain become to attack?<p>What i'm wondering is if transaction costs in the 'end state' of bitcoin can be competitive with centralized competitors like credit cards, paypal, etc. given this level of power consumption?
Long term outlook for mining isn't good. Ethereum, for example, is moving toward Proof of Stake (<a href="https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ" rel="nofollow">https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ</a>), and Bitcoin will become less profitable for miners soon, beginning with the activation of Segwit.<p>The reason for the recent Bitcoin Cash fork, was that miners are terrified of losing control given the substantial investment required to maintain profitability. I don't think Satoshi ever thought mining would become so profitable, centralized, and political. If Satoshi had, he or she may have rethought the mining aspect of Bitcoin.<p>It's the end of days for mining as we know it.
Just another thing people went wild for without thinking about externalities. You don't need to be a genius computer scientist to realize a thing that requires a constantly rising amount of processing power just to keep pace will eventually need an unreasonable amount of power.
The energy expended is a guarantee of security and immutability.<p>The fact that real world energy is expended is the thermodynamic guarantee of the irreversibility of a transaction.<p>If you have access to the VISA database, and change something, you cannot have the cryptographic proof that it has not been tampered with. At the very best, you trust a VISA root key.<p>With Bitcoin you trust math and physics, telling that if the whole network has expended 1TWh after my transaction, at least twice that energy will be necessary to reverse it, and the only data i need to prove that, is the blockchain.
Spending 800M$ a year in electricity alone to run a digital currency is massive and at 8$ per transaction seems incredibly inneficient. The comparison to the VISA network is incredible. Independently of your opinion of the value of Bitcoin in the long term the current network is definitely not more useful to society than the VISA network.
BECI is flawed, I wrote a critic of it some months ago: <a href="http://blog.zorinaq.com/serious-faults-in-beci" rel="nofollow">http://blog.zorinaq.com/serious-faults-in-beci</a><p>This motivated me to research and publish a more precise energy comsumption estimate, and I have been published in Bitcoin Magazine: <a href="http://blog.zorinaq.com/bitcoin-electricity-consumption" rel="nofollow">http://blog.zorinaq.com/bitcoin-electricity-consumption</a> <a href="https://bitcoinmagazine.com/articles/op-ed-bitcoin-miners-consume-reasonable-amount-energy-and-its-all-worth-it/" rel="nofollow">https://bitcoinmagazine.com/articles/op-ed-bitcoin-miners-co...</a><p>I always like to remind people that Bitcoin miners consume about the same amount of energy as Christmas decorative lights in the US. Kinda puts things in perspective...
Apparently "terawatt-hours per year" is a unit that people use in public policy, but it strikes me as strange. Converting 16.22 TWh/year to a "more metric" unit, that's a sustained power usage of 1.85 gigawatts.<p>So Bitcoin is constantly using more than enough power to make Doc Brown's eyes bug out.
This is one of the reasons I prefer proof-of-stake schemes, despite the complexity, low power consensus is preferable given roughly equivalent tamper resistance. State collusion with mining pools is a credible threat to proof-of-work schemes.
PoW needs to die.<p>PoS can be superior to PoW in every way except the problem of initial wealth distribution. PoW solves this problem elegantly. PoS currently has no meaningful alternative to this distribution method.<p>What Ethereum is doing with using PoW to bootstrap wealth and then transition to PoS looks like a winning combination.
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.<p>Anyone have any sense of how accurate either of those is?
... Speaking of environmental externalities,<p>In the US, "Class C" fire extinguishers work on electrical fires:<p>From Fire_class#Electrical:<p><a href="https://en.wikipedia.org/wiki/Fire_class#Electrical" rel="nofollow">https://en.wikipedia.org/wiki/Fire_class#Electrical</a><p>> Carbon dioxide CO2, NOVEC 1230, FM-200 and dry chemical powder extinguishers such as PKP and even baking soda are especially suited to extinguishing this sort of fire. PKP should be a last resort solution to extinguishing the fire due to its corrosive tendencies. Once electricity is shut off to the equipment involved, it will generally become an ordinary combustible fire.<p>> In Europe, "electrical fires" are no longer recognized as a separate class of fire as electricity itself cannot burn. The items around the electrical sources may burn. By turning the electrical source off, the fire can be fought by one of the other class of fire extinguishers [citation needed].
The reward for mining a block will go down over time. In the end, all mining will be financed via the transaction fees. Then the market will figure out how much energy should be used per transaction.
What the article fails to take into account is the huge volatility of BTC relative to the USD. So if you are going to make this calculation over a whole year then you have to split it up into many small calculations (for instance, per block with the going rate of BTC:USD at the time) and then accumulate in USD.<p>On another note: a very large fraction of all bitcoin mining is happening in China and electricity cost there is quite different compared to the USA.<p>So I seriously question the prime assumption leading to the quoted energy consumption.
It's such a waste of energy in a planet already burdened with climate change we worsen annually. Greed is crazy. What this is wasting is painful to see.
This is a stupid comparison. The number of transactions can be increased by a factor of a 1000 easily while holding the amount of energy expended constant.
Why don't we compare Bitcoin's energy footprint with that of all the banks, remittance shops and associated infrastructure instead?<p>The PoW is quite expensive, but remember that mining is a subsidised activity amounting to billions of dollars worth of rewards for the miners, many of whom make extensive use of hydro-electric and solar power.<p>There's the question of wether we need all this hashing power to protect the billions of dollars worth of bitcoin market cap.
The truth is that ASICs mining was not anticipated and neither was the "arms race" that made mining into a profession. With Proof of Stake consensus algorithms taking front stage in Ethereum, EOS and other blockchain projects, PoW is bound to be abandoned or significantly changed.
While it's a lot of power being used, it's pretty much all automated, versus any other currency that takes a lot of manual labor. Bitcoints biggest flaw in my mind is that there is no trust built in. After each transaction it should be possible to give a rating, so that each wallet/account has a reputation, it could work like "Pagerank". Trust is essential to Bitcoin and Bitcoin markets usually has either public trust, or rating and escrow added on.
I always thought it was purely ridiculous that bitcoin requires mining which eats energy. So freaking ugly. The genius that created bitcoin could not see that the cheapest form of energy is coal and that his idea will just spew more CO2 into the atmosphere. Or somehow this genius could not see that? OK, yes... Iceland's geothermal energy.
How does this compare to carbon-intensive resource extraction operations like gold mining?<p>(Gold is industrially and medically useful, IIUC)<p>See also:<p>"So, clean energy incentives" <a href="https://news.ycombinator.com/item?id=15070430" rel="nofollow">https://news.ycombinator.com/item?id=15070430</a>
Bitcoin is the very essence of the free rider problem, it derives its value from illicit goods and money laundering and uses real resources at an incredibly inefficient rate to do so.
Well...yeah. It's kind of by design, right?<p>I mean, it's either "work" or centralization, so that's the trade off bitcoin makes. The work is the disincentive against cornering, right?
Taking lots of energy is literally the point of proof-of-work. Criticizing Bitcoin mining for using lots of energy is like criticizing DNA evidence for being hard to fake.
The article says that Bitcoin could switch to proof-of-stake. Can it really do that and stay Bitcoin? I'm sure it would require at least blockchain split...
I'm really confused by this article. Sometimes it seems like they're talking about bitcoin mining, then they start talking about transactions.
Note: Ethereum adds another 30% and is rapidly rising.[1]<p>[1] <a href="https://digiconomist.net/ethereum-energy-consumption" rel="nofollow">https://digiconomist.net/ethereum-energy-consumption</a>
I'm saddened with how many technologists here think of money.
As if our current system of fiat currency is in any way reliable, let alone at the ultimate stage of its evolution as a technology of wealth transfer.<p>If I look at the US currency as a technology that enables trade and cooperation, I notice:<p>- falsifiable; see the North Korean super dollar;<p>- pieces of metal alloy; coins are a souvenir from the past we shouldn't be bringing them into the future.<p>- porous fibre carry bacteria; See here: <a href="http://www.newsmax.com/health/Health-News/paper-money-germs-bacteria/2014/04/21/id/566829/" rel="nofollow">http://www.newsmax.com/health/Health-News/paper-money-germs-...</a><p>This makes me doubt if I can trust it and unlikely that I'll carry it on me.<p>On the other hand Bitcoin and other cryptos are currencies from the future that we all can buy and use today.<p>These are currencies designed to assure trust between unknown parties, so they are most definitely a means of exchange with no significant counter-party risk.<p>As a store of value, they suffer from the same speculative price fluctuations all too common in the FX markets, as we can see with the GBP over the last year or so. In crypto, this natural movements are amplified because there are no jurisdictions and very low barriers of entry, so when the coin supply doesn't increase to meet the demand prices go up, as they should. And lets not forget that several countries have already moved to recognise crypto-currencies as legal tender, so demand is increasing by reaching wider portions of consumer market.<p>As for crashes, to the best of my recollection, all major ones were caused by panic selling following news of major hacks (<a href="https://storeofvalue.github.io/posts/cryptocurrency-hacks-so-far-august-24th/" rel="nofollow">https://storeofvalue.github.io/posts/cryptocurrency-hacks-so...</a>) or rumours of impending legislative crackdown in China and now in the US.<p>The intrinsic value of crypto-currencies is in the platforms that support them, so not only the market cap but also what the project stands for and what it can deliver in terms of market proposition, for instance:<p>- Ether is used to pay for resource utilisation on the Ethereum platform which I use to develop smart contracts, but the Foundation is re-inventing the internet so that's how I value the currency.<p>- Monero, ZCash are in the forefront of cryptographic research and are some of the most accessible and privacy protecting financial instruments available so that's how I value them.<p>- Bitcoin is all about economic resilience and self-sovereignty, unfortunately the in-fighting is bound to decrease its usefulness.<p>(edit: formatting)
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.