Topic: Is Bitcoin viable, energy wise? - page 2. (Read 8832 times)

So hash power follows price, difficulty follows hash power, and transaction volume follows... ?

It is driven by the decision of node operators to add or subtract hashing power. Ultimately, this decision is driven by the prevailing sentiment of node operators of an expectation of profit. Price leads difficulty.

No, i just want to keep things apart as much as possible.
Mining costs are not transaction costs.

That is not entirely true.

The number and volume of transactions is a measure of velocity, which affects the prevailing exchange rate, which ultimately drives difficulty. So, it does not happen immediately but transactions do eventually translate to hashing power. The feedback loop is inherent to the design.

Yes, but the ammount of confirmed transactions is unrelated to the hashing power.

I'm sorry, maybe I misunderstood somewhere, but doesn't mining confirm the transactions?

No, i just want to keep things apart as much as possible.
Mining costs are not transaction costs.

You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...

I realize that. But that does not in any way justify a new currency that uses even more energy.
Besides, the military operations are not to protect any particular form of currency.
They are there to protect the value the currency represents. It is irrelevant what the storage medium is.
I can predict that if any big entity will use bitcoin they will protect their wallet with the same fierceness.
[Hint:Surrounded? A walk in the park ]

I can think of a few scenarios using Bitcoin and having it utilise vast amounts of energy, and whereby distributing it effectively and utilising the latent heat and capitalising on the distributed energy consumption we have a net benefit, or secondly having concentrated mining facility converting the latent heat in a seconds tear energy economy of heat mining.

All these new opportunities are only viable, if energy consumption of energy in the Bitcoin network can become "unsustanable" by your definition today.  As a result I don't see any motive to over plan, over planning would only be depriving the future of the opportunities we make for them today. In a sustainable eco system waste is food for another system, (nuclear power being the one exception) and by all means I would agree with you if we just stopped at waste and called it done. 

As an engaged ecological and environmental designer, I've observed the waste we create today is not part of a sustainable ecosystem, (it could be argued it is but only over devastating cycles over long periods of time) but for the typical time periods from generation to generation it is in fact just waste, and a result of our economic system, when cryptos supersede fiat and gold, we will start to see a huge transformation.  I would predict we will become vastly more efficient.

Here I find chodpaba idea that money is just a means of exchange with the pulpous of redistribute risk, quite refreshing and appropriate.

But of course! I would even suggest that we need to make these kinds of choices before the treshold is reached.
So we need to think very carefully if bitcoin, in its current incarnation, will be able to justify the resource it will require to operate in the future.
I think this is essential to if bitcoin is to be of any significance in the future.

I'm almost certain that if you spent as much time analyzing regular fiat currencies, you'd have answered all your questions by now. I guess my Harvard economics education was a complete waste of time and money.
I'm just here trolling on semantics. yea, that's right. I'm that bored with my life. 

I'm just here trolling on semantics. yea, that's right. I'm that bored with my life. 

It's not bullshit at all.
All currency has a cost.
You can't compare bitcoin to paper money because bitcoin is not in use like paper money.
The fact that some countries get rid of the smaller denominations is completely unrelated to the cost of bitcoin.
Moreover, bitcoin does't have denominations of value. It is a broken comparison, whatever you may have wanted to tell with it.

Another reason why you can't compare fiat to bitcoin is the mechanics of making it work.
Money is re-usable while bitcoins are not.

Planning and designing paper money is something you do once (or once in a while). After that you can use the design as many times as you like.
The main costs of paper money are in the accounting and the energy of transporting it, not in its design or production.
To print a single dollar note of any value costs less than $0.1
After the printing the note can be used may times.
But you have the cars that are transporting them from place to place every day. But even then the transportation costs for these bulk transfers are fractions of percents of the total value transported so its still not much, relatively.

Compare that to bitcoin.
In bitcoin you have to pay every time you transfer value. Right now the client asks for 0.01 bitcoin which is about $1.56 per transaction. And then you still need to wait some time before the transaction happens.
So this is already quite a barrier for use as a currency and this is only the beginning.

And that is besides the fact that there are miners pissing away heaps of energy just to make it all work. The $1.56 doesn't actually cover the network because the fees are nothing compared to the block rewards. In other words, in the future when all income would need to come from fees the $1.56 will not be nearly enough to cover the costs of miners.

I think someone figured that mining a block of 25 bitcoin costs about $40 worth of energy at the moment.
That's about 1% of its current dollar value.
You could argue that a single bitcoin will be worth much more in the future and then the production costs will be relatively smaller.
But this is not true. Bitcoin value follows hashing power. The more energy expended the higher the price goes.
So to make bitcoin more valuable we first need to expend more energy on mining.

Think about these things and expand them to a substantial part of our economy and you may start to see my point.

And this is why I think people predicting ubiquitous use of bitcoins for everything are full of baloney. Bitcoins were from the beginning designed to be more of a reserve currency than an instant payment option. If you want to pay your friend 0.1 mB to cover the cost of a beer, then it is better to use Ripple or some other system than to actually send the tiny amount through the block chain.

That is all well and good, but perhaps my point was a little too obscure.

Beyond a certain threshold you have to make a choice about how your limited resources are utilized.

Bitcoin is a line in the tar sands.

If this will be the situation (and i agree this is likely) then i think that bitcoin will become too expensive to use as a regular currency. If i want to buy a bottle of milk chances are the transaction fees will be more then the milk or the transaction will take a very long time. Both would make bitcoin unworkable as a currency for daily use.
It would require a cheaper bitcoin frontend to make small transactions economic.

My prediction is that in the future the price will be relatively stable, so the cost per block will be determined by the transaction fees. Essentially, we (the bitcoin users) will set how much energy is used by setting our transaction fee amounts.

You're right. Those credits are "mined" through the entirety of the operation of the tiered monetary system, from Fed operations, to U.S. Treasury markets, all the way down. And the entirety of the world's military might and legal infrastructure to secure that system.

(edit)
[Hint: you are surrounded.]

Energy spent on mining will dwarf all other costs.  Also, this energy is easy to predict, because energy spent on mining is a simple function of Bitcoin price and total block award.  This is because mining has very low barrier of entry, and this ensures that as long as it is profitable, new miners will join, until the most inefficient miners are at the break-even point.  And the most profitable miners will try to expand their operation.


This makes it that each block costs somewhere around  (0.5 * block award * price) to (0.75 * block award * price).  And since awards are paid in Bitcoins and electricity is paid in local currencies, this makes the situation that all mining costs hit the exchanges every day, and push the price down.


This can currently be estimated to be $150.000 to $250.000 each day (using price of $90), and this amount of fresh money must enter the exchanges every day, or the price will go down. 


At this point we have a temporary delay in the "mining difficulty follows price" process , because of the change in technology and delays in deliveries of ASIC miners, so mining is very profitable at this point, and this reduces the selling pressure on exchanges.  This, plus block award halving is why we have this current Bitcoin bubble.