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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."
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).
So people are paying real money for electricity to then convert it to fake currency?
"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.