Topic: Is Bitcoin viable, energy wise? - page 3. (Read 8832 times)

I'm pretty sure it doesn't work by sending every person that has that type of credit card a receipt of every single transaction happening with those cards.
Also, i'm pretty sure credit card companies don't need to mine their credits before they become usefull entities in the system.
And finally, i'm also pretty sure that any calculations the cc comapny makes does not involve brute force solving a cryptographic puzzle. It would make credit cards prohibitively expensive.
[Hint: way ahead of you.]

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.

Bazinga

Uh... How do you think your credit card works? [Hint: It requires multiple computers and a whole lot of actual computation to even do one transaction.]

Then how are you able to honestly say that btc uses more energy than any other currency?

That's completely BS. Look at all those countries that have gotten rid of small denominations in their currencies because they are not cost effective to continue to implement. Jeez, how did we ever go from copper, silver and gold to paper?

Can you think for even a moment in how much time, and money goes into just planning and designing paper money? The transportation and green house gases that are emitted just to truck that heavy crap around?

You can't honestly be serious with this analysis... Can you?

Just to be clear, my side of the story is that i want to look at bitcoin as a system. It is not about profits. It is about how accepted bitcoin can become while using this much energy. It becomes clear, for instance, that if bitcoin doesn't change it has no future as a currency. Currencyness is, however, one of the main reasons for the existance of bitcoin.
It is the very first thing people read when they visit http://bitcoin.org/en/.

Nothing like that.
I'm pretty sure that energy will put a cap on bitcoin one way or another.
What i'm mostly interested in is how much of the potential can be realized in our energy economy.

I don't think that there is a more expensive money currently in use than bitcoin.
So i'm wondering how big bitcoin could realistically become before the growth is dampened by costs.

I'm noticing a fundamental flaw in most of the last couple pages of posts. Not necessarily the posts, but the posters.

You're crunching numbers to find that crux where it's no longer profitable to mine, with whatever mythical unicorn hardware you can imagine. But it seems you're missing the entire point to bitcoin.

Being completely wrapped up in profits was the reason that all the other currencies failed. Your short sighted view of how btc can change the world is the flaw, in your logic, or lack thereof.

Would it not be advisable to continue to hash away to keep your investment alive?

You sound like a bunch of drunks at the bar who certainly love to drink, but then hate to have to take yourself away from the eye candy to take a leak.

You'll need to see both sides of the bitcoin before you fully understand where this could take humanity. And for crying out loud, leave the last 5,000 years of currency trading at the door. This is a whole new era.

If each btc has the potential to be valued at $1M and it reaches that value long before the inflation of electrical costs match, then yes.

But you see, I used the word 'potential'. If you're looking for market viability then you're seeing it as an investment. Otherwise you would see it and use terms that would describe it as a necessity.

Sounds more like you are unsure of yourself and your investment strategy. If so, how can any of us advise you? We don't know your hashing power. Your maintenance costs. Your Investment goals.

Fishing in a mud puddle won't get you much for dinner.

How much energy consumption does FIAT currency take when you account for all energy consumed by banks and all other companies that are necessary for our current use of FIAT? (Visa, mastercard, etc)?

Much less in fact, according to the video.
He is comparing 5TWh of the whole EURO ecosystem to the 600TWh that is consumed only in germany. So it probably is at least 5 times less than 1%.

I liked this, posted elsewhere, a measure for evaluating efficiency, power consumption/production, with an Austrian style free market economy with a fixed money supply, I would tend to think we would be more efficient than we are in our perpetual growth economy.   

I haven't read all the arguments as I thought I knew the answer until I watched this:

http://www.youtube.com/watch?v=xHGFWWOylJM

If I understood it correctly Paper Money consumes just less than 1% of total GDP energy consumption. (coins obviously more) and HFT's data centers even more.

Some criticism on the video:
1) you can't scale the BTC network transactions at its current energy efficiency to that of a big states current transactions to make the claim.
2) You can't assume Moore's law doesn't apply to Bitcoin hashing (Asics won't replace GPU's and Asics won't become more efficient in the future)
3) you can't not account for the future number of transaction per block increasing. (we will always be limited to 250K or whatever it is)
4) you can't amortise your mining rig as E-waist every year - (my mining rigs only lose fans so my e-waist is a lot less than the example given.)
5) you can't assume the latent wasted heat is not used by the miners, ( this winter my heating bill was $0 as my rigs kept me warm - I have seen setups where Bitcoin rigs are used to power under flour heating.) so 50% of excess energy is not wasted just repurposed.

Shouldn't shilling for PPCon be in the "Alternate Cryptocurencies" area?

Your line of thinking kind of indirectly acknowledges that mining will be a low margin business.  Are you still thinking that running costs will not get close to (as in 50% of) total mining income?

As for tech availability,  those chips have a high cost for the masks and tooling and the low costs per unit.  So, once the first batch is done, they get much cheaper.  That means that the will soon be easily available.

Take Avalon for example, this time they can deliver 100TH which is 4x the original network hashing power, if bitcoin price is very high they have enough motivation to keep mining for themselves with a little blow a certain fraction of total network hashing power and maximize their profit

Of course this time they sell the ASIC mining rigs to everyone, but there are also companies like ASICminer, they never sell the equipment to public and do not want to expand the capacity, just check their thread

Again, your estimation is based on a situation that most of the miner have access to the latest mining technology. In my opinion this is just a temporary situation in early stage of bitcoin adoption. When bitcoin has reached mainstream acceptance and high valuation, mining might require highly specialized hardware, thus become not feasible for normal users, and several large mining corporations might form some kind of aliance to not expand the capacity to hurt each other's profit and save energy, just like OPEC. Hopefully we are not going to see this day too soon

Yep: That 51% attack is nigh impossible, and the bitcoin network will always have as many miners as can be supported by the fees. (and very rarely - if ever - more)

Once you have majority of the hashing power, there is no point in increasing it, because you are basically competing against yourself. (Also, if you are the only miner you could do it all on one CPU.)

However, no miner is in this position.  You could argue that all the miners could make a pact about the maximum capacity, but, there is simply no way to enforce this on a P2P network.

If a miner can increase his profit by adding more capacity, he will do so. And this arms race has a very easily predictable result.

I agree with your view of daily energy cost. It is a good way to estimate a worst case scenario where every one is having the same mining technology and just break even on energy cost

If each bitcoin worth $20,000, that is $72,000,000 per day, at $0.2/kwh, that is 360,000Mwh per day, about 15,000 Mw output, that is 3 big nuclear power plant


Why should they do that when no one is competing with them? Suppose the rest of the network is 6TH now, I could mine with 6TH with a daily profit of 1800 coins and a power consumption of 200 coins; or I could mine with 60TH, 3273 coins, but 10 times the power consumption of 2000 coins. Is there any motivation for the later? Well you need a chart to find out the optimum hashing power, but it is definitely not higher the better