there are few things on this planet that are less wasteful and more useful/important for our civilization than bitcoin. it's the first time in history we've been able to express and implement monetary value and security thereof in terms of pure energy without any middlemen.
There's value in competition, though. Bitcoin doesn't eliminate trust, but it does commoditize that function. Commoditization necessarily means "many producers", so there's no way to achieve that without duplication of effort - but I guarantee that one Bitcoin ASIC has a lot less environmental impact than one human.
There have been previous threads on HN with some back-of-the-envelope comparisons of Bitcoin's energy consumption vs the global banking systems, e.g. https://news.ycombinator.com/item?id=18325430 . If these rough calculations are correct, the global banking system uses ~100TWh/year (including datacentres, branches, heating in offices etc.) while Bitcoin is around one-third of that at ~30TWh/year for a negligible percentage of the total number of transactions, and a single Visa transaction (again factoring in datacentres etc.) is 41Wh per transaction whereas a single Bitcoin trasaction is around 20,000 more at ~826kWh. That was also 5 months ago, so the situation is likely to have got worse for Bitcoin, given the traditional banking system is incentivised to reduce energy consumption whereas Bitcoin is explicitly designed to increase energy consumption over time.
The article estimates the total number of ATMs at 3 million, with an average daily power consumption of 5Wh, for a total yearly power consumption of 13Twh. Except if I punch [3 million * 5Wh * 365.25 to terawatt-hours] into the Google, I get 0.0055TWh. If I assume the author meant to type 5kWh as the average daily power consumption, you get 5.5TWh, which is closer, but still not the stated quantity.
[EDIT: OK, so I if I punch [3 million * 500W * 365.25 days to terawatt-hours] into the Google I get the 13TWh the author estimated for ATM consumption. So the author is actually assuming that the average ATM is consuming 500W?]
Likewise the numbers for how much electricity bank branches consume doesn't seem to add up (it seems like the author assumes branches consume an average of 10kW, not 10kWh/day?), and I can't replicate any of the numbers given for bank server energy consumption (just multiplying the numbers given in the article together in different ways).
do these calculations take into account energy equivalent of running all the armies in the world, funding their wars and conflicts? because entire banking system exists on a premise that there is an army behind every fiat currency, so it's not really honest to exclude that from communication.
bitcoin security on the other hand is backed purely by energy spent by miners.
The idea that bitcoin will magically make armies obsolete is one of the most laughably silly ideas I’ve seen in a long time, and that’s quite the bar to clear.
Hint: wars predate fiat currency. You’d still need army without fiat.
The fundamental problem you’re going to have is that any point you decide is the beginning of debt based fiat currency, well there’s still a crap ton of war before it. If you say that the brits were really using fiat during WW1, a dubious argument, then I’m going to gleefully point out that the Romans conquered the Mediterranean using physical gold & silver coins; no fiat.
It’s entirely possible to fund massive wars without fiat currencies. We know this because we’ve seen it time and again. Taxes and bonds can be used even with a hard metal currency, as does the handy expedient of promising a portion of the spoils of war. I see no reason why a bitcoin based country couldn’t just raise taxes and bonds just like the gold backed ones did for literally all of human history.
Beyond that, the world hasn’t seen any truly massive multi-lateral engagements since the proliferation of fiat currency. While the Middle East remains a hot spot, there has been nothing to match the scale and hardship of a world war or a napoleonic war. If the theory is that fiat currency enables war, you’re going to have a very hard time explaining the limited scope of conflict since the abandonment of Bretton Woods in 1971.
why obsolete? i never said that. bitcoin will just decouple money security from state security. which is why when you compare energy consumption, you need to include at least some chunk of resources dedicated to army, defence, etc.
In my opinion, the fraction of the cost of the army that goes to preserving fiat is somewhere in the region of 0%.
What maintains the value of fiat is not government coercive action (e.g., having an army that forces people to use currency). Instead, the value is dictated by how much the populace believes it is worth. So it's the general government actions to maintain the health of the economy, and none of that would disappear if the government were to decide not to use fiat.
Indeed, to the extent that you'd compare how much the government spends in a hypothetical world where it doesn't use fiat currency versus one that it does, it probably takes more resources in the first case (i.e., fiat currency is a net asset to the government, not a net cost).
I love the idea of "no fiat, less war". I also love the idea of "less war". I don't believe war is a natural human occurrence but instead usually done for gaining fiat. However, I do believe that trading is quite natural and our current fiat implementation often simplifies trade. So maybe a borderless fiat simplifies it even more.
First, the logic doesn’t work. Let “has fiat currency” be A, and “has a large army” be B. You’re asserting “If A then B; therefore if not A then not B”. This is a formal logic error called “denying the antecedent”, which means the argument is invalid.
(You also don’t support A well, but that’s a side point because your logical assertion doesn’t work).
Second, there are plenty of examples of rich fiat countries with small armies (Switzerland, 0.7% GDP defense spending) and non-fiat countries with massive army expenditures (Roman Empire, harder to calculate due to history and lower productivity, but at least 2.5% GDP and 80% of the entire government budget). The presence of both indicates that the form of currency a country uses is secondary to other intangible aspects when it comes to the formation and maintenance of large armies.
> Let “has fiat currency” be A, and “has a large army” be B. You’re asserting “If A then B; therefore if not A then not B”.
those are incorrect presumptions and therefore incorrect conclusion. A is "has fiat currency", B is "needs an army or other means to maintain fiat value".
of course army is not the only thing, but it's one of the things in many of the countries. whatever other things other countries have to assert fiat value - those too consume some energy-equivalent of resources. army is just the most obvious and easy to understand example.
and yes, there are also feedback loops, there is no strict causal relationship between the components of this system, which is yet another reason why you can't make these energy consumption comparisons without being intellectually dishonest.
> yet another reason why you can't make these energy consumption comparisons without being intellectually dishonest.
The intellectually dishonest part is trying to shove as many extra costs onto the fiat currency side of the equation without counting them for cryptocurrency.
Comparing the energy cost per transaction is a simple, pairwise comparison. Even if all the world used bitcoin for currency, there is no reason to expect that things like banks, armies, and the entire financial ecosystem wouldn't also exist. Trying to make fiat currency account for all the latter costs is just trying to mask the fact that bitcoin is by design inefficient.
> The intellectually dishonest part is trying to shove as many extra costs onto the fiat currency side of the equation without counting them for cryptocurrency
let's meet in the middle then? i don't shove as much as possible but you shove enough for comparison to be honest.
> Comparing the energy cost per transaction is a simple, pairwise comparison
it's simple and wrong. energy-efficient transactions isn't bitcoin's goal. this has already been mentioned, i suggest you re-read the thread.
> there is no reason to expect that things like banks, armies, and the entire financial ecosystem wouldn't also exist
who's expecting that? i'm honestly amazed by amount of strawman-ing happening in this discussion. didn't expect that on HN.
You can change the definition of B all you want, it's still a formal fallacy, meaning the argument is literally worthless. You have to structure a very different argument from what you've shown to assert that bitcoin would reduce national military expenditures, not just tweak the details.
but you don't just disagree, you make convoluted invalid arguments. there is no logical fallacy in
> if maintaining fiat value requires spending resources then not having to maintain fiat value means there is no need to spend resources to maintain fiat value
it's indeed a case of:
> "I don't have an argument, but I believe it very strongly".
By that analogy we use plenty of people, buildings and power in traditional banking. I'm guessing that easily outweighs the power and costs of bitcoin mining.
But to enter the market, you just need to buy those Bitmain ASICs and find a cheap power source. That's what makes it a commodity market: barriers to entry are low, so if a big player gets too dominant, a bunch of new entrants with money but not necessarily expertise can take them down. You can't really do that to say Goldman Sachs or Wells Fargo, where a large portion of the competitive advantage they've built up is the trust (har har) and relationships they've developed over the past 150 years.
There's perhaps worries that Bitmain could get too big and poison the chain, but they're hamstrung in that by Bitcoin being an open protocol. If they did that the network would fork, and despite the higher hash rate in the Bitmain fork, holders would dump the Bitmain coins and buy the original fork, since they wouldn't trust the poisoned chain.
your understanding of bitcoin is very lacking. miners never waste any energy, they spend it to acquire proof that they spent it. that proof has value and while value of the proof is larger than market value of bitcoin rewarded for the proof - miners will keep mining.
also miners are not middlemen - they don't control transactions, they don't control the peer to peer network. they are there to publish the proof and get their reward.
you really should inform yourself on the topic before debating it.
Miners are literally there to skim value out of a transaction. They're middlemen.
And it is a waste. There are plenty of more efficient ways to make a transaction. I get that bitcoin is designed around this waste but that's hardly an excuse.
There is zero waste. You don’t understand bitcoin. Bitcoin is not about transaction efficiency or throughput, use MySQL for that. Bitcoin is about secure ownership of money, peer to peer exchange and immutable fiscal policy.
What you call waste is simply price for some level of security that isn’t backed by any armies.
Edit: also, no, miners aren't middlemen, that's just another misunderstanding on your part. middleman has control over the process they facilitate, miners have no control over anything but construction of blocks and how much energy they are willing to spend. you could argue miners can choose to ignore transactions coming from me (if they manage to figure out how to identify them), but it's a competition of independent parties so there will always be other miners that do not choose to ignore me. for that to be an issue big enough to call miners middlemen you'd need majority of miners to collude on something quite obvious and demonstrable, which would undermine bitcoin project itself, rendering miners' own investments in bitcoin and infrastructure worthless - not in their interest. besides, with confidential transactions this entire point will be moot.
Hold on, the response to “Bitcoin is inefficient with energy” is that efficiency doesn’t matter? That isn’t moving the goalpost so much as removing it.
third parties only observe what's published in a blockchain. they can choose to disagree with blockchain. when all/majority third parties disagree with blockchain - it becomes irrelevant and worthless while some other branch of that blockchain becomes "the real one".
it's really not the same as having limited number of third parties proclaim which version of blockchain is correct.
but more importantly - one doesn't have to ask permission from any third party to publish their transaction either via internet or radio or satellite or morse code. if you still think trading in gold is safer/easier - i don't know what else to say.
This is such utter nonsense. There are a whole class of middlemen!
And decentralised currency is not useful or important, unless you've got some sort of decentralisation fetish, which most people don't.
This is honestly one of the most inflated, ridiculous claims I've ever seen in the cryptocurrency space. A space which is already riddled with ridiculous, overblown claims!
i provided an elaboration: it's the first time in history we've been able to express and implement monetary value and security thereof in terms of pure energy without any middlemen.
You ignored it - there are middlemen and your claims are ridiculous fantasy.
Miners are the middlemen, complete with fees. Bitcoin is not pure energy any more than any other electronic currency. Proof of work is energy already used, not somehow carried in a bitcoin.
The whole "pure energy" thing is just air-headed utopianism AFAICT
> there are middlemen and your slaims are ridiculous fantasy
this is an assertion from your previous message.
> Miners are the middlemen
this is an elaboration for your assertion, that was missing from your previous message.
you don't have to lie, it's fine if you admit your mistake and fix it.
> Miners are the middlemen, complete with fees
this is false. middlemen have control over the process. miners don't control who can transact with whom and transaction fees are still orders of magnitude lower than the actual flat block reward. moreover - miners don't set the fees either, market does. miners only participate in a competitive environment of providing proof of work and getting paid for it. they are "contractors", not middlemen.
> Bitcoin is not pure energy any more than any other electronic currency. Proof of work is energy already used, not somehow carried in a bitcoin.
bitcoin is not pure energy and i never claimed it was. if you go back and try to read carefully you'll see that i was talking about monetary value and security. bitcoin is just a record in a ledger and not different in t hat regard from thousands other cryptocurrencies. what's different is the difficulty number of every block in the bitcoin blockchain - that's where security comes from, that's how hard it is to modify history and that is where big chunk of bitcoin's value is coming from.
> Proof of work is energy already used, not somehow carried in a bitcoin.
again, you're misunderstanding what i'm saying. you can't convert bitcoin back into energy that was used to create the blockchain, however you do have to spend equivalent amount of energy for each block to be able to mutate the history. that's what i mean when i say that bitcoin is security of money backed by pure energy.
> this is an elaboration for your assertion, that was missing from your previous message.
Not really. Who else was it going to be, it's not like I'm the first to point this out.
> miners don't control who can transact with whom
Of course they do. It's up to them which transactions to include in a block.
> transaction fees are still orders of magnitude lower than the actual flat block reward
People who like bitcoin like to talk about inflation and QE as theft from their pockets. The block reward is a fee extracted from the ecosystem in the same way.
> bitcoin is not pure energy and i never claimed it was
"it's the first time in history we've been able to express and implement monetary value and security thereof in terms of pure energy"
So yeah, you did, you said it was monetary value expressed as pure energy, which is meaningless. It's not a measure of joules, and it's not the hashing which gives it value. Quite the opposite - the speculative value is what attracts the hashpower.
> It's up to them which transactions to include in a block.
and "them" is not a single entity or even small number of entities. miners compete for block rewards and every transaction with a fee contributes to the profit - whatever malicious miners choose to leave out will be included by non-malicious miners making them more profitable.
calling miners middlemen when they would only have actual control over which transactions appear on the chain if majority of miners colluded (destroying the value proposition of bitcoin in the process) is very disingenuous.
> talk about inflation and QE as theft from their pockets. The block reward is a fee extracted from the ecosystem in the same way.
i don't even... QE and other fiscal measures are short term decisions made by bunch of powerful humans behind closed doors. Bitcoin emission schedule was decided ten years ago and has virtually zero chance of being changed without destroying the project and it's value. you must be trolling right now if you say you don't see the difference.
as for why is there bitcoin emission schedule at all - because that's probably the most fair process of distributing bitcoin.
> So yeah, you did, you said it was monetary value expressed as pure energy, which is meaningless
either you start reading and quoting me correctly or this discussion is over, i'm done with your manipulative tactics.
I'm not sure why you'd make such a trivially disprovable claim, they quoted you word for word, it's very easy to prove that with a quick browser text search...
