Topic: With great power comes a great electricity bill (Read 4230 times)

It's you who's fucking clueless man!!  Listen to a REAL miner, a guy who mines precious metals and gems.
Bitcoin was modeled after Gold mining, which, is an inneficient occupation, I know, I mine Gold along with SHA256.
What gold miners do is always improve their rigs to get the most yield for the least expenses...
At the end of the day, it's not who brings in the most loot, it's who bring home the most pay.
Yeah, I own two profitable mines, you??  Exactly, keep listening.

Gold's intrinsic value is around $20 but our fiat monetary system is based on gold reserves.
I guess only a few of us know Ft. Knox is virtually empty and its contents live in China and India now?
Today, Gold gets its value because, well, it's pretty, it's the best metal for electric connectors and used as a fiat hedge.
It also gets is origins traced all the way back to the bible and is always a sign of nobility.
The cost of commercial gold mining is also quite high... without the high price of Gold, miners wouldn't mine it and monetary system would collapse... I don't think most people know just how fragile it is.
A commercial gold mine runs at least $1,000 a day in... being conservative.
This would also put a lot of people out of work, if Gold tanked to below $1,000... for a while it did.
In those times, it's the small prospectors who make the most because their costs are much lower to begin with.

Guess what, you can mine gold for years and never find a smidgeon of Gold... that is the risk factor my friend.
At least mining Bitcoin, unless you mine solo, you're getting pay.
However, pooled mining is the equivalent of mining placer top gravel; a paycheck.
If you want to hit it big, one needs to either bet on an alts or gamble their power on solo.
Betting on solo with less than 100TH/s... THAT is a waste because you'll never get your $'s worth.
Even pools with around 1PH/s struggle getting one block every 3 days; the equivalent of mining Gold dusts compared to nuggets a century ago.

One just doesn't go dig a hole in the ground and expect to get rich in one season, it takes a lot of investment and dedication.
Those who think they do, well, they all talk and are all one hit wonder and never come back.
Besides, hardware double in efficiency every year, you're like when Edison tried to discredit Tesla by saying it's not as safe.
By failing to mention that Tesla Power could travel great distances and retain its charge much longer.

Pure life experience always trumps armchair know-it-fuck-alls.  
If you get your money's worth it's not waste because you get what you pay for. #Capitalism

Ancillary uses do not offset the "waste".  If a miner is able to recoup some of his hardware maintenance and electricity costs by using or selling the generated heat then he has simply become more efficient and increased his profit margin.  As other miners do the same, difficulty goes up.  The network will tend towards consuming 25 BTC + fees worth of real resources every 10 minutes.  Mining could perhaps be adapted to incorporate other computations (e.g. looking for primes) but the extent to which these computations are useful is the extent to which they offset costs and drive up difficulty to make room for "real" mining.

 It is used wisely {securing the blockchain} already.  Anyway, Satoshi was attempting to answer to critics and he isn't omniscient; he's a programmer.  Let's not elevate him to an undeserved status here by quoting him as point of fact on matters where he has limited expertise.  He also said, "If it's summer and you're using A/C then it's twice." <-- that is incorrect because it doesn't take the same quantity of energy to remove the waste heat the miner produces using A/C; it takes about one-quarter of the energy.  Also, warmth generators in cold climes isn't much of a stretch - genius prediction not required.  Please, that cannot be considered a "vision".

I think the last paragraph says it best.... In the beginning everyone will mine and later only the people with the cheapest electricity in the coldest places will be left.

We have to appreciate Satoshi's vision and what he predicted will happen in the future.

Is it a waste..? Nope... not if you use it wisely. {Heating} 

I wonder if this what it looks like after a few more halvings and the Bitcoin reward per block is down to 1 BTC or less. Either the BTC price will have to "astronomical", or there will have to be a great deal hardware shed to keep the costs down if miners need to subsist on transaction fees.

This has got me thinking.

Maybe it's the combination of the large stash of coins he mined (while monopolizing the network), in conjunction with the possibility that he could decide to resurface with those coins and return to "power". He would be crowned the king after-all.

I can see in my mind a few scenarios where he could threaten the stability and security of the network if he decided to play his hand a certain way. Not a very likely possibility, but one that should probably not be ignored.

Interesting that you consider Satoshi's 10% stash a threat even in the long term.  Tell me:  Do you think Bitcoin would be more valuable today if Satoshi had dumped almost all of his coins in 2012?  Do you think that Bitcoin would be more successful today if, all else equal, this "threat" had been nullified sufficiently many years ago?

All of this is done just with greed.  The network could be secured with just x number of people (20,000) running one usb stick each.  The diff would be low and the electricity use would be low, but no one would make money except those 20,000.

Guys who shape future of Bitcoin invested too much money into ASICs.

Bitcoin should already be made POS by now. I still don't understand the need to spend so many resources on just mining bitcoin.

This is unknown and depends on many variables (future btc price, transaction volume, code changes, etc.)

The biggest threat to bitcoin (at the moment) is Satoshi's 10% stash and the centralized super-powers of the core developer(s). If these problems can be addressed, then the bitcoin network might be even "more secure" after the block rewards cease to exist.

In free market, if the production cost of a coin is much lower than its exchange rate, then almost everyone will try to produce these coins and sell them, no one will buy. And true believer will not buy but mine. That is simple arbitraging, free money to take, people could constantly sink the exchange rate, and still make money on the way down. That happened during 2014

The cost consists of two parts: ASIC miners and space/electricity. Technology is cheap, material is cheap, once designed, ASIC miners can be produced in large scale with a very low cost, then the only thing that will prevent people from accumulating more and more ASIC miners is the difficulty and electricity cost

Once the mining cost is getting close to coin's market value, arbitraging will stop and more and more people will turn off their machine and buy bitcoins instead, this will increase the purchase support and decrease the sell pressure, make the exchange rate stable. So electricity cost basically decided bitcoin's exchange rate, and is also a good indicator for future bitcoin exchange rate

Bold statement, care to prove?

The blockchain design is flawless, electricity spent is not a waste but a must. It is a twisted view from today's fiat money system created this waste debate

Money is no different than any other well traded commodities like petroleum or electricity, in order to have value, it must have demand and limited supply and eventually the cost will decide its face value

It seems that fiat money is an exception: You don't need to waste any energy to create fiat money. But that's also the reason it should worth nothing. The reason fiat money still worth somthing is because its monopole: In order to give fiat money value, you must pass a law to make it the universal transaction medium in the country, and the cost to pass that law is a war

If war is not possible, then in a market of free currency competition, the currency that cost most to produce will have the most value: The cost is an indicator of public interest and the degree of competition

In free market, if a coin costs much lower than its face value, then almost everyone will try to produce these coins and sell them, until its face value get close to the cost

You can also implement a scheme like POS, preventing late comers to crash the price. But in free market, if the scheme unfairly benefit exiting holders, no one will join the game. Bitcoin does not unfairly benefit exiting holders, since every holder are exposed to large swings of exchange rate and have to take risk, many early adopters have sold their coins during a downfall just because they entered in a much higher price during a bubble

Off topic question: When the BTC mining period ends in many years and most of the miners leave, will the BTC network still be as secure as it is today?

I agree, but we shouldn't start with bitcoin inefficiency we should start at the big wasters.

We have Visa, Mastercard, Discover Card, American Express, all wasting millions a month on advertise to compete for the reward of finding customers. This is HUGE waste, also they all have duplicate systems. They employ way more people than necessary to get the interest reward and find customers. I'm guessing the savings by eliminating all these competing companies to one would save BILLIONS a year worldwide.

Next Insurance companies, man there are like a 1000 insurance companies out there all competing to sell almost identical products!! Again save BILLIONS!!!! a year by streamlining all insurance companies to 1 central insurance company.

Next Retail, Target, Wal-Mart, K-mart, CVS, blah, blah, blah, all attempting to get that customer to come in their doors mostly selling the exact same shit, so inefficient. Imagine how many stores we could shutdown, how many distribution networks we could streamline, backend computer systems, redundant semi-trucks running the same routes. It's absurd! We could save 10's of Billions a year streamlining that mess.

Oh man we are getting somewhere now, this centralized control thing is great.

Next, it's so inefficient and a waste of time to have elections every 2 years, we could streamline politics by assigning 1 ruler with complete control and power. We could literally get rid of 1000's of politicians and 10000's of thousands of government workers, lawyers, etc....

This is fun, I'm fixing the world!

Read this ....
"At its peak, the Changcheng factory churned out 100 bitcoins a day at each of its six sites, but the group of entrepreneurs is finding that as the level of difficulty and computing power increase, the ratio is gradually changing. The process uses about 1,250 kilowatt-hours of electricity, and the group's monthly electricity bill is about $80,000. They are currently mining from 20 to 25 bitcoins a day."

Here - http://www.mining.com/inside-a-chinese-bitcoin-mine-20076/

Satoshi has conceded in the past that Bitcoin mining does in fact "waste" power except in those cases where the computer rig is used to heat a dwelling.



https://bitcointalksearch.org/topic/m.8431

You are right, I'm trying to assess feasibility of existence of 100 billion IoT-devices utilizing blockchain tech.

PS: http://public.dhe.ibm.com/common/ssi/ecm/gb/en/gbe03620usen/GBE03620USEN.PDF

Oh lol, I didn't realise there are so good miners now...

Ok, look.  Everyone stop mining except one guy (I'll volunteer) thereby minimizing/nearly eliminating the "waste"; well maybe we should have a few guys spread out for safety.  Those guys distribute the block reward and transaction fees gained in some, er, fashion to everyone that wants some.  Oh, the devil is in the details, isn't it?

 Hass McCook (MBA from University of Oxford) did a 5 part series evaluating the sustainability of the Bitcoin network against other monetary institutions for Coindesk.  The conclusions are here:  http://www.coindesk.com/microscope-conclusions-costs-bitcoin/

 I'm pretty sure the costs would scale downward with greater efficiencies in mining and upward with a higher bitcoin valuation.  Already, you can see the difference in electricity costs over less than one year.


 

This is indeed a valid definition of "inefficiency".  However, you are the one that judiciously introduced the term "waste" into your description of the mining process.  Your assertion that Bitcoin mining is inefficient is simply built upon your assertion that Bitcoin mining is wasteful.

Also, I don't understand the meaning of "actually do the work" here.  Are you suggesting, for example in the case of block #300001 appearing 19 minutes after block #300000, that the block winner did 19 minutes of actual work?  Surely all but one of the trillions of hashes performed by the block winner in this period were every bit as wasted as the unsuccessful hashes of all block losers.  Surely the block winners unsuccessful hashes were every bit as wasted as the unsuccessful hashes they performed before block #300000 (when they were themselves a block loser).

While in terms of "miner" (i.e. people or entities), it might be as high as 10%, I am sure Solar only covers less than 1% of actual mining production. Mining is a 24x7 year round operation, Until you move off planet you don't get that much sun.

Well i meant to say nobody is forcing them to mine and it's their free choice to do so.
Well it is an fact that it wastes alot of electricity but also many other things do. And miners can get electricity even from solar systems and i belive that atleast 10-20% of miners use that advantage.

I'm done too. There is no point in debating the obvious. 

 At first I thought you were ignorant but now I see you're just trolling. You and I arguing about those things we cannot change is also an inefficient use of our time but the beauty of it is that I can change that efficiency.  I'm done. Have fun.  lol

Who is we?

Bitcoin is great, but its reward system encourages the wasting of electricity. This is an indisputable fact.

We don't force all the miners to do that work. It's their own choice and it would be more of a lottery if everyone would go solo.
For some miners it's just an hobby. Also with current pooled mining your argument is invalid as all the miners that worked on so said block will get reward by ammount of their work done on block.

Having one miner actually do the work (the block winner) and all the other miners (block losers) waste their efforts is the definition of "inefficiency".

http://www.merriam-webster.com/dictionary/inefficiency

Maybe Satoshi owns a lot of stock in power companies.

 The blockchain in stasis is utterly useless to bitcoin.  Miners are required to verify new transactions; the reward was to get them started.
Anyway, that wasn't even part of your original, flawed argument which was:


 I'm pretty sure you said "network" there.  lol

But you see ASIC chips get upgraded more and more often so it wastes less electricity after every new technology.
I belive in next 2 years the eletricity consumption of bitcoin will get atleast to half that it represents now.

280 MW that's a lot of Electricity!
With 1800 block its around 450 000 $ that a lot of electricity for 450 000 $ 

no doubt you will find a relationship between fossil fuel consumption and electrical rates, my guess is it's contantly with contribution of hashrate

Incorrect. You don't have to mine to preserve the blockchain. The flaw is in the reward system design. It encourages waste.

Except it couldn't be called decentralised network then.
It's good the way it is and power consumption will eventualy get lower as the time goes and btc per block reward will get lower.
POS isn't future in my eyes at all.

My understanding is in terms of energy efficiency, Bitcoin mining ranks as the biggest waster of power since the invention of electricity.

The entire bitcoin network could be sustained safely on less than 1000 watts. lol  

https://blockchain.info/charts/hash-rate

 Multiply that by an estimated joules per Ghash/s and you have the estimated network consumption.

at 0.7 joules/Ghash/s ~ 280MW

Is there somewhere statistics on Bitcoin miners electricity consumption?