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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."
"About 982 megawatt hours a day, to be exact"
982 MWh/day / 24 = ~41 megawatts
Come on reporters, convert brain-dead units into normal units.
On where the power is coming from. Wind Powered bittcoin mining wouldn't be so bad right?
The Blade Itself
982 MWH/day costs approximately $100,000 per day. Is the marginal utility of mining bitcoins worth more than $100,000 per day to the world economy? If so, carry on. If not, everybody please stop.
So we take a controlled monetary system and try to create a better monetary system and then spend effort analyzing how it fails?
.. you're kidding yourself. Quit wasting time analyzing why bitcoin isn't going to get anywhere and just accept it.
The problem with the existing monetary system isn't that it's controlled by a small group of people, it's that those people are corrupt and are manipulating the system. Bitcoin has the same problem, it's just obscured because the people 'mining' the system aren't a central group, they're a distributed group.
This is crowd sourced corruption, nothing more. If you didn't expect there to be costs related to tens of thousands of people running resource intensive software to game a system designed to protect people from responsibility
If you're able to game the monetary system, then it's lost it's value.
Continuing my tradition of using Hydro-Québec's installed capacity as a unit of measurement, this "environmental problem" is only consuming 0.0011 Hydro-Québecs.
In short, my considered advice to anybody looking at bitcoins as a way to get rich quick:....steer clear.
That's good advice for pretty near any way to get rich quick. Especially if someone is trying to sell it to you.
"First they came for the slanderers and i said nothing."
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
So once 21 million is hit...no more power is needed, because you can't generate more?
The 21 million BTC figure is asymptotic. The reward for a successful hash halves every so often as the total minted value approaches 21 million. But each Bitcoin transaction can include a voluntary "transaction fee", a tip paid to the miner who includes the transaction in the next block. After that point, miners will seek tips rather than newly minted bitcoins.
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
The other thing is that bitcoins have a finite shelf life, as opposed to precious metals which we know last almost indefinitely. Once a break is found for SHA-256 or Elliptic Curve DSA (the two cryptography primitives used by the bitcoin protocol), bitcoins will be worthless. It's not likely that this will happen any time soon, but 20 or 30 years from now? Definitely plausible. At that point, all the money spend on mining will essentially evaporate.
IANABP (I am not a Bitcoin Proponent, I own exactly 0BC and will not in the forseeable future), but I am interested in the idea and mechanisms involved.
If a break is ever found, suspected, or even slightly likely an orderly migration to better cryptographic primitives can be performed. If you are interested in knowing more the wiki enumerates all the known possible attacks.
md5sum
d41d8cd98f00b204e9800998ecf8427e
When I read that, I thought 21 million is not a lot of coins for the whole world to use. It seems screwy to me. You run into the issue that you run into with gold, if that is the case. You can't buy a loaf of bread with gold because it is worth so much.
They can be divided into something like 0.0000000001 BTC so that is not an issue, if the economy got huge you'd price stuff in milli-BTCs or micro-BTCs. But you're getting close to why people think it's a pyramid scheme, to fit a trillion dollar economy in 21m BTC the exchange rate would have to rise to almost $50k/BTC. Actually $100/BTC already seems crazy, it'd put the total value at $2100 millon - until anyone big tries to cash out anyway.
I've tried and tried to wrap my head around this, but it makes no sense to me. How can you have fractional-reserve banking if the coins have to match a digital signature? Fractional-reserve banking creates money out of thin air. How can you create bitcoins out of thin air?
Let's say people deposit 100 BTC in the bank, now the bank lends 90 BTC to others while keeping 10 BTC as a fractional reserve, that might appear as 190 BTC (100 deposits + 90 loaned out) but it is only an illusion. If the people wanted to withdraw their 100 BTC the bank would be bankrupt because it only has 10 BTC in reserves, it is waiting for the other 90 BTC to be paid back with interest. In reality you'd probably secure yourself against bank runs like that by offering fixed interest rates so people can't withdraw all at once and cause a cash shortage and the bank could lend somewhere else with the loan portfolio as security. As long as none of the loans are defaulting, there's no real problem with this.
The problem is when they are defaulting, like we saw now in the financial crisis, if those "90 BTC + interest" is full of rotten loans and only 80 BTC will ever be paid back then 80 + 10 (the reserve) = 90 BTC is less than the 100 BTC the bank owes people, the bank is bankrupt and the account holders lose part of their money. Really nothing of this is specific to Bitcoin, you can replace it with USD throughout and that is how fractional reserve banking works. Normal banks (that is, not the national bank) doesn't actually print any money, they just make it seem more if you count deposits and loans many times (since those money loaned can be deposited.to be loaned out to be deposited to be loan just minus the fraction in each round).
Live today, because you never know what tomorrow brings
Actually they already use GPUs - and there are companies making ASICs now. Dedicated Bitcoin mining boxes. The people who purchased GPUs specifically with mining in mind are apparently already annoyed, because the new computational power coming online means they are seeing less return, due to the increasing requirements as the number of mined bitcoins increases.
actually, you can. That's the whole point of the Gold Standard.
In 1925, the Gold Standard in England was set at three Pounds twenty Shillings and change. The Bank of England was authorised to print gold certificates (later to become promissory notes) to nine times the amount of gold it held in its vaults. In 1931, the 1925 Standard was abolished, and the BoE was authorised to not only deny any requests to make good on any certificate, they were authorised to print even more certificates to the total amount of national and Government debt(!), add the words "I promise to pay the bearer on demand the sum of..." on all its new issue promissory notes (they weren't called certificates now) and also the phrase "This note is legal tender for any debt" (or something like that). What this created was a fiat currency that had by 1932, a gold backing of something like .01%, and by the time decimalisation kicked in in 1971, the amount of gold ratio to the amount of currency in circulation was so low as to constitute a rounding error no computer of its time could calculate. What we have now since even the Silver Standard is abolished is like the United States, a currency that has zero intrinsic value (it is literally worth even less than the paper it was printed on), it's current value being based on the amount of book debt held by the banks against the amount of currency in circulation measured against similar situations of other currencies. If the Dollar takes a dive, Sterling follows. If the Euro falls off a cliff, as it has done since its inception, so does the Dollar. The only thing that keeps any of these currencies afloat is the seizure of lands and properties resulting from subpar mortgaging and artificial hiking of house prices, and the sheer audacity of private financial institutions in their recent activities in Cyprus and Ireland. At least Iceland had the balls to tell the bankers to go fuck themselves.
Operation Guillotine is in effect.
No, the bank can loan out 95 strawberries. If those 95 loaned strawberries are deposited in another bank, that bank can loan out (95*.95) strawberries. If those strawberries are loaned out, and deposited again, now we're up to (95*.95*.95) strawberries, and an equal number of strawberry IOUs. If this process happens an infinite number of times, eventually the number of strawberry IOUs will be 2000. But every single deposit or loan will have involved a real strawberry.
Again, the government actually can create fiat currency by taking a piece of paper and writing "$100" on it, but fractional reserve banking always balances inputs and outputs. And despite what somebody upthread implied, it's been around since the middle ages.
Although I agree that it is not a pyramid scheme in the classical sense, it shares some similarities. By designing the algorithm to have exponential complexity, the creators definitely designed it in their favor. The reason why it works and the price is rising, is because there are more and more users joining, if it was not the case the price of Bitcoins would slowly fall as the volume rises but the value is constant. This is the second similarity to a pyramid scheme, in that to sustain the current trend of raising price, it needs to have more value flowing into it. The current state of affairs is similar to a pyramid scheme.
On the other hand I would not know how to design a hashing scheme, that is not exponentially complex as the uncovered hashes exhaust. In addition the economic implication is interesting, once the Bitcoins are all uncovered, there is no room for any fiscal policy. Currently the most of the rise of Bitcoin is not about actual Bitcoin use, but rather economic speculation. And this will be a fun bubble to see burst.
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.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Like getting in early to any company stock early adopters will usually benefit.