>The bitcoin network annually wastes 78 TWh (terrawatt hours) annually or the energy consumption of several million US households.
According to the Cambridge Bitcoin Electricity Consumption Index (https://cbeci.org/), it actually wastes about 115 TWh annually now. They even have a comparison page where you can see that the network sits between United Arab Emirates (113 TWh) and Argentina (121 TWh) in annual energy use.
This has to now far exceed China’s ghost cities and Dubai’s doomed megaprojects as the greatest waste of resources in recent history, though it still has a way to go to match the US/USSR arms race. That one would be tough to beat, though you could argue that it’s waste is offset a bit by the technological spinoff it generated.
Meanwhile space exploration and life extension struggle to attract funding.
Humans are merely clever, not intelligent. If we were actually intelligent we would understand the systems in which we embed ourselves instead of being at the mercy of them.
To be fair cryptocurrency has subsidized a fair bit of interesting cryptography research, but holy crap could that have been done so much more cheaply by just paying some universities to staff up with cryptographers and giving them some challenges.
You could probably have founded and fully endowed dozens of top tier universities for what we have wasted on this.
Another good thing to look at for perspective: how many startups could we have seeded and venture funded for the money literally burned by cryptocurrency?
All that coal burnt to mine Bitcoin literally causes cancer, birth defects, neurological issues, pollution, and global warming, not to mention widespread cult-like stupidity, fraudulent shilling, shady business practices, irresponsible gambling, and other personally and environmentally self-destructive behavior.
When I actually held bitcoins back in 2012 I always made the comparison to the amount of energy needed to transport physical bills in armored cars, hire security guards, build giant vaults, printing presses, etc. Back then it seemed a reasonable comparison to make, but then the actual power consumption numbers seem very small back then by comparison.
I also remember Satoshi saying in the white paper that people in temperate climates might would be the miners because the excess heat could be used to heat homes in the winter. Again I don't see the sort of environmental responsibility currently.
I somehow don't see myself buying a $4000 ASIC to mine Bitcoin in my home and paying like 280€ per month in electricity for it even though it was -20°C Friday.
> When I actually held bitcoins back in 2012 I always made the comparison to the amount of energy needed to transport physical bills in armored cars, hire security guards, build giant vaults, printing presses, etc. Back then it seemed a reasonable comparison to make
When I saw such comparisons, I always countered with two points:
- One, energy expenditure on Bitcoin network grows superlinearly;
- Two, all the expenditure for trucks, vaults, presses, etc. and management for it is considered upkeep. It takes money from the pockets of people who would prefer to keep it. So these costs are ruthlessly optimized down to minimum. If printing or transporting bills could be made free, financial institutions would jump at it. Meanwhile, in Bitcoin, burning energy is a core part of securing the network, and it's being periodically adjusted towards more waste. If mining could be made free, the network would collapse.
These points paint a quite different trajectory over time for Bitcoin's energy use vs. fiat energy use. And it seems to pan out.
> I don't see the sort of environmental responsibility curren<strike>tly</strike>cy
fixed that for ya.
The good thing about heating your home in the winter with excess thermal energy caused by cryptomining is that in summer you can either stuff all that heat into bags and save it for winter, sell it in town to people who have a sauna at home, or send it to the opposite hemisphere where people are freezing. /s
I'd like to see the estimates in the coming months. Lots of people report exchanges having less and less bitcoins, allegedly due to people storing their wealth and not being interested by transactions anymore. I may be naive but it could mean the network will become underutilized for a little whiel.
The amount of power the Bitcoin network uses is proportional to the number of miners, independent of the number of transactions. it is designed to have one block per ten minutes and adjusts the "difficulty" to match. As long as the price of Bitcoin keeps going up, I can't imagine mining will become less popular.
The average transaction costs around $16 USD. I'm not sure what you mean by the network becoming underutilized but bitcoin's tiny transaction throughput is in high demand.
Also what do you mean by "exchanges having less and less bitcoin" and what are you basing that on? Most people unfortunately don't transfer what they have out of exchanges in the first place, even less so with transaction costs being enormous.
What type of transaction? Are you taking $16 in fees? Or do you mean energy cost for mining that transaction into a block? Fees are definitely not that high. On Gemini for example I can buy $100 of bitcoin for $0.15 (as a one off example for a USD->BTC transaction).
The average transaction fee refers to the cost in btc to make a transfer. That amount is then converted to usd to make it easier to comprehend. Such fees go up during periods of high strain on the network and as people choose to pay more to get their transactions through quickly.
They definitely are that high. What you are talking about is not a bitcoin transaction. This is exactly what I was talking about - people don't even realize they can or should take their balance off an exchange. What you are talking about is the exchange fee.
When you buy bitcoin from an exchange the transaction is taking place off chain. If you want the bitcoin transferred to a wallet that you own you will have to pay the high transaction fee.
Old news. The far more interesting question is what to do about it. The OP has some suggestions, but I have some more radical ones:
- put carbon taxes on BTC/fiat exchanges
- outlaw mining
- outlaw BTC transactions
- put economic pressure on other countries to do the same
Basically, there is no benefit to the world that cannot be done with far more energy-efficient means, e.g centralized currency or proof-of-stake cryptocurrencies. Proof of work needs to go, sooner rather than later.
What about a carbon tax on... well, carbon!! I mean, carbon extraction. Carbon, the thing that pollutes in so many ways, so more terrible ways than just electricity generation?
Let's start with the bad things first. Then the others. Then the others. And then, finally, we can talk about Bitcoin.
No. Bitcoin and other proof-of-work cryptocurrencies are really just a waste of electricity. Even if you put your miners next to a hydro plant it is wasteful. You could just use proof-of-stake cryptocurrencies and do something productive with the electricity, like smelt steel or produce hydrogen.
Bitcoin is the equivalent of heating your house with the body heat of cows. Yes, its possible, yes, it works, yes, it used to be done this way. But it isn't really efficient and while a few cow-merchants and fleas might object, the world is better now.
Bitcoin is the equivalent of heating your camp by setting a forest on fire. "Look ma, radiative heat bouncing off the hills will keep us warm for couple of days, and when we come around here next year, the animals living here will be easier to hunt!".
Sure, we used to do that, before we learned how to write. But holy hell does it not scale.
Yeah, until you realize that in a lot of places Bitcoin is far more profitable than any other activity, meaning that any use other than Bitcoin mining would be priced out of the market.
Almost the best solution that preserves bitcoin, which is: put a tax on BTC mining.
The Bitcoin consensus rules rely on miners proving their faith in Bitcoin up to the amount of resources they are prepared to (provably) burn. Since this is about 'wasting' resources, having it taxed 99% globally would let the faith proof stay intact while the environmental cost would go down by 100x. You do can 'burn' resources by giving it to your local government. And it would actually benefit the local population.
Caveat: it has to be global, and at about the same rate everywhere. Can it happen without a world government? I don't know. But governments could start to trace transaction compositions up to a distribution over block rewards; and back-collect a tax on them accordingly. That is if they can control transactions; but governments do have a fair amount of leverage over the average joe's daily activity.
But all this presupposes that Bitcoin has gone mainstream and is used in the daily life, and we're definitely not quite there yet.
----
On another note, it is a bit sad the article does not mention halvings, which are quite relevant to that topic.
Would proof-of-stake systems ever have been developed if proof-of-work systems didn't come around first to build widespread trust in cryptocurrencies?
If not, then you could say that the energy consumed up til now by proof-of-work systems was essential to the development of proof-of-stake systems.
I think that OP is strawmanning Bitcoin as it exists today into being the end goal of all cryptocurrency technology when really it's just the very first stepping stone.
Coal was burnt to get to our current level of industrialisation. A lot of steel for wind turbines was smelted with coke. That doesn't mean we shouldn't try to find better ways and get rid of the old polluting methods.
And no, I'm not strawmanning to get rid of all cryptocurrencies. I'm naming a concrete problem with a part of them (the older, legacy, proof-of-work ones) that needs to be corrected by changing to better ones. That your investments might suffer is tragic of course. But the same goes for all the coal miners...
Agreed, I am eager to see the widespread adoption of proof-of-stake technologies to improve the efficiency of cryptocurrencies. The inefficiencies of proof-of-work aren't something to be happy about obviously, except insofar as they enabled cryptocurrency technology that wouldn't have been possible otherwise.
And to be clear, I was referring to OP the author of the twitter thread.
>A Pigovian tax (also spelled Pigouvian tax) is a tax on any market activity that generates negative externalities (costs not included in the market price). The tax is intended to correct an undesirable or inefficient market outcome (a market failure), and does so by being set equal to the external marginal cost of the negative externalities.
Thanks! I did not know this term. This is also the only argument that makes sense. Governments don't seem so keen on implementing though, because of many reasons. Airplanes were flying empty in, at least, beginning of Covid because of bureaucracy ffs!
Wouldn't that be offloaded to the sector that is producing the negative externality? If you are mining, you are using electricity.
If that electricity is coming from fossil energy, then that tax is already paid. If you are mining in a country that generates its energy with solar power, doesn't the argument of "bitcoin bad" become shaky?
"Bitcoin bad" is already shaky. If we as a society care about these energy problems we need to start fixing it in the beginning of the supply chain and work our way to the end.
I used to worry about this question too. But how much energy has mining gold cost? Was it worth it? Will bitcoin have a similar impact? I imagine the answer is more, yes, and yes.
Turns out, about 10x less than Bitcoin, (this article seems to imply 25 million GJ per a year of energy mining/processing gold, and the Twitter thread implies 280 million GJ per a year in Bitcoin.
Except Bitcoin also creates electronic waste, including gold, and, I would argue, is not at the scale that gold is at, as an influencing factor on the economy.
Well, over the same time period, but gold has been mined for thousands of years, and for a long time much less efficiently. And bitcoin mining will decelerate as halving occurs, until the last coin is mined in a bit over 100 years' time.
Increasing fees are expected to make up for the repeated halving of block subsidy, as is necessary to maintain network security (and one of the major reasons why Bitcoin constrains block size). Within another 4 halvings, fees should start to dominate.
To put this 78 TWh number into perspective, humanity consumed roughly 160,000 TWh in 2017. That's 0.005% of humanities total energy expenditure in 2017.
A moral conclusion is baked into the formulation of the issue, that Bitcoin "wastes" energy, but it can be applied to almost anything: gold mining "wastes" energy, circulating hard currency "wastes" energy, social media "wastes" energy, any waste at all wastes energy
To my mind "Bitcoin is a problem" is a reductionist take on the larger environmental issue of reducing emissions, and it shortcuts the larger philosophical issue of whether and how we decide whether some particular use of energy is wrong or right
Perhaps a solution would be to make electricity for bitcoin mining alone more expensive, or by the same token, mandate subsidies for "good" uses, like food and medical production. Or would doing this cause unintended consequences worse than the original "problem" of Bitcoin?
But to my mind Bitcoin being a "waste" or bad is not yet established just by citing its admittedly massive scale of energy use
> A single bitcoin transaction alone consumes 621 KWh
That sounds like a lot, but it's about $10 worth of electricity for the miners. Another comparison might be that that's about how much electricity it takes to smelt 4kg of aluminum. I don't think it's meaningful to think in terms of "waste" wrt energy consumption any more than gold mining is "waste". Most of the energy generating capacity would not have been turned on if it wasn't going to be used for mining bitcoin.
The only useful framing is in terms of externalities, but it turns out the cheapest forms of energy generation (underutilised hydro and solar in china) tend to be zero carbon. Using energy isn't bad, emitting carbon is bad.
Coal is more portable than hydro electricity, so you can burn it where you actually need heat/electricity.
What do you do with unused hydro output? You can waste it or you can power bitcoin. This could be arbitrary big numbers in terms of KWh, but the opportunity cost and carbon footprint would be zero.
Since bitcoin mining is so perfectly competitive, it will be done where the cost of energy is lowest, which is zero for the most places - where energy would be otherwise wasted. And since other consumers pay considerably more than zero, they'd get oil/gas/coal delivered to them instead of wasting them on bitcoin miners.
Hydroelectric power destroys aquatic ecosystems [1]. Many technologists are prone to resorting to “clean hydro” power as their way of dismissing concerns about carbon footprint. I'd much prefer the story around Bitcoin's carbon footprint shift to one of offsetting rampant consumerism through disincentivizing spending.
You are forgetting (among many) about the impacts of a decentralised currency for the billions of people without access to bank accounts or a stable currency.
Billions? The bitcoin network is doing less than 7 transactions per second. It's less than useless for anything but a handful of people trading it as speculation.
Still, there are plenty of coins that don’t rely on this “waste”, and even big ones that are moving away from it, such as Etherium. If Bitcoin was a PoS system, the underutilized electricity could be going towards something else, like protein folding.
Iranian government is mining bitcoin and causing countrywide power shortages. It's also burning mazut in power plants and polluting the environment. Currently 8% of the world's bitcoin are mined in Iran (which has 1% of the world's population and 0.5% of world's GDP).
I don't know if it's behalf of China or not yet but this must be stopped.
The only reason bitcoin mining happens in Iran is because the price of electricity is artificially low because of government subsidies. It seems to me that country with power shortages shouldn't be subsidising power consumption and then getting mad when people take advantage of it.
Nope. People are not taking advantage of anything. Do you live in Iran?
Majority of bitcoin is mined in containers. Civilians do not have access to megawatt power supplies. Civialns also can't import such containers. Electricity may be cheaper but graphic cards and ASICs certainly are not.
TDLR; people don't have access to mining equipment or power source required. Rulers do.
This analysis assumes miners use a selection of currently available mining rigs.
I think we should consider the fact that many of the biggest miners might have access to unreleased mining hardware which performs substantially better in terms of $/watt.
If they did, they would make massive profits. If they sold their more efficient mining hardware to the general public, the lost profits would far outweigh the money earned by selling more efficient mining hardware.
And Bitcoin mining is wiping out all the Truffula trees, which take ten months to germinate, ten years to sprout, and another ten years to become fully grown.
You'll be amazed, you'll be nonplussed / It tastes like bread without the crust / Grooms your hair when it gets must / Rids your home of dismal dust / It's a natural, it's a must / Eliminates carburetor rust / Everybody do-do-do-do-do-do-do-do need a Thneed
Bitcoin doesn't waste energy. Bitcoin consumes energy waste.
The global market for adding bitcoin blocks is as competitive as it is possible to get. No barriers to entry, no one even has to know who or where you are. As such only miners who can secure the cheapest energy survive.
Excess hydro capacity in China during rainy season; capturing flared gas from shale oil fields in the US; geothermal in Iceland; any source of stranded or wasted energy.. bitcoin mining will soak it up.
Bitcoin mining using fossil fuels is simply not cost competitive.
This "#hashes => #GWh => #tonnes CO2", is broken logic full of unsubstantiated assumptions made by bitcoin haters.
That is full of broken assumptions and excuses. Bitcoin mining drives up the cost of those "waste" energy forms.
Excess hydro capacity can be used for electrolysis to hydrogen, hydrogen can also be produced from flared gas. Which can then be used to produce low-carbon-emission steel with hydrogen as a reduction agent.
Bitcoin mining makes all that more expensive, less likely and risky, because setting up a few miners is quick and easy. Running a steel mill or electrolysis plant is expensive and longterm. Too risky if bitcoin miners might buy all the cheap intermittent power you planned with.
You can't drive up the cost of "waste", all you can do is use it such that the waste is decreased. If people want to make hydrogen with it they should do so. As I said, the Bitcoin network is not capable of bidding for energy at higher prices.
Your argument boils down to: why aren't people doing this uneconomically viable thing that I think is better than this other economically viable thing.
Think of all the useful productive things that you could do with all that precious time and energy you personally waste by shilling and hyping Bitcoin. You could take a nice walk. You could pat your dog. You could take a bath. You could write a poem that makes somebody smile. You could write a computer program that solves somebody's problem. Find something productive and constructive to do with you life and the limited time and energy you have here on Earth, instead of wasting your energy shilling and mining Bitcoin.
Oh, give me a break. Get over your delusions of grandeur that you're "without a doubt" such an essential savior of the future of humanity. The last thing humanity needs is yet another Bitcoin shill, making baseless arguments full of broken assumptions and excuses that ignore the science and the facts, and encourage pollution and global warming and fraudulent get-rich-quick pyramid scams.
Preposterous logic. Any energy used has to be made up with other sources. The idea that all bitcoin miners are public-spirited eco-warriors is pure imagination.
Rather than venting greenhouse gases produced from the oil and gas mining process, they use it to mine Bitcoin. Sure this results in some CO2, but that's a lot better than venting straight methane.
It's not like excess hydro power in China is stored anywhere. It's literally wasted.. why do you care if people use it to mine bitcoin? How is it cutting in to the energy that other people can use?
If Bitcoin becomes global reserve currency, governments won't be able to conjure money out of thin air to finance wars of aggression. And — sans inflation — prices of all things will decrease over time in absolute (BTC) terms. This could put a major dent in consumerism, as owning BTC will be seen as preferable to owning any other asset, particularly depreciating assets e.g. consumer goods, housing and cars.
The above dynamics could more than offset Bitcoin's carbon footprint. But even if it doesn't, humans are driven by self-interest and every single individual on this planet has the financial incentive not to be left behind. You basically just have no option but to invest in bitcoin. And the longer it takes you to figure this out, the more costly it will be for you.
That's really funny. Bitcoin - the ultimate in speculative assets, a money transfer system so good it couldn't even power a small country's day-to-day transactions, while wasting the energy of a medium country, industry and all - the solution to consumerism and world peace.
You could've earned +10% ROI in 2020 by holding AUD instead of USD. Every currency is backed by thin air, including Bitcoin. The average lifespan of govt-issued currency is ~100 years.
> a money transfer system so good it couldn't even power a small country's day-to-day transactions
You most likely utilize a credit card or bank card for your day-to-day transactions. Nothing would change about this with Bitcoin entering the picture.
> the solution to consumerism and world peace
I made no mention of "world peace". Just because governments couldn't conjure money out of thin air to finance war machines doesn't mean there will be peace on earth. But taking away the money tree from governments around the globe changes the game completely. It is also true that — sans inflation — absolute prices of goods and services decrease, which disincentivizes consumption.
>You could've earned +10% ROI in 2020 by holding AUD instead of USD.
And that would put you under the SP500 and the NASDAQ. Bitcoin in the same span did +286%.
> You most likely utilize a credit card or bank card for your day-to-day transactions. Nothing would change about this with Bitcoin entering the picture.
What’s the point of Bitcoin then? Because at the level of transactions Bitcoin can handle, we would have a bunch of central bank-like entities trading Bitcoin between themselves and a shit ton of intermediaries.
> Just because governments couldn't conjure money out of thin air to finance war machines doesn't mean there will be peace on earth. But taking away the money tree from governments around the globe changes the game completely.
That is not in any way a given. With all this intermediaries it’s not that hard to create “money out of thin air” through various schemes and leverage.
If you don’t interface with the network directly, your supposed guarantees go out the window, fast. And the global network today can’t possibly handle the daily interactions in any big city.
> And that would put you under the SP500 and the NASDAQ. Bitcoin in the same span did +286%.
My point was that government-issued currency fluctuates in value, sometimes quite significantly. This underscores the fact currency is a speculative asset.
> What’s the point of Bitcoin then? Because at the level of transactions Bitcoin can handle, we would have a bunch of central bank-like entities trading Bitcoin between themselves and a shit ton of intermediaries.
Central banks wouldn't be able to debase their bitcoin via inflation, and money printing for political ends would grind to a halt. Meanwhile, the currency unit BTC would work in every country. I'd say that's a win over the status quo.
> That is not in any way a given. With all this intermediaries it’s not that hard to create “money out of thin air” through various schemes and leverage.
If those schemes inflated the BTC supply in the slightest, they'd instantly fork off the network. If banks decide to issue cash backed by BTC, it would trade at a discount compared to BTC proper given the inherent lack of assurances. And it would be competing against myriad L2 blockchain protocols designed to enhance transactional capacity.
> If you don’t interface with the network directly, your supposed guarantees go out the window, fast. And the global network today can’t possibly handle the daily interactions in any big city.
I don't have an issue with major credit card companies giving out BTC-denominated credit lines. IMO BTC is bound to become global reserve currency in any future where government issued ecurrency comes into the foray, and the private banking sector is bound to issue cash and credit lines backed by BTC.
> My point was that government-issued currency fluctuates in value, sometimes quite significantly. This underscores the fact currency is a speculative asset.
And mine is that as speculative assets go, currency is one of the lamest. Volatility is very limited, with most of the variation being caused by the relative closeness of the different currencies.
> Central banks wouldn't be able to debase their bitcoin via inflation, and money printing for political ends would grind to a halt. Meanwhile, the currency unit BTC would work in every country. I'd say that's a win over the status quo.
If those schemes inflated the BTC supply in the slightest, they'd instantly fork off the network. If banks decide to issue cash backed by BTC, it would trade at a discount compared to BTC proper given the inherent lack of assurances. And it would be competing against myriad L2 blockchain protocols designed to enhance transactional capacity.
There’s a lot of untested and unstated assumptions there. Just to get started:
- somehow governments will not agree to perfectly available schemes, like fractional reserve lending.
Just by agreeing to save with tax money the lenders, governments can create sudden inflation by drastically reducing required reserves.
- “inflation is a monetary phenomenon” == “printing is the only cause of inflation”.
There’s more variables there, and some of them would be still in control of governments. There’s this general misunderstanding in Bitcoin believers that just because supply is limited, the price will stabilize. Picture this is scenario, governments create a tax on savings and use this to keep ever increasing reserves of BTC. As long as they have reserves, they still have monetary levers, but it’s the same for all countries, so supernational organizations will be the central-bank-like entities controlling the currency.
> IMO BTC is bound to become global reserve currency in any future where government issued ecurrency comes into the foray, and the private banking sector is bound to issue cash and credit lines backed by BTC.
Right now the whole crypto market is a self referencing speculative bubble. Most applications created deal with either creating new tokens or exchanging existing ones. I’m way too bearish on that until I see Bitcoin (or crypto in general) in the real economy.
The very concept of a backing currency has become obsolete. Most money is not 'printed' directly by Central banks, it is instead printed by regular banks, who have been given the right to lend money they do not have, up to some limit. This would not be automatically changed by pegging the dollar to BTC or gold or anything else. As long as banks are allowed to lend value they do not own, nothing significant would change.
According to the Cambridge Bitcoin Electricity Consumption Index (https://cbeci.org/), it actually wastes about 115 TWh annually now. They even have a comparison page where you can see that the network sits between United Arab Emirates (113 TWh) and Argentina (121 TWh) in annual energy use.