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BurtW

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Quote from: btchedge on July 13, 2014, 04:30:31 AM

Interesting discussion...

RE: Solar and Wind - For every megawatt of solar or wind power added to an ISO there must be a megawatt of NG, coal or nuclear power deployed in order to maintain stability of the grid. ISOs such as ERCOT must have the ability to maintain stable supply / frequency which means if a wind farm is feeding the grid then ERCOT must have adequate firm fixed generation capacity such as NG fired spinning reserves to ramp up as the wind stops blowing.

The only way to avoid the need to provide an equal amount of traditional generation to pair with your wind or solar is if you have the energy storage capacity to create an adequate reserve. Batteries are still cost prohibitive as are most other methods. The other option would be to curtail operations as the wind and sun stop blowing or shining.

RE: Huge Opportunity That Bitcoin Is Perfectly Suited For - When you start to look beyond the traditional constraints of the existing grid and fuel transportation networks you will find that Bitcoin is perhaps one of the best suited technologies to leverage abundant energy resources that are hiding in plain site. Rather than spoil it by elaborating too soon I am curious to know if any of you smart people know what I am referring to. Anyone?

The world could be completely solar, just make an array that circles the globe and it will have sun 24/7 no need for other power generation tech.

There is no way to transmit the power needed from the sunny side to the dark side. Sorry.

btchedge

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Interesting discussion...

RE: Solar and Wind - For every megawatt of solar or wind power added to an ISO there must be a megawatt of NG, coal or nuclear power deployed in order to maintain stability of the grid. ISOs such as ERCOT must have the ability to maintain stable supply / frequency which means if a wind farm is feeding the grid then ERCOT must have adequate firm fixed generation capacity such as NG fired spinning reserves to ramp up as the wind stops blowing.

The only way to avoid the need to provide an equal amount of traditional generation to pair with your wind or solar is if you have the energy storage capacity to create an adequate reserve. Batteries are still cost prohibitive as are most other methods. The other option would be to curtail operations as the wind and sun stop blowing or shining.

RE: Huge Opportunity That Bitcoin Is Perfectly Suited For - When you start to look beyond the traditional constraints of the existing grid and fuel transportation networks you will find that Bitcoin is perhaps one of the best suited technologies to leverage abundant energy resources that are hiding in plain site. Rather than spoil it by elaborating too soon I am curious to know if any of you smart people know what I am referring to. Anyone?

BurtW

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Quote from: dothebeats on July 12, 2014, 04:47:43 AM

I was looking for an analysis that's something like this. You helped me save hours of searching through the internet.
Back to the topic, if more and more energy efficient miners come out, then the energy consumption of the whole network would decrease. But if widespread adoption of bitcoin ever happens, then the energy consumption would again plummet up and may become an issue because it may cause the global consumption of energy to rise up too. Great analysis though, thanks for helping me understand the maths here. Cheesy

You are welcome!

What you said here is not true:

Quote

if more and more energy efficient miners come out, then the energy consumption of the whole network would decrease.

What is true is:

If more and more energy efficient miners come out, then the energy consumption of the whole network would stay the same. This is because people just buy more and more of these more energy efficient miners. They will keep buying more equipment and adding to the hashrate and difficulty until they bring the power consumption back up to the maximum level allowed by profit.

So as I have said before many times efficiency does not enter into this equation:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

only the following parameters:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

Notice that price (the exchange rate x) does enter into the equation so what you said here:

Quote

if widespread adoption of bitcoin ever happens, then the ~~energy consumption would again plummet up and may become an issue because it may cause the~~ global consumption of energy to [would] rise

This is because widespread adoption would drive the price higher and price does enter into the global energy consumption equation.

hashman

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Quote from: STT on July 10, 2014, 10:45:49 PM

Anyhow I think moores law will reduce electric cost over time until the network consumes no more then a LED readout on any device.

You are missing something fundamental about the mining here. If bitcoin is worth X in 2020 that means miners will spend 12.5X on electricity every 10 minutes in 2020. It will be worth it for miners to spend that much on power; that's what we mean by "worth X". No technological improvements can change that, it is the fundamental algo of bitcoin that miners get new coins. If coins are worth more they will spend more on power.

dothebeats

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Cashback 15%

I was looking for an analysis that's something like this. You helped me save hours of searching through the internet.
Back to the topic, if more and more energy efficient miners come out, then the energy consumption of the whole network would decrease. But if widespread adoption of bitcoin ever happens, then the energy consumption would again plummet up and may become an issue because it may cause the global consumption of energy to rise up too. Great analysis though, thanks for helping me understand the maths here. Cheesy

BurtW

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All the posts about efficiency and Moore's law and power consumption per device are totally off base. Also your comment about people who mine when it is not profitable is really off base because that behavior makes things even worse as far as the total power consumed by the network goes.

The amount of power consumed is proportional to the amount of available income in the mining process. More efficient mining hardware just leads to more miners and a higher difficulty, it does not affect the total power consumption.

DannyElfman

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Quote from: halfawake on July 08, 2014, 11:38:29 PM

Quote from: DannyElfman on July 08, 2014, 10:45:46 PM

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

They might, if we ever get to the point (many years into the future) where fiat becomes obsolete. The advantage of credit cards is, at least in part, for people living paycheck to paycheck, they can spend money that they don't have yet and pay the bill later when they've been paid. But I agree with your overall point, it does seem rather counter-intuitive that someone would use both a credit card and bitcoins at the same time. Debit cards would make more sense, though.

Debit cards would make even less sense then credit cards as they have the same costs as credit cards but would not have your counter point as above.

I doubt that any crypto would ever be so widely used that fiat would become obsolete as it is near impossible to garnish bitcoin from someone. Today for example if you were to spend $5,000 with your credit card, then simply don't pay your credit card bill despite having the ability to do so and have say $10,000 in your bank account then the credit card company can get a judgment against you and the court can order your bank to give the credit card company the $5,000 that you owe out of your account via a garnishment. This would simply not be possible with bitcoin.

halfawake

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Quote from: STT on July 10, 2014, 10:45:49 PM

Quote

I did it just by buying bitcoins rather than spending money on mining gear. Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

I think comparative advantage is applicable to that one. It might be expensive and pointless to some but some parts of the world have much lower electricity costs. This can be seen in aluminium processing which favours local low electric costs but many parts of the world this business is not profitable afaik.

Bitcoin has the advantage of being highly transportable work so more then anything this rules applies. It would make sense for those stuck with old bad equipment to maybe sell it in bulk to the low cost parts of the world.

Anyhow I think moores law will reduce electric cost over time until the network consumes no more then a LED readout on any device. On average of course and I get that difficulty must keep rising and so people assume higher electric cost but I dont think its about electric it'll be about technology cost and in the end R&D and maybe silcon production will be the networks processing cost more then other factors

You're quite right that electricity is cheaper in some places in than others. I only hope for the environment's sake that the bitcoin miners are gravitating towards places like Iceland which has plentiful renewable power rather than places that are cheap simply because the electricity is subsidized. I don't buy your comment about Moore's law though, bitcoin mining is an arms race for getting the best gear the fastest. While that gear may become more efficient eventually, I'd be incredibly surprised if it ever uses that little power.

In any case, Moore's law typically applies to processor speed, not power usage. Also, the other reason I don't buy it is that Moore's law is treated by some like it's an immutable thing that's set in stone. It's not, scientists very close to reaching the physical limits of how much they can cram into one chip. So I'd be surprised if Moore's law continues into the future very long like it has in the past thirty years.

STT

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I did it just by buying bitcoins rather than spending money on mining gear. Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

I think comparative advantage is applicable to that one. It might be expensive and pointless to some but some parts of the world have much lower electricity costs. This can be seen in aluminium processing which favours local low electric costs but many parts of the world this business is not profitable afaik.

Bitcoin has the advantage of being highly transportable work so more then anything this rules applies. It would make sense for those stuck with old bad equipment to maybe sell it in bulk to the low cost parts of the world.

Anyhow I think moores law will reduce electric cost over time until the network consumes no more then a LED readout on any device. On average of course and I get that difficulty must keep rising and so people assume higher electric cost but I dont think its about electric it'll be about technology cost and in the end R&D and maybe silcon production will be the networks processing cost more then other factors

halfawake

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Quote from: halfawake on July 09, 2014, 11:00:38 PM

Quote from: ?? on ??

We may "bet" that the environment will be significantly more energy efficient than today. It is still a bet.
The quantity of electricity used by the blockchain is not a bet ; it is directly proportional to the price of one bitcoin.

Not really. It's more proportional to the number of miners because the electrical use is pretty much all from mining. Of course, greed being what it is, the higher the price of bitcoin goes, the more people are likely to mine, so in a correlational sense, you're probably right, but it's definitely not cause and effect.

I personally think you have some flaws in your analysis. One of them is the fairly mythical concept of the rational person. One example of this is sunk costs, you're right that a rational minor should ignore the cost of the mining rig. I do my best (and probably a fairly good job) of applying the concept of sunk costs to my own life. But a lot of people don't, even people who should know better. So I suspect that a lot of miners continue to mine even if it's unprofitable with their miner from an electricity standpoint simply because they've seen the huge runup in price and hope that this trend will continue over time.

Granted, you did point out these caveats in your own reply to your post. I just feel that they should be more prominently in the actual analysis because I strongly suspect that a lot of miners are speculating on an increase in price so they continue to mine, whether or not it's profitable. I can understand the idea, I'm speculating too, but I did it just by buying bitcoins rather than spending money on mining gear. Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

halfawake

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Quote from: ?? on ??

We may "bet" that the environment will be significantly more energy efficient than today. It is still a bet.
The quantity of electricity used by the blockchain is not a bet ; it is directly proportional to the price of one bitcoin.

Not really. It's more proportional to the number of miners because the electrical use is pretty much all from mining. Of course, greed being what it is, the higher the price of bitcoin goes, the more people are likely to mine, so in a correlational sense, you're probably right, but it's definitely not cause and effect.

BurtW

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Here is my entire spreadsheet, I was too lazy to format it last night:

Code:

    Original target      Subsidy    Est Fees   Power
Era   starting year    BTC/block    BTC/hour      GW
--- ---------------  -----------  ----------  ------
  0            2009  50.00000000  0.00000000  270.00
  1            2013  25.00000000  0.00000000  135.00
  2            2017  12.50000000  0.00000000   67.50
  3            2021   6.25000000  0.00000000   33.75
  4            2025   3.12500000  0.00000000   16.88
  5            2029   1.56250000  0.00000000    8.44
  6            2033   0.78125000  1.31250000    5.40
  7            2037   0.39062500  3.65625000    5.40
  8            2041   0.19531250  4.82812500    5.40
  9            2045   0.09765625  5.41406250    5.40

BurtW

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All paid signature campaigns should be banned.

That is an interesting point with respect to the dream of having 1 BTC = $100,000 (or pick your favorite high number).

Using my previously derived formula for the power consumption:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

where:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

we can look at the power consumption in each era assuming a price of $100,000 per BTC.

In order to make it simple I will make the following assumptions:

x = $100,000 per BTC
f = fees per hour will keep the coinbase above 6 BTC/hour (1 BTC/block) in all eras
c = $0.10 per kWh
g = 0.1 miner gross profit margin

Code:

    Original target      Subsidy    Est Fees   Power
Era   starting year    BTC/block    BTC/hour      GW
--- ---------------  -----------  ----------  ------
  0            2009  50.00000000  0.00000000  270.00
  1            2013  25.00000000  0.00000000  135.00
  2            2017  12.50000000  0.00000000   67.50
  3            2021   6.25000000  0.00000000   33.75
  4            2025   3.12500000  0.00000000   16.88
  5            2029   1.56250000  0.00000000    8.44
  6            2033   0.78125000  1.31250000    5.40
  7            2037   0.39062500  3.65625000    5.40
  8            2041   0.19531250  4.82812500    5.40
  9            2045   0.09765625  5.41406250    5.40

shrekster

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I have to imagine energy consumption is through the roof.

halfawake

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Quote from: DannyElfman on July 08, 2014, 10:45:46 PM

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

They might, if we ever get to the point (many years into the future) where fiat becomes obsolete. The advantage of credit cards is, at least in part, for people living paycheck to paycheck, they can spend money that they don't have yet and pay the bill later when they've been paid. But I agree with your overall point, it does seem rather counter-intuitive that someone would use both a credit card and bitcoins at the same time. Debit cards would make more sense, though.

DannyElfman

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Quote from: ernie- on July 08, 2014, 06:35:43 AM

Quote from: halfawake on July 08, 2014, 04:34:22 AM

If not them, then who would you compare bitcoin to? I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc.

I picked a major player in the traditional financial system to choose to compare. But if you want to say that it's a flawed comparison, then you're missing the point here. The point is if you're going to make a comparison, you have to compare bitcoin to something. And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do. So...what would you compare bitcoin with? If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do.

The comparison flawed, it's like trying to compare cars to roads, it just doesn't make sense. The Visa style payment gateways sit on top of the currencies. Visa could easily add Bitcoin as one of the supported currencies. Visa chooses to use fiat atm, but I can see it adding some crypto in the future, and it's infrastructure or energy consumption will hardly need to change as it wont be mining the crypto.

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

Febo

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I sometimes think Satoshi was pushed by Energy lobby's.

ernie-

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Quote from: halfawake on July 08, 2014, 04:34:22 AM

If not them, then who would you compare bitcoin to? I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc.

I picked a major player in the traditional financial system to choose to compare. But if you want to say that it's a flawed comparison, then you're missing the point here. The point is if you're going to make a comparison, you have to compare bitcoin to something. And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do. So...what would you compare bitcoin with? If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do.

The comparison flawed, it's like trying to compare cars to roads, it just doesn't make sense. The Visa style payment gateways sit on top of the currencies. Visa could easily add Bitcoin as one of the supported currencies. Visa chooses to use fiat atm, but I can see it adding some crypto in the future, and it's infrastructure or energy consumption will hardly need to change as it wont be mining the crypto.

halfawake

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Quote from: ernie- on July 08, 2014, 03:44:03 AM

Quote from: halfawake on July 08, 2014, 02:12:58 AM

Quote from: smoothie on July 08, 2014, 02:09:31 AM

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

For now, perhaps. But how big would this energy consumption be if the bitcoin network were as big as a traditional major finanical company like, say, Visa? We should strive to do better than fiat is doing, not merely being not as bad as the traditional system.

Visa don't mine coins, their network has nothing to do with the creation of money, the banks do that for them. Your comparison is flawed.

If not them, then who would you compare bitcoin to? I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc.

I picked a major player in the traditional financial system to choose to compare. But if you want to say that it's a flawed comparison, then you're missing the point here. The point is if you're going to make a comparison, you have to compare bitcoin to something. And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do. So...what would you compare bitcoin with? If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do.

ernie-

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Quote from: halfawake on July 08, 2014, 02:12:58 AM

Quote from: smoothie on July 08, 2014, 02:09:31 AM

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

For now, perhaps. But how big would this energy consumption be if the bitcoin network were as big as a traditional major finanical company like, say, Visa? We should strive to do better than fiat is doing, not merely being not as bad as the traditional system.

Visa doesn't mine coins, their network has nothing to do with the creation of money, the banks do that for them. Your comparison is flawed.

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