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Is Bitcoin Mining a Real-World Environmental Problem?
First time accepted submitter HeadOffice writes "Mark Gimein points out that Bitcoing mining uses a lot of power, enough that it is a real world problem: 'About 982 megawatt hours a day, to be exact. That’s enough to power roughly 31,000 US homes, or about half a Large Hadron Collider. If the dreams of Bitcoin proponents are realized, and the currency is adopted for widespread commerce, the power demands of bitcoin mines would rise dramatically. If that makes you think of the vast efforts devoted to the mining of precious metals in the centuries of gold- and silver-based economies, it should. One of the strangest aspects of the Bitcoin frenzy is that the Bitcoin economy replicates some of the most archaic features of the gold standard. Real-world mining of precious metals for currency was a resource-hungry and value-destroying process. Bitcoin mining is too.' However, not everyone is convinced that virtual mining is as bad for the environment as the real thing."
It's not quite that simple. Fractional-reserve banking creates promises of money out of thin air. You can do fractional-reserve banking with gold coins, barrels of oil, strawberries, or any other commodity.
Even that's not quite fair to say, because every promise of money created is created at the same time as a right to future money, so the total net amount of money isn't changed.
Many people get f-r banking and fiat currency confused.
Sorry, but there is a mechanism built in to the algorithm to prevent that from happening.
The truth is that all men having power ought to be mistrusted. James Madison
On where the power is coming from. Wind Powered bittcoin mining wouldn't be so bad right?
No. Electrical energy is fungible. So if you use wind power, there is less wind power available for others, so they have to use more coal power (or whatever). The result is the same as if you had just used the coal power directly. The only way it would make a difference is if the wind power was otherwise going unused (unlikely).
it's a rounding error.
So is every car on the planet, but that doesn't mean we don't consider the output of those cars, does it?
Little things tend to add up quickly when you're paying absolutely no attention to efficiency.
Persistent Volume manager for Kubernetes - https://github.com/dwimsey/openshift-pvmanager
So people are paying real money for electricity to then convert it to fake currency?
you can exchange it for other currencies or goods & services, how exactly is it a fake currency?
This is a joke. I am joking. Joke joke joke.
Not really. Say your energy grid has 100MW wind and 500MW coal and you're using 400MW. If your BitCoin mining adds 100MW consumption, you could always say it's using 100MW of wind power, but then that means whatever was using that power before now derives it from coal. It's just swapping numbers around.
Yes, it'd be hard to remove wind power from others, but that's only potential available energy, it's not realized and thus entirely irrelevant to the discussion, unless BitCoin mining magically builds wind farms.
CONGRATULATIONS, sir, you have picked door #2, marked "Bitcoin mining will eventually stop." Behind that door we have ... that bitcoin is a pyramid scheme. Also, congratulations to the zombie botnet owners of the world, who will soon be owning most bitcoin.
How very fortunate you did not pick door #1, the door marked "Bitcoin mining will pay for itself in perpetuity." Behind that door you would have found a colossal waste of resources. For every unit of value a bitcoin represents, the same value would be wasted by the mining machines, leading to economic loss and global warming escalation.
Bitcoin is a cool technology experiment - but in the end, it's just a bad idea.
"I mean the guys could make a mint that got in on the ground floor, because mining was super duper easy, but as more and more enter it becomes harder and harder and now I seriously doubt anyone that isn't stealing the electricity will ever break even."
That isn't why they made a killing. First, it wasn't "super duper easy" even in the beginning. I made a couple of bitcoins back in the early days, and it took my laptop grinding away for a total of about a couple of days each (I ran it overnight when I was sleeping).
That's not "super duper easy" when you consider that a Bitcoin was only worth about 50 cents to a dollar. You were lucky if you broke even on the electricity.
Most of the people who made lots of money in the market were not bitcoin miners (though that has probably changed if anybody has half a brain). It was the investors. People who bought bitcoins hoping their market value would go up.
But there's a problem with that, too, see. Last I checked (which wasn't very long ago), it was costing in the neighborhood of around $30 to mine a bitcoin, if you add up the amortized equipment cost, time and electricity. Yet Bitcoins went up as high as $250.
Wouldn't you like to be able to make something for $30 and sell it for $250? Yeah, me too. Of course it's down from that now but it's still selling for about 5 or 6 times what it costs to make. That's a pretty good markup. So people who are making bitcoins TODAY are making a killing. Not just the initial investors (though they did pretty well).
Which of course means more people will make Bitcoins, which means the price will come down, until the difficulty (cost) of making them is not that far from market price.
All you are seeing right now is a bubble. As long as they are selling for lots more than they cost to make, you are going to have an irrational, lopsided market that could crash at any time. But it's hardly a "pyramid scheme". There is lots of opportunity right now for somebody to invest in hardware and make a lot of money... if they do it quick.
I'd like to see your conversation with the salesperson at a checkout point of a supermarket with you trying to pay for other purchased goods (of matching value) with a bag of potatoes.
It would be the same conversation that would occur were I to try paying with bitcoins.
Which brings us in a rather circular way back to the original point: there is no practical difference between someone accepting payment in bitcoins and someone accepting payment in a bag of potatoes. "Accepting payment in $FOO" doesn't make $FOO a currency, or money or tender of any sort. Criteria for what constitutes a currency is high enough that it disqualifies precious metals, after all. Bitcoin doesn't (yet?) satisfy the criteria for being a currency.
Now, it's possible that in the future bitcoins will satisfy the criteria for being a currency and everyone will trade in it ... then you run into the same problem that we ran into with precious metals and cowrie shells: there is no match between the "currency" and the value it is supposed to represent (which is why precious metals were eventually abandoned as currencies).
Ironically, by following the same model used by precious metals (mining a finite resource at a specified and hard-to-change rate), bitcoins are doomed to be abandoned as currencies too ... that's if they ever get adopted as currrencies - but I'm willing to give it the benefit of the doubt and say that it will one day achieve critical mass and take off, only to be shot down later when it runs into the same problems that gold and silver and diamonds and bronze and tools and cowrie shells and cows and goats and poultry ran into.
(If you'd like to read more email me; I'm about 75% done with a tiny eBook on money and it's development. There will eventually be a bitcoin section in there).
I'm a minority race. Save your vitriol for white people.
It is isn't a pyramid scheme, it is just ruined by speculators. And the worst kind of speculators, the dumb kind that buys gold from vending machines because prices are at record heights.
If you know ANYTHING at all about successful speculation, you know that you buy LOW and sell HIGH. The dumb speculators are however slow as well as dumb and only dive on say speculating in gold when prices are already high. Buy Apple stock 10 years ago. Smart. Buying Apple stock right now. Dumb.
Bitcoin is seen as having a high value right now, like say comic books had a while ago and dumb people think that this is then worth investing in with the logic that if you buy high, you can sell at even HIGHER! And really cleanup!
It doesn't tend to work that way. Instead, you can buy high because smarter speculators are SELLING high and they are selling because they don't think it is going to go any higher. Bitcoin as a anonymous paypal alternative has some merrit. As an investment, not so much. As a currency, none whatsoever. It would be like creating a currency out of comic books or bottle caps.
Fallout fans may be familiar with that idea, it is silly but do you fully understand HOW silly it is? Bottle caps were garbage once. How can you put a real world value on an item someone may at any point find a whole stockpile off, or worse, the machines that make them in the millions? North Korea has its defacto currency, the US dollar. Even loyalty taxes to the state have to be paid in it. NK ALSO had projects to create huge piles of counterfeit US dollars. Some ended up in the rest of the world but the majority of counterfeit US dollars is in NK circulation. NK has flooded its own economy with counterfeit currency they can't even hope to spend anywhere because if you had any brains and a North Korean handed you a wad of dollars you check every note individually.
Almost anything can be used as a currency, and has. Stamps have been used as currency almost exactly as Terry Pratchett described it in one of his latest books. In fact, paper money is an alterntive not that different from bitcoin to using real precious metals as barter counters. Nobody has a need for gold however, it was just for thousand of years convenient to barter for goods with a in between mechanism of gold/silver. I trade you my chickens for X gram of precious metal I have no need off because I know that I can barter that for clothes with that other guy.
ANYTHING will do for that, and has. There have even been cases of shops creating their own low currency for giving chance to small for real currency. You give me your silver coin and I give you produce and a chit saying that you still have some spending power left in this shop.
But what you NEED for a currency to be usable is some stability. Deflation is bad because it causes people to hoard and to much inflation hurts as well because if you pay me now, I will have far less tomorrow. Rampant speculation causing a currency to go rise and fall thousands of percent are useless. How am I going to price my goods when every second the currency has a different value.
Say you are going to sell beer for REAL (and not just as a novelty value, bars can afford to "sell" some beer just for a smile if 99% of the customers buy it for hard cash) for 1 bitcoin you might get within a day get anywhere between a dollar and a 400 dollars.
There is a reason people talk about HARD cash. Hard cash needs to be hard, have a consitent value. Salt worked once because people had a stable need for salt, a stable market existed so it could be reliable used to barter with. Comic books, baseball card, tulip bulbs and bitcoins don't.
It makes no sense to invest in it, you can only speculate in it if you understand what buying low, selling high really means AND until the idiot speculation stops it is even useless as a paypal alternative because you can't mark your products in bitcoins when that goes up and down per minute.
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