Guest essay by Eric Worrall
Bitcoin miners are expected to consume 0.6% of the global energy budget in 2018.
Bitcoin Could End Up Using More Power Than Electric Cars
By Tim Loh and Frederic Tomesco
11 January 2018, 05:02 GMT+10 Updated on 12 January 2018, 04:31 GMT+10
The global power needed to create cryptocurrencies this year could rival the entire electricity consumption of Argentina and be a growth driver for renewable energy producers from the U.S. to China.
Miners of bitcoin and other cryptocurrencies could require up to 140 terawatt-hours of electricity in 2018, about 0.6 percent of the global total, Morgan Stanley analysts led by Nicholas Ashworth wrote in a note Wednesday. That’s more than expected power demand from electric vehicles in 2025.
“If cryptocurrencies continue to appreciate we expect global mining power consumption to increase,” Ashworth wrote in the note.
…
One eager entrant is Hydro-Quebec, Canada’s biggest electric utility. It’s in “very advanced” talks with more than 30 cryptocurrency miners — many of them currently operating in China — and expects to announce agreements in 2018, Marc-Antoine Pouliot, a spokesman, said Wednesday in a phone interview.
Within four years, Hydro-Quebec envisions miners soaking up about five terawatt-hours of power annually — equivalent to about 300,000 Quebec homes — from the surplus created by the region’s hydroelectric dams. “If we have to invest in our transmission network, these investments will be paid for by the miners,” Pouliot said.
…
Steven Mosher claimed in December that Bitcoin miners all use hydro, in response to my suggestion that bitcoin was causing a rise in CO2 emissions. Avoiding CO2 emissions seems to be important to Bitcoin advocates.
Do all bitcoin miners use hydro power or renewables? In my opinion very unlikely. Even “certified renewable” power is suspect. In 2010, Spanish solar providers were busted producing solar power at night.
Even if you assume that all bitcoin mining hosts are honest about where their power comes from, does consuming cheap hydro power for Bitcoin mining displace other traditional users of hydro, such as Aluminium smelters? Or does bitcoin mining encourage so much investment in additional hydro capacity that nobody is displaced?
Either way, a projected 0.6% of the global electricity supply is an awful lot of power to burn on an activity which seems fundamentally pointless.
There is a silver lining to green bitcoin hypocricy. If you ever discover that you are living in a dystopian green paradise, where home heating is discouraged but bitcoin mining is tolerated, you can heat your home with a multi-kilowatt bitcoin mining rig.
I don’t understand. What is a Bitcoin miner?
Bitcoin mining is how new bitcoins are mined (created). Coins are mined by solving an insanely difficult code breaking problem, using highly specialised computers which burn vast amounts of electricity.
dunce. its not “code breaking.”
https://www.youtube.com/watch?v=sE7998qfjgk&t=1s
I honestly don’t get it. Am I just stupid? Where did the value come from, while expending wealth to solve a puzzle. What does that mean? Can anyone really explain this to a two year old?
I can see if a sovereign nation state did this, since it is back stopped by the credibility of the State. But of course, all throughout all of history, all fiat currencies have failed, or on the way to failure. I can see the Blockchain security, but this is created out of thin air by private interests? I don’t think anyone will be able to satisfactorily explain where the actual value comes from…
Simplified explanation Mosher. Trying to generate a hash within the right range is a “code breaking problem”.
There is no tangible wealth being mined, created, farmed, manufactured or collected. The “value” is entirely in the desirability or requirement to possess the item, which necessarily has to be rare and very difficult to create, and a trust that the value will continue to increase indefinitely. It’s an example of Tulipomania or a South Sea Bubble. Indulgences and carbon credits were other examples, though in the carbon credit example the value was (or is) sustained only so long as the national government enforce the value (that is, create a “fiat currency” that people in that country are effectively forced to trade in: pieces of paper, say, as opposed to lumps of coal or bushels of wheat or actual smartphones). As soon as the government stops sustaining a fiat currency its value drops to to its intrinsic value, which is zero. I don’t know how high the price of bitcoins can go before the market will collapse! By the sound of it, the Chinese will have a lot of surplus hydro-power plant on their hands after the collapse. In North America, any company (or state) that borrows money to build hydro-power is gambling on the basis that it will be able to sell that power in the future at a sufficiently high price to repay the loan. However, if there is a major surplus of hydro power that price will be tiny and the company would go bankrupt. This would be Enron to the nth degree. Investing in hydro in order to mine bitcoins is a bizarre fantasy that will end in tears! It will be like borrowing money in the seventeenth century to buy tulip fields and bulbs.
Once again, Mosher misses the point. The article is about energy use. Either it uses stated amount or not. Whatever is the answer, for those who haven’t followed the bubble and the price for the last couple of years, it is fascinating.
“I can see the Blockchain security, but this is created out of thin air by private interests? I don’t think anyone will be able to satisfactorily explain where the actual value comes from, but this is created out of thin air by private interests”
How is that different than the US dollar?
I have more faith in the US Goverment to keep the merry go round working for as long as possible. There is only 21 Mil Bitcoin to be mined and somehow that can be exchanged for USD? And then used for actual goods and services? Did I miss something?
But I get your point about ‘how is this any different’. It is just Faith. And I trust The Fed to keep the party going as long as it is possible. We barely even know who is reallly behind Bitcoin. Could be Little Rocket 🚀 Boy for all we know.
some of the smarter mioners are in iceland using geothermal as well as already in canada for similar lowercost power.
now i remember reading how a massive volume of water and power were going to the data mining dhs/nsa setup in utah?and thats just one of such places..that are pretty much black/unmentioned and for sure dont tell their running costs to anyone.
then theres all the cloud storages..same again
so the fluff re bitcoin minings a bit of a furphy i suspect
and people can mine in home setups for some of the coins like Safecoin/Maidsafe when its fully up n running soon. interesting concept an alter web and you can mine to cover your cost of using services, if you have a decent pc and storage space i gather.
ya oz. Ive got a ton of customers there
Which serves absolutely no useful purpose, since you might as well be making electronic snowflakes. No two of those are exactly alike either, but we pay money to get RID of them.
It’ll be much easier to trade something with actual value, like gold.
icisil: Because the u.s. dollar is backed by the US Army... that’s why it’s called “fiat money.”
Ian, so the US Army is going to ensure that the US government never debases the currency and will always pay it’s debts?
In colonial days, individual banks would issue currencies based on their deposits. The trouble was it was nearly impossible to use those currencies outside the town where the bank was located. There was no way to determine if the bank was legitimate and trustworthy.
Mosh shows who the dunce is. (Hint: it’s not Eric.)
Ultimately every fiat currency, in its fundamental essence, is just a promise to pay. The question becomes how that promise will be enforced if someone reneges on the promise. If you can go to court and have that promise enforced, there is a level of security that you don’t have if you can’t go to court and get the promise enforced.
In the US, the government and its judicial system is still enforcing currency based on promises. With bitcoin though, the question immediately arises as to what government will enforce a promise if someone reneges. I really don’t know of any such government. If there are no laws about bitcoins, how would any government enforce these promises between two people?
David –
Bitcoin is like a bearer Bond there is no promise to pay. There is no consumer protection. Once you sign over with your private keys it is pretty much gone with no ability to take it back.
It is fascinating how these 1s and 0s cannot be copied.
Not quite. Bitcoin mining does not actually involve searching for bitcoins. It is the equivalent of you are given gold nuggets if you show you were digging for a long time. You merely demonstrate you engaged in useless calculations for a sufficient amount of time, and you get bitcoins as a result.
“It is the equivalent of you are given gold nuggets if you show you were digging for a long time.”
Except the gold existed prior to the digging. Bitcoin doesn’t. What appears to be happening here is one is making their own “gold”, in which case it looks like you have a few million Federal Reserves creating a supply of useless “currency”.
“Ultimately every fiat currency, in its fundamental essence, is just a promise to pay.”
There’s no promise inherent in the essence of a medium of exchange. All that’s there is the medium of exchange. The promise to pay comes as part of the contract consideration that’s agreed to after a meeting of the minds of the parties involved.
“If there are no laws about bitcoins, how would any government enforce these promises between two people?”
Just like any other contract where there’s an agreement by the parties. If I have a contract with you to trade a certain car for another car and you renege on the contract, I’ll sue you and whichever court of law has jurisdiction will hear the case.
Similarly, if I have an agreement with an individual whereby bitcoin is the medium of agreed-to exchange and he doesn’t live up to the contract, I’ll sue for whatever damages the contract stipulates and a court of law will hear the case. Verbal contracts are enforceable.
Earthling2
January 13, 2018 at 1:59 am
I honestly don’t get it. Am I just stupid? Where did the value come from, while expending wealth to solve a puzzle. What does that mean? Can anyone really explain this to a two year old?
————————
Hi there.
Please do not take my word for it, but as far as I could assist with my superficial understanding, the value comes from actually building the blockchane….
Mining is the mechanism and the method of building the blockchane, simply put…..
Now blockchane is very complicated to explain in a comment, but a way to put it in regard of this blog post, as per the energy angle, it is a function that reduces considerably over time the energy consumption of/by the Internet and in the same time influencing the energy efficiency and sufficiency world wide…:)
Kinda of trying to reduce the energy bills and turn the industries, the energy sector and the whole of the rest of the human affairs towards a better and more efficiency.
Very valuable if it is some thing like this….but trust me is far much more complex than such a simple explanation…..for as much as I can tell.
Hope this helps…
cheers
markW – you ask a good question: “Ian, so the US Army is going to ensure that the US government never debases the currency and will always pay [its] debts?“. That’s pretty much the equation, though it might be too late by the time the army stepped in. The US dollar doesn’t have an absolute value, it relies on the integrity of the US system and the behaviour of the US government. Just look at Venezuela, for example. Or any of the other countries with rampant corruption, broken systems or wildly over-spending governments (Donald Trump referred to these recently). In Zimbabwe, inflation peaked at an estimated 79,600,000,000% in 2008 (https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe). The US is not immune from the equation, its currency retains its value only while people have faith in its government and systems. If the US crosses the invisible line, watch the Renminbi take over. But until then, the US dollar has genuine value. Bitcoin? Well, the creators of Bitcoin and other cryptos have already made a very large amount of real money, and will be very happy to walk away and leave others to clean up the mess.
Earthling2
January 13, 2018 at 1:59 am
“I honestly don’t get it. Am I just stupid? Where did the value come from, while expending wealth to solve a puzzle. What does that mean? Can anyone really explain this to a two year old?”
As whiten explains: January 13, 2018 at 1:00 pm
” the value comes from actually building the blockchain….”
The blockchain is the actual value. By calculating and maintaining it the ‘miners’ are rewarded with some bitcoins for each block clarified. All those pc’s connected to the networks do maintain the blockchain and clear blocks that can be used for further transactions.
https://en.wikipedia.org/wiki/Blockchain
“A blockchain,[1][2][3] originally block chain,[4][5] is a continuously growing list of records, called blocks, which are linked and secured using cryptography.[1][6] Each block typically contains a hash pointer as a link to a previous block,[6] a timestamp and transaction data.[7] By design, blockchains are inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.[8] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.”
I know this does not answer yet the question however many people see a bright future for the technology. The question is how far will it really expand and which form.
Currently there are many hundreds of cryptocurrencies besides bitcoin:
https://coinmarketcap.com/all/views/all/
These my two cents 🙂 have fun
“Once again, Mosher misses the point. The article is about energy use. Either it uses stated amount or not. Whatever is the answer, for those who haven’t followed the bubble and the price for the last couple of years, it is fascinating.”
Ah no. My comments about power are below where I give you the actual data to do your own work.
THIS comment is about the stupid description of mining as “code breaking”
There is no code… no message.. Just a brute force guessing at numbers
its a lottery.
“The blockchain is the actual value.”
So the blockchain IS the value and the blockchain is defined as:
“A blockchain,[1][2][3] originally block chain,[4][5] is a continuously growing list of records, called blocks, which are linked and secured using cryptography.[1][6] Each block typically contains a hash pointer as a link to a previous block,[6] a timestamp and transaction data.[7] By design, blockchains are inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.
Interesting…so I have a bunch of old company receipts on-hand that efficiently and “verifiably” record permanent transactions I’ve made.
Anyone Bitcoin enthusiasts care to buy them????
I’ll sell them to you for $5000 a receipt!!
Surely a bargain!!
“We barely even know who is reallly behind Bitcoin.”
Isn’t it nothing more than thousands or perhaps thousands of thousands of little “Fed’s”, each with their own printing press, so-to-speak?
What is funny is people thinking “gold” has any intrinsic value. Gold like diamonds historically only has value because it was rare and you can’t easily fabricate them to kill the value the same can be said of a bitcoins.
@ sy
your receipts can be spoofed altered and falsified — happens all the time
Blockchain can’t be — that’s the beauty — hashing is a non-reversible mathematical function — once a new block is added and confirmed all old transactions can never be changed — unlike your receipts
Bitcoin is monopoly money, there is no real world value behind it. Its proponents argue that it’s really really really really hard to fake the monopoly money. Yeah but so what, so we have really really really really hard to duplicate monopoly money. There is still no real world value.
The fact that despite this there are people and companies willing to trade it is bewildering. I assume the explanation is that the economics (or lack thereof) is so complicated, that it’s difficult to grasp, so a lot of people are confused. See this very discussion. Also there’s the “gee-wizz high tech wizardry” factor that gives it undeserved glitz.
The comparison with official fiat currencies is wrong. Yes banknotes and numbers on bank statements have no intrinsic value either. But they are the official legal currencies of powerful national economies. The value of the US dollar comes from it being the default currency of a country where on every street corner there is a supermarket full of desirable goods that accepts US dollars as payment, and the country has the means (in the form of agriculture, factories etc) to refill the shelves all the time. And its authorities in the form of courts, marshals, and armed police officers will make anyone in debt pay in US dollars, and not something else, therefore US dollars will remain desirable as long as the government supports them.
Monopoly money such as bitcoins have nothing like that behind them, they rely on nothing but a large number of people being deluded about them. It will ultimately crash, the only question is when.
When a your computer solves a hard math problem, you are awarded bitcoin. link
It’s important that the math problem is hard and takes a lot of computer power. Power in this case refers to the ability to do math but also in watts consumed.
If computers get better to the point where the bitcoin problem becomes ‘easy’, that will facilitate fraud. That means they will have to increase the difficulty of the problem.
Each step in a computer’s operation is called a CPU cycle. The harder the problem, the more cycles. Each cycle consumes electricity.
So, if computers get better and more efficient, the bitcoin problem will have to get harder to prevent fraud. That means a lot more CPU cycles and, even if the computers are more efficient, the electricity consumed will probably increase.
The power consumption problem seems to be baked into bitcoin and isn’t likely to be solved.
Fortunately, there are other cryptocurrencies that don’t work the same way as bitcoin.
And after all this is done value is created. Got it.
Most of those coins are centralized. Bitcoin is a different and better animal.
“When a your computer solves a hard math problem, you are awarded bitcoin.”
Which is the electronic equivalent of a sign handed you by Bill Engvall saying “I’m stupid,” with the exception that you can sell it to someone out there was a bigger idiot than you are.
So, at the risk of being sued by Bill:
HERE’S YER SIGN!
But the fundamental problem is that there is no way to restore the same amount of energy consumed in mining a bitcoin when one is destroyed. That is why the whole idea is rather like a Ponzi scheme
It is built in to get ‘more difficult’.
@Ian
Nope, that’s not it at all.
See, the ‘miners’ are actually working on the encryption of the next block of BITCOIN TRANSACTIONS that will be added to the ledger — wallet A sends .008765BTC to wallet b multiply this times a hundred transactions per block around the world — these transactions are hashed (encrypted using a known algorithm) to create the next encrypted block in the ledger.
For their work, the computer or pool of computers gets a reward of X bitcoins.
It’s the same as a fee for ATM transaction or the credit card acceptance fee that every merchant pays — except the community that is ensuring transparent fidelity gets paid
“For their work, the computer or pool of computers gets a reward of X bitcoins.
It’s the same as a fee for ATM transaction or the credit card acceptance fee that every merchant pays— except the community that is ensuring transparent fidelity gets paid.”
Just a slight quibble with your equivocation of a credit card merchant fee and an ATM transaction…merchants never pay fees (or taxes), rather their consumers do in the increased price of the product to cover those fees/taxes.
For this reason in my business I give customers a discount for cash or check payments, since they cost me nothing in 3rd party reconciliation fees at the bank.
Who issues x BTC for the work done, i.e., the reward? Is it the consumer or the merchant and where does this transaction happen, e.g., at the original purchase or does the merchant get a monthly bill or…?
Which authoritative body governing Bitcoin decides how much the reward is per transaction?
@Patrick
bitcoins are NEVER destroyed — they live forever in the ledger — the ledger grows with every transaction
bitcoin wallets actually hold a set of public and private keys that prove they ‘own’ a transaction in the ledger
@ sy
I can tell you have never owned a business that takes credit card payments.
I can assure you that I received an invoice from my credit card acceptance company that charged me (actually debited directly from my merchant account) for each transaction and a monthly fee for the virtual and real machine.
Whether or not the seller passes on the fee is a matter of choice.
“Whether or not the seller passes on the fee is a matter of choice.”
I guess I should’ve said…no “rational” business owner would ever pay taxes or merchant fees without passing them on as a cost of doing business…apologies.
🙂
It’s not code breaking — in fact the HASH is non-reversible
What it is is SOLVING an encryption algorithm for all the bitcoin transactions that are going to be added to the next block in the block chain — according to a very specific algorithm and based upn the previous block in the chain.
For completing that PROOF OF WORK and ensuring that the transaction is recorded in perpetuity in the blockchain and cannot be denied — the SOLVER is rewarded with some bitcoin.
bitcoin is simply a pointer into the blockchain that along with a public and private key shows ‘ownership’ of digital value
A typical bitcoin mining rig –
If anyone thinks these guys care about “clean power” they are probably quite wrong. If your power supply has to be reliable and cheap 24/7/365 it is probably not “clean”.
The video shows a solar flare disaster, but if a Carrington event happened again as it did in 1859 it would not just take out all the block chains and leave the bitcoin miners broke. It would also take out the ignition systems on cars and trucks, power plants and transmission lines would go down. Traditional banking with “real cash” is also largely virtual these days.
http://www.history.com/news/a-perfect-solar-superstorm-the-1859-carrington-event
Possibly there is enough archival data stored in places like Iron Mountain on tape that the internet could be largely reconstructed after such an event. I hope the block chains and all our bank accounts are backed up properly. If so the bit coin billionaire would lose his mining rig but still have his money. There is just no way of telling how many bitcoins would buy a loaf of bread after such an event.
There is no way a Carrington event would take out personal electronics, unless the devices were hooked to the grid and there was a huge power spike.
The reality it that the grid has sufficient surge protection that it would absorb any such event with ease and nobody would ever know that it had happened.
Bruce Ploetz
January 13, 2018 at 5:13 am
Possibly there is enough archival data stored in places like Iron Mountain on tape that the internet could be largely reconstructed after such an event.
——————–
I am not sure that I am correct but my understanding is, that in such a case, the only way to have a back up archive such as considered and possibly workable, in the meaning of an Internet backup, it is the blockchane only that could do.
Silly me, never considered up to now that blockchane could also be and do that best Internet backup…:)
Thanks
Agreed!
The blockchain lives at every single bitcoin node — same for ethereum (hence why 2GB gpus can’t be used for mining anymore the block keeps growing)
Very Funny!
Mark
A Carrington event could destroy civilisation as we know it as so much of our leaders vest are dependent on electricity and the internet all open to disruption, natural and man made. Money to fuel, water to food everything ultimately relies on uninterrupted electricity and all the things it powers.
The uk govt set up a special committee several years ago about another Carrington event and involved the security services
https://publications.parliament.uk/pa/cm201012/cmselect/cmdfence/1925/192504.htm
It is possible to build in resilience, although that is more likely to happen with new equipment than existing stuff . There is an unknown cost and unless there is legislation I guess those providing our services are going to take a piecemeal approach to the problem
I remember discussing this with Leif some yeas ago and I believe he said about a Carrington event that it was not a matter of IF it happens but WHEN it happens
Tonyb
I think the 20 TWhr consumed last year already exceeds that of all of the electric cars combined. Assuming that an 85 kWhr Tesla can be charged to 80% in 30 minutes, and they charge once a day, it would take 1.6 million of them to suck up 20 TWhr. I don’t think there are that many EVs on the planet.
Energy is energy. It’s the first law of thermodynamics. Economically speaking, it comes down to about $0.03 a megajoule, so a TJ is about $30,000.
1TWh=3600TJ
Mark
My tablet is very entertaining tonight. I think I put ‘activities’ rather than ‘leaders vests’ and it certainly didn’t say that as I scrolled through it prior to sending it.
I think there may be a game show in there somewhere ‘did you really mean to say that’?
Tonyb
No they dont ALL use hydro. As I said almost all do.
Hydro, solar, geo thernmal, some coal, some Fuel oil (russia mostly)
“Even if you assume that all bitcoin mining hosts are honest about where their power comes from, does consuming cheap hydro power for Bitcoin mining displace other traditional users of hydro, such as Aluminium smelters? Or does bitcoin mining encourage so much investment in additional hydro capacity that nobody is displaced?”
The vast vast majority of the power consumed is STRANDED power. Or in some cases that aluminum smelter that went out of business? Take over his power contract.
Power consumption
https://blockchain.info/charts/hash-rate
today we are at 17.5 Million Terahash
The Typical machine operates at 90-150 Watts Per Terahash.
“Either way, a projected 0.6% of the global electricity supply is an awful lot of power to burn on an activity which seems fundamentally pointless.”
The activity is SECURITY. Mining secures the network against fraud with a 300B market cap we
spend to secure that asset against fraud.
So if you ran a Miner Today it would cost you about a dollar in electricty and you would make about 7 dollars in bitcoin
Pretty much pointless…ya.. stay away
It seems that Bitcoin is basically a way to monetize electricity. Unfortunately, it can’t be directly converted back: emissions are forever.
So is aluminum. But, you can’t make a beer can out of bitcoins
Watts? Or watt-hours?
Watts
The bitcoin ASIC mining machines compute 14.3 Terahashes/sec @ about 1400 Watt draw from the wall
You also wrote:
“US customers are all Hydro.”
yes my US customers are all Hydro.
you guys are so stupid.
how do you think I know what my customers in the US use?
One of the largest Bitcoin mining operations in the world uses only coal power – the Bitmain factory in Ordos, Mongolia, with 25,000 machines. The Bitmain organization is the largest group of Bitcoin miners (almost 18% of all bitcoin mining), and a high percentage of their setups are run off of Chinese coal power.
Wrong.. You took that from an old artlcle. 25K machines is not a very large facilitity That would be a 25MW facility. not very big. Big are the 500MW facilities.
The article was from October 2017. No, a three month old article is not “old.”
There are no “500 MW facilities,” There are mining groups/associations that add up to 500 MW, but no single-location 500 MW Bitcoin mines.
Bitmain is still the largest single group, and the majority of their hardware is still in China, where the power they’re using is cheap (and dirty) coal. Even the competing Chinese Bitcoin miners are still effectively using coal.
sorry Chad. Been there seen it.
And because those miners are buying all the “good” electrons from low carbon sources, regular people are forced – FORCED! – to buy “bad” electrons from high carbon sources. Not only are miners sucking up valuable power that could be used for electric cars, they are forcing poor people to increase their CO2 footprint – shuffling off their sins on others.
And you support that?
What we need is an electron scrubber to clean up the dirty ones before they enter my equipment. some kind of sieve made of photons might work.
Reverend: Yes, you have the solution. Each electric meter should have an electron filter. Electrons pure of Carbon Sin go into the house. Electrons tainted by Carbon Sin are filtered out. Each month, the meter reader opens the meter and takes out the little filter bag (electrons aren’t very big), and shakes it out into an electron container. Tainted electrons are taken back to where they came from, or maybe dumped into the nearest landfill. No \sarc because this reply transcends \sarc.
“…or maybe dumped into the nearest landfill.”
Blasphemy! Recycle them!
Actually nobody anywhere uses any particular type of power. Everybody uses the mix of power going into the network one is hooked up to. This means that bitcoin miners in Norway and Iceland use almost exclusively hydropower, bitcoin miners in Sweden and Portugal use a large proportion of hydropower. Everybody else use mostly fossil-generated power. And there is no such thing as “stranded” power.
tty is wrong. Buy from the network?
stupid retail strategy
here is what One of my typical customers will do.
1. Go to the Dam Operator.
2. Strike a deal for the capacity no one uses
3. Build out a substation if they have to.
4. Construct a building , buy transformers etc..
5. Order machines from me.
If you want to know about swedish mines… dont listen to tty
Too funny.
hey TTY how many MWs do you have running in sweden
There are bit miners all over the world using electricity generated from all sources. If you can mine from a coldish place, with cheap electricity, you’ve an advantage.
“Avoiding CO2 emissions seems to be important to Bitcoin advocates.”
An uncritical acceptance of the madness of crowds, gullibility, lots of loud advocacy on blogs, aggressive defence of an obviously over-hyped scam.
The bitcoin people aren’t much better.
JF
and here we are – the Kodak Kashminer
Looks like a hi tech greenhouse heater.
Or should that be, ‘Faerie Counter’
Brilliant stuff about Kodak over at Reddit /r/butttcoin. If you want to make money maybe Kodak stock market puts are going to earn more than Bitcoin speculation!
Unless I am mistaken, let’s do the maths:
Bitcoin Difficulty: 1,590,896,927,258
Hashrate : 8,481,426,187 GH/s
efficiency of miners : 10GH/W (bitmain S9 latest)
so … total network consumption 848 MW
world total electricity consumption 19800 TW
Not all the miners use S9’s but old miners gets phased out pretty quickly because they lose money instead of earning some.
So where is the problem ?
Morgan Stanley claimed the 2017 consumption was 20 TWh. That’s quite a bit more than the 848 MW you posted.
Power (848MW) versus energy (20TWH). So 848MW times hours in a year (24*365) = 7.43 TWH. In the same ballpark as 20TWH.
So we all agree … that’s about 1/20,000,000th of the world total electricity. I don’t think its worth giving a damn.
“The right is always harping about personal responsibility, but there is no greater avoidance scheme for personal responsibility than the for-profit corporation.”
Except for the non-profit corporation, who’s principals enjoy the same protections as the for-profit.
“I don’t begrudge any person having lots of wealth, provided they didn’t make that wealth via the for-profit corporation. Now who does that today? Nobody.”
Except for, e.g., the Clinton family, whose wealth has increased exponentially over just a short period of time via the Clinton Foundation, a non-profit that profits no one but themselves (or used to).
Get Really, Really Rich: Form a Non-Profit
https://www.cbsnews.com/news/get-really-really-rich-form-a-non-profit/
By your own logic therefore you must “begrudge” any principal in any corporation regardless of 501 status who’s amassed a great deal of wealth.
Moreover, by your own logic we must disband both for and non-profit corps to prevent the possibility of “inequality”, including Bernie’s own non-profit, “Our Revolution”.
If not don’t you contradict yourself? Why not?
What is about the desire of those on the left to believe that anyone who has a lot of money must be evil.
What is it about those on the right who seem to think that vast amounts of inequality are a good thing for society.
How is great wealth made today? The vehicle for great wealth accumulation, is the for-profit corporation which, ironically is a creature of the state. No state charter — no corporation. Breaking it down a bit further. Why do people incorporate in the first place? To avoid personal responsibility in three different ways: to avoid taxes, to avoid being responsible for corporate losses and to avoid any personal judgments for lawsuits.
The right is always harping about personal responsibility, but there is no greater avoidance scheme for personal responsibility than the for-profit corporation. I don’t begrudge any person having lots of wealth, provided they didn’t make that wealth via the for-profit corporation. Now who does that today? Nobody.
What we have today is not capitalism. It is crony capitalism via the for-profit corporation.
David,
“What is it about those on the right who seem to think that vast amounts of inequality are a good thing for society. ”
Without inequality, we would still be living in the trees. In the plant and animal kingdom, this is referred to as ‘survival of the fittest’. And you should also understand that in the vast majority of cases, what you consider to be inequality is the reward earned for hard work.
The only way to achieve the dysfunctional utopia you seem to prefer is if everyone is equally poor and oppressed. For example, North Korea.
david…
“Those on the right” understand that “vast amounts of inequality” in a society can be the result of totalitarian or socialist leadership, in which case it is not a “good thing”, or it could result from the fact that not all people are identical in productiveness, which, in a “good society”, means that productiveness is rewarded.
In our society nearly all businesses are licensed by “the state”. All sole proprietorships, partnerships, and corporations are, in your terms , “creatures of the state”. The corporate structure allows for the ease of accumulation of capital with limited risk to investors, which results in more economic experimentation and is generally of benefit to society. Non-profit corporations avoid taxation, and can be as much a demonstration of inequality as profit businesses. See, e.g., the Clinton Foundation, or Harvard.
“What is it about those on the right who seem to think that vast amounts of inequality are a good thing for society.”
No sane person thinks inequality is a good thing.
What is it about those on the Left who seem to feel they need to tell lies about the Right?
Some seem to think if Joe, or Elon gets rich, Bob has to get rich as well, otherwise it is inequality. It’s not. Sosialists seem to think even that if I make sure my daughter gets a good education by paying money and getting her to a good school, that’s inequality. I need to put her in a public school to make sure she’s not taller than anybody.
In the end there stands communism, where everybody gets what one needs, everybody does what is able to do, and nobody cares. And STILL, there are some people who are inequal.
But to be frank, socialist never wants to take money from the rich, like Elon, or Hillary, or Al, or George. A socialist wants to confiscate the small physical good that a poor person has: owned property, cheap energy, car, meat, all convenience. Hillary may do whatever, it is the man of the street who’s hit by the socialist.
https://www.youtube.com/watch?v=SF362xxcfdk If you ever asked the question what is money you might turn up some surprises.
hashgraph is very cool.
more later
What a lot of rubbish. A smooth-talking, quietly spoken person spouting half-truths upon half-truths, linking them together smoothly as though one “logical thought” follows on from the previous. This is a classic sales technique – you supply a half-truth, then say to the recipient “well if this is true, then…” and immediately follow with an even more unbelievable half-truth. I can see why folks would believe in this tripe. You only need to isolate each “thought” by itself to realise that if one is false, the entire “blockchain” of “truths” must be false.
Generally, we have just incorporated debt into inflation, and pass the buck so to speak, down through time to future generations. The problem is that it finally gets eroded down to nothing. Some quicker than others, think Venezuela or Zimbabwe. Gross negligence on steroids ruins fiat currency practically overnight. But the USD is also going to Hell in a hand basket…it is just most everyone else is going quicker.
A good explanation that predates the internet and a lot of technology was a book called “None dare call it a Conspiracy”. Remember reading it 40 years ago. Basically about the creation of The Fed in 1913.
Wealth and currency are acts of Faith. But it also implies that there was some ‘work’ done to justify its existence and also so that someone else will also agree that it has the same value they are willing to exchange goods and services for.
I see none of this in Bitcoin, and no one will even try and legitimately explain where the value came from. This will end very badly, the Bitcoin part, but Blockchain does have some utility. When Bitcoin is worth all the value of Gold since humanity began, you know it is a giant fr@ud and about to burst. It is financial musical chairs. I just can’t imangine anyone stupid enough to convert Gold into Bitcoin. Of course timing is everything and some people will get very wealthy with this, but in the end it was a theft of real wealth from someone else who maybe created it the old fashioned way. Hard work or Smarts. This is neither. Get out before it collapses!
So Bitcoin is Tulip Bulb 2.0?
There is a far better term to describe crypto currencies and that’s Ponzi scheme. When you are making money it’s difficult to understand that the money comes at the expense of somebody in the future who just purchased your worthless goods. While the Bitcoin is a well thought out way of transferring money, as you pointed out, there is no money to transfer should you want to cash out your Bitcoins. Instead there is only the greed of the next generation of owners backing up your currency.
“So Bitcoin is Tulip Bulb 2.0?”
No, after the tulip bulb market crashed, you could still plant the bulbs and grow flowers. The Dutch turned it into a major industry, after a couple of hundred years. If you ever get a chance to visit the Kuchenhof, the Dutch tulip show held every spring from late March to early May, do it. It is absolutely spectacular.
https://keukenhof.nl/en/
Earthling2, here is the answer to your question of where bitcoin gets its value:
From the Foundation of Economic Education’s article on the subject:
“Bitcoin is both a payment system and a money. The payment system is the source of value, while the accounting unit merely expresses that value in terms of price.”
This appears to provide absolutely nothing in terms of offering a valid source for an objective value of Bitcoin other than a Begging The Question logical fallacy:
The price (i.e., value of the product) is presupposed in the payment system.
Of course it doesn’t since value is subjective. Nothing has ‘objective’ value. The price at which bitcoins are advertised for dollars tells us only the market clearing price at that moment where the number of bitcoins people are willing to buy because they think the bitcoin-wanters perceive them being worth more than the dollars are balanced by the number of bitcoins other people who currently own them are willing to sell because the dollar-wanters perceive the bitcoins are worth less than the dollars.
“Of course it doesn’t since value is subjective. Nothing has ‘objective’ value.”
Then it would seem you contradict yourself? From your source above:
“The payment system is the source of value, while the accounting unit merely expresses that value in terms of price.”
???
“I see none of this in Bitcoin, and no one will even try and legitimately explain where the value came from.”
the work done is the Mining work.
Its why we call it Proof of work.
The work is creating an immutable ledger of all transactions.
The value comes from the same place all value comes from.
The market agreeing to the value via trade.
It is inter subjectively emergent.
as for your claim that NO ONE will try to explain where the value ‘came’ from
Wrong. Many people explain it Just go to youtube, search
bottom line: its digitial and rare.
start here
here is a simple one
You might disagree with the VALUE but the market disagrees with you.
“the work done is the Mining work.
Its why we call it Proof of work.
The work is creating an immutable ledger of all transactions.“
Mr. Mosher, I have several old company ledgers for sale…all transactions are verifiable and permanent.
Holler if you and yours want to pass me a quote!
🙂
“It is inter subjectively emergent.”
Doesn’t that terminology describe ISIS as well under the last US President’s administration? Not so much after a rational Commander-In-Chief came along though…
Or maybe it’s something like “trans-dead”? It’s really dead but you don’t believe it is so it’s not?
“Inter: to deposit (a dead body [or Bitcoin]) in the earth or in a tomb”
https://www.merriam-webster.com/dictionary/inter
(Disclaimer: I added the “[or Bitcoin]” part)
“bottom line: its digitial and rare.”
No one cares about that! It’s “inter subjectively emergent”…it’s value is purely based on faith! Rarity can’t make a BIT of difference on your own logic.
But of course if it could make a difference anyone with the right hardware can make another so that logic fails anyway?
I think the question is not “what is money”, but “what keeps a monetary system reliable”. Bitcoin is a huge bubble, which is kept running by speculation and crime.
No, it is an ever expanding circle of merchants and consumers that can exchange value between wallets that the government cannot track.
The Govt. can track wallet addresses on exchanges, but they can’t know the owner of a non-exchange wallet address.
Monero and ethereum are even more opaque, and Zcash is even moreso – it can’t be broken the brute force hack on Zcash is 2^75 — it uses a zero knowledge proof (the math is very very esoteric) — so that a transaction can be proven without knowing the actors or the value
“The Govt. can track wallet addresses on exchanges, but they can’t know the owner of a non-exchange wallet address.”
If the identity of the parties in the contract for exchange are anonymous, how will transactions be enforced if one party doesn’t deliver? (I know davidgmillsatty…you mentioned this above but you didn’t mention the anonymity part)
Suppose I order 100,000 units of Xeon CPU’s from the anonymous Bitcoin merchant. The anon merchant doesn’t deliver.
Where do I go to get my money back?
Of course, we know that the cost of mining bitcoins, by design, increases if too many are being mined, and vice versa. So the “wasteful” use of electricity is due to the ballooning bubble of bitcoin price, which makes the South Sea Bubble and the Tulip Bubble and The Great Railway Mania look like pathetic pony shows.
Money is the root of all evil. And yet it does make the world go round.
I wonder if the G8 group of nations should consider heavily taxing bitcoin mining rigs? Could be hard to enforce, though, and I generally prefer less government to more. My main hope is that the bubble will burst, and bitcoin mining costs will come down again. We need a Great Pause, followed by a Great Cooling.
Rich.
Rich how would you tax a world wide decentralized endeavor?
It seems to me that to become profitable, miners seek the cheapest electricity since it is one of their highest costs. Places with high electric costs are not where miners exist.
“Money is the root of all evil”
A wise man once said something similar, but entirely different, ie, “The love of money is the root of all evil”
I think a lot of people don’t understand what evil really is.
The desire/lust/compulsion to control the lives and property of other people is the ROOT of all evil, of all aggression, theft, murder and so forth. Money can be a part of that, of course, but only one small part of it. Without the desire to control others, what money a person has is immaterial.
icisil:
Excellent.
Bitcoin mining costs won’t come down. It’s baked into the system in that there is a limit to the total number of bitcoins so mining becomes exponentially harder in terms of hashes required per bitcoin. The only way of reducing cost in dollars is *much* better mining asics or cheaper electricity.
If the bitcoin bubble bursts then it won’t be economic to mine them any more. Also, mining is a side-effect of validating bitcoin transactions so transaction costs will rise exponentially too. Thankfully that’s not a feature of dollars, pounds, euros and most other fiat currencies (Venezuelan bolívars anyone?).
You are right, Banks do not run server farms or consume energy.
Hold with the sarc. Banks do have transaction costs, but they don’t grow exponentially.
Transaction costs for banks have in general been falling.
Tractor, I disagree about the “baking into the system”. Here is a thought experiment. A hacker devises a virus which disables all the bitcoin miners in the world (except perhaps him/herself). But there is still a demand for bitcoin transactions, which as noted, generates new bitcoins. But on his/her own the hacker cannot keep up. The bitcoin system notices this, and it is my understanding that in this case the cost of processing transactions, i.e. the hardness set for the hashing problem, drops. And then the electricity “wasted” on this drops.
Yes, that is a thought experiment, not realistic. But such experiments are what Einstein made a living from.
Rich.
“It’s baked into the system in that there is a limit to the total number of bitcoins so mining becomes exponentially harder in terms of hashes required per bitcoin. ”
NOPE.
Difficulty is a function of the rate of finding blocks over the last 14 days.
If fewer people Mine, the hash rate goes down.
hash rate goes down and block time creeps above 10 minutes
block time creeps up and you adjust difficulty Down.
In simple terms if Miners decide to switch from Mining bitcoin to BCH for example
then blocks will take longer to find
every two weeks we measure the number of blocks created and adjust difficulty to
get to an average of a block every 10 minutes.
An increase in difficulty is not Baked in. Difficulty is a function of how many machines
are looking to solve the puzzle.
more machines.. more difficulty
fewer machines.. less difficulty
“I wonder if the G8 group of nations should consider heavily taxing bitcoin mining rigs? Could be hard to enforce, though, and I generally prefer less government to more. My main hope is that the bubble will burst, and bitcoin mining costs will come down again. We need a Great Pause, followed by a Great Cooling.”
I love it when conservatives betray their principles.
“I love it when conservatives betray their principles.”
What makes you say he/she is a conservative?
Could be a libertarian, e.g:
“Make pot legal and tax it”
You would first have to know it traded 🙂
“You would first have to know it traded :-)”
Do I get a receipt? Can my receipt be used as proof? What if the other party doesn’t provide their side of the receipt? How do I prove the transaction took place?
Bitcoin is not ASIC hardened — meaning first cpu’s were used, then gpus, now you need a specially made application specific integrated circuit (ASIC) made just to mine bitcoin if you want to not just heat your house.
Many other algorithms are ASIC hardened — meaning only cpu or gpu can be used
Some even use unused storage space on harddrives
I bet worldwide video gaming uses a phenomenal amount of power, but you never hear any complaints about that because the video gaming industry makes a phenomenal amount of money from it.
The video game machines also provide something. You may not like it or partake of the hobby, but it’s like farmers growing tobacco at worst: they are producing a product and that product is consumed.
This whole thing basically just produces a useless speculative object.
I read today there is a new video game league being form in which the players will be paid $50,000.
https://www.inverse.com/article/38953-the-22-major-stores-online-that-accept-bitcoin
yeah Overstock and Microsoft and virgin galactic are speculative
There are car dealerships in the US that accept bitcoin now
If I was a hostile alien military power seeking to destroy a technologically advanced planet then I would adopt the following policies.
1. Seek to destroy the target planet’s power base by creating and fostering the lie that industrial emissions of carbon dioxide gas will destroy the climate and make the planet uninhabitable.
2. Create a false economy that needlessly consumes power so that the remaining technological industries that maintain the target planet’s military strength collapse.
3. Create an entertainment industry that fools the populace into believing that magic is reality.
So here is a very simple puzzle. I have a $20 bill and I hire Anthony to wash my car for $20. Anthony goes to work and washes my car spic and span with detail. Now Anthony has my $20 bill, but he hires Charles to pick the weeds in his garden. Charles works his butt off, and genuinely earns the $20 that Anthony gives him. Now Charles has the $20 bill, and he hires Steve to clean out his computer and erase some software and bugs. Steve completes the task with excellence, so Charles gives Steve the $20 bill that he honestly earned. Now Steve needs some data from an obscure server that he can’t easily access, so Steve hires Me to gather the data and I pass it on to Steve and he pays me $20 and I now I have my original $20 bill back, and all that work got completed on time, on budget, and everyone is happy as ducks in water. What just happened? Did we even need a $20 bill to start with? All that work got done, and I have my original $20 back in my pocket. And no taxes I might add, but that is a different matter.
In a perfect world, no, we would not need to exchange money because we could trust everyone and everyone’s needs would be met. In this world, people generally cannot be trusted to place our needs above their own, so we need a store of value in a medium that we do trust, i.e., money.
How do we trust Bitcoin then when it really has no intrinsic value. Solve a math equation and that equals some type of value? There isn’t even any barter in the Bitcoin philosophy.
Please describe or define “intrinsic value.” The US “dollar” has had zero intrinsic value, ever. Even when “backed with gold.” How would any currency have intrinsic value?
“The US “dollar” has had zero intrinsic value, ever.”
Au contraire, Madame. The US Dollar is backed by the taxing authority of the United States Federal Government, which year after year hoovers up about 20% of the economic product of the world’s largest and most productive economy. Don’t try to short them on taxes, it will not end well for you. Further, they take especial pleasure out breaking recusants.
I do not claim that the US government will continue indefinitely to manage the financial system with some semblance of stability. It is composed of men, who are prone to error, folly, and miscalculation. When, not if, the US government collapses, I am confident that whatever replaces it will use very similar institutions for very similar purposes. Bitcoin will have no part of it.
Even in a perfect world money is useful (and necessary because of the increased efficiency it facilitates). The basics of a barter system are pretty easy to understand – farmer A trades some grain to farmer B for some eggs. Money became popular (and essential) when people needed to try to evaluate how to value larger and more complex items like a shovel or a tractor. (How many cows is a tractor worth – today, tomorrow or next week – and how does one transact a third of a cow to the guy is selling the tractor? Especially if the guy selling the tractor doesn’t need any cows at all! Money is a way to measure value fairly and with some precision (10ths, hundredths, etc). The use of money takes the lid off the demand side of the Law of Supply and Demand by allowing many more customers for any given product and thus increasing the value of that product.
Haha. The old adage goes along the lines that in case of a nuclear war, $5 and $100 are of same value, but nutritionally, $100 is better since it’s been circulating less and is microbiologically cleaner.
It depends on how badly you want gold, nuts, or say, squirrel furs. Historically, currency has been built on intrinsic value. Later on it was build on promise (I promise to pay some gold against this agreement).
Governments basically promise that the piece of paper called note has a value, that government actually provides physical goods in exchange. Governments are in position to make such promises and can be trusted on to some extent.
But who promises anything in the Bitcoin system? Basically you have to trust that the system works. So as a monetary unit, Bitcoin works, but does it earn the trust for real? Does it have an army to protect itself? Is it protected by the UN? What about if it is just illegalized, how would you use it then?
Not really a puzzle. the $20 bill is just doing its job of lubricating trade, and makes it easier than bartering car washing for data gathering and having to recruit all the intermediaries that want something else done.
Money can also be stored a lot more easily than labor can.
“Money can also be stored a lot more easily than labor can.”
Maybe, maybe not. These days I’m storing lot more labor much more easily in my behind and my belly than I am money in the bank…
🙂
+1!
Money can be viewed as a medium of exchange.
You could have gotten together with Anthony, Charles and Steve before hand, negotiated the exchange of services. Or you could have done it in individual steps as you outline above.
Believe me, economic transactions using money are much, much easier than straight barter.
“Did we even need a $20 bill to start with?”
At some point Anthony will need to buy cleaning supplies, Charles a new hoe, Steve some software, you some electricity, etc., from all or part of that $20 bill.
not if they simply exchange digital tokens of value — oh wait — they do just with debit cards and US dollars instead of crypto wallets and crypto coins
Earthling2: You’ve described the value that money brings to economic activity. It acts as a stable medium of exchange so that barter can be avoided. To do what you described without money, contracts would have to be agreed upon by all four parties to do their part. (Charles would agree to weed Anthony’s garden and in return Steve would agree to debug Charles’s computer, etc.) And then add the complicating factor that not all jobs would be valued at exactly $20 and the advantage of a stable currency becomes obvious.
But with Bitcoin, you give Anthony $20 worth of bitcoin. Anthony decides to hire Charles for the bitcoin you gave him, but Charles finds it’s now worth $40, so he only offers half to Steve and keeps the rest. Steve takes the half and then tries to hire you with his bitcoin but you check and his half is now only worth $10 so you refuse, or insist on more bitcoin.
The represented value of bitcoin is that it will replace fiat money (for various reasons), but it never will unless it has stability over a reasonable period of time. That’s unlikely, so it now serves only as a store of value, i.e., an investment, and one with no underlying utility. It’s value is based solely on greed, to the point where many of its current holders describe themselves as HODLers. HODL stands for Holding On for Dear Life, seriously.
This will end badly, and the higher the combined value of all cryptocurrencies gets, the worse the ending. We are starting to see equipment build outs to support cryptocurrencies. The more of that, the worse the ending. The manufacturers of the mining equipment, for example, will someday see orders plummet to zero, and the suppliers of those manufacturers will also suffer accordingly.
Forget about electricity. If cryptocurrencies have another year like 2017, their value will go up 50x from 800bn to 40 trillion dollars. That is approximately 10% of the value of all the world’s wealth today. (They went from 16bn to approximately 800bn in 2017.) This is clearly not sustainable and a lot of people are going to be hurt if this scam is allowed to continue. The sooner it ends, the better.
“no taxes I might add, but that is a different matter.”
No, it is not irrelevant. It is the reason that governments sponsor banking systems and create currencies. The US government impounds about 25% of the domestic economy. It must maintain the currency and banking systems just to survive.
In the 16th Century, Spain looted the New World and was the richest empire in Europe. They ruled the Netherlands. The Dutch rebelled against Spain. They invented the Bank of Amsterdam and modern finance which enabled them to become a dominant naval and economic power, and throw off Spanish rule.
King William of the Netherlands, at the invitation of English Protestant magnates and with the cooperation of the English Army commanded by John Churchill*, invaded England and was crowned William III. The Bank of England was established along the lines of the bank of Amsterdam. With those resources, England rose over the course of the next two centuries to become the largest empire in world history.
In the United States, the Federal Reserve System was established in 1913, fortuitously in time to finance the US participation in WWI. Later expansions of the central bank have enabled the US to be the world’s dominant military and economic power.
*Later Duke of Marlborough, ancestor of Winston.
The problem is that transactions are much more complex than that:
Anthony does not want $20 of anything, he wants $10 of weeding from Charles, $5 of milk from Bert and $5 of flour from Jane. Charles then adds the $10 to $40 he got from several other people and buys an new wheelbarrow. Etc.
Without something like money it becomes impossible to keep track of these different value transactions.
There is a sci-fi story (https://www.abelard.org/e-f-russell.php) in which they use obligations (Ob) instead of money. Each person effectively issues his own money, person A does something for person B and person B is obliged to do something for person A at some time in the future. The Ob could be traded but I decided immediately that it was not a workable system because of the complexity of the transactions, explained above.
With modern computer technology it might be possible to make a working Ob system; however, one still needs a unit of measure so that the value of an Ob can be determined and subdivided.
a Satoshi is 1-ten millionth of a bitcoin
[youtube=https://www.youtube.com/watch?v=i_wOEL6dprg&w=640&h=390]
https://youtu.be/i_wOEL6dprg?t=9m1s
@Earthling
No you never did it’s called promisary note battering
https://en.wikipedia.org/wiki/Promissory_note
Earliest use of it
Cryptocurrency mining at least is more useful use of electricity than all those GCM supercomuter runs that will be performed in 2018.
joelobryan: Actually, no, more damaging. Both are a waste of resources, but cryptomining is far, far, more wasteful due to the magnitude of the waste.
Bitcoin is neither an inherent value currency nor a fiat currency. Inherent value, such as gold coins, contain something we actually want. (BTW, gold would make the very best soldering iron bits if only it were cheaper; likewise silver for power lines.) A fiat currency is declared to have value by an authority. E.g. the government promises to accept their currency in payment of taxes etc. But a bitcoin is neither. No one is guaranteeing anything in exchange for a bitcoin. It is a pure speculation based on estimates of what others might give for one in future.
But let’s call it a fiat currency for argument’s sake. What is wrong with it? Unlike, say, dollars, which the government prints for minimal cost, a bitcoin must be ‘mined’. It converts actual, genuine value (electrical power) into something even less than a fiat currency – the mere hope that others will pay something for it. In a world where people with sensitivity to flicker are forced to use compact fluoro lights on the argument that the electricity used by a thermal light is immoral, bitcoins must be the most immoral of all, for real wealth is destroyed to create nothing.
Your argument is falsified by people in Bolivia and Venezuela using bitcoin instead of gold or fiat currency
“Your argument is falsified by people in Bolivia and Venezuela using bitcoin instead of gold or fiat currency”
But isn’t this largely due to government controlled electricity prices and desperation?
“It’s become a popular vocation in Venezuela in part because the country’s economy is in such dire shape. Even computer scientists and skilled technical professionals can’t reliably find work. Next year, the unemployment rate is expected to climb above 20 percent.
But the main factor driving Venezuelans to take up bitcoin mining is a price control put in place by the socialist government: Electricity is virtually free.”
http://reason.com/archives/2016/11/28/the-secret-dangerous-world-of
And further:
“Maduro said that the “Petro” will be backed by the nation’s oil reserves, and he credited “the prophet Hugo Chávez” for originating the idea, citing a 2009 interview with the now-deceased former president in which he suggested that oil-rich countries get together to create a new “petro-money” that would replace the dollar as the global-reserve currency.
Maduro also announced the formation of a new working group of industry professionals, “Observatorio Blockchain,” to help figure out how the Petro will work and to formulate cryptocurrency regulatory policies.”
http://reason.com/blog/2017/12/13/venezuela-bitcoin-cryptocurrency
Not that I have any respect for despots like Maduro, but does he show a weakness of digital currency with his plan here? Why should it be advantageous that any digital currency, e.g., the Petro, be “backed” by another commodity (in this case, oil) if the value is inherent in the block chain?
Interesting to see how two-faced Quebec is when it comes to the climate change game. On the one hand, the province is part of the 3 way carbon trading swindle with Ontario and California thereby indulging in the mandatory virtue signalling so prevalent among our political elites. But when a chance pops up to make some easy money by wasting our hydro resources on Bitcoin, well, that’s a whole different ballgame. The same is true when it comes to the province’ refusal to support the Energy East pipeline, but demands Canada’s support for the production of fossil fuel guzzling Bombardier aircraft.
Morgan Stanly prediction, read that as projection/extrapolation is based upon Bitcoin being worth as much or more. As we know, bubbles dont work like that and if an investment bank doesn’t recognise this they are failing to learn lessons from history or are deliberatley perpetuating the fallacy – fools or charlatans, sound familiar? No bubble, no Bitcoin mining
MStanley is hyping bitcoin. They plan to cash in in some way before the crash.
Who or what is Mosher?
I believe he is head of marketing for a Chinese company that makes bitcoin miners.
An imaginary entity that plays with imaginary numbers to confirm its devotion to an imaginary magic molecule and plays with other imaginary numbers to create imaginary money that helps him play with the imaginary numbers to confirm his devotion…………………………….
So it’s about 25 million dollars worth of electricity. BFD. That’s nothing to how much Bitcoin-purchasers have wasted on this electronic Fool’s Gold.
Bitcoin mining is about to become obsolete, according to the “experts” I’ve read about.
trust them experts… too funny
So where does all this Bitcoin money ultimately come from? Is it some 4 year old slave labourer in Bangladesh or somewhere?
bitcoin is simply a pointer into the blockchain ledger that says a particulate wallet address has some amount of value
ATTENTION: This is a special offer made only to those people who feel they fully understand Bitcoin and other cybercurrencies:
Send to me a postage paid stamped envelope along with a twenty dollar bill and I will send to you information on how to entice total strangers to send money to you in the mail.
Marv,
I would – but you don’t give an address . . . . .
Auto
Let me make a forecast. By the end of the year one bitcoin buys you exactly one tulip bulb.
Remember, when some of us went to school, there were courses “101” …..
Like Astronomy = stars 101
Geology = rocks 101
biology = frogs 101 (the dissection was not virtual)
math = numbers 101
history = old stuff 101
As we have aged, and look at life’s problems in retrospect, most of the knowledge we would have needed to navigate them better, or that we used to navigate them well, was presented in those “101’s”.
Bitcoin. vs. Dollars.
A government fiat currency derives its value as a medium of exchange based on the debts it can be used to discharge, and it’s convertibility into other stores of wealth, from gold to bushels of wheat. If a currency can be used to pay taxes and discharge government debts, and qualifies under law as capital for a bank, and is convertible in the open market(or even a black market) to valued commodities, it is a useful medium of exchange. Currencies are not a “store of wealth” except of rthe very short term …. think of the derivation of the word “currency”. If exchange is viable, conversion is two way.
One clearly expends real assets to acquire a chimerical right to Bitcoins. I would suggest that the number of circumstances in human experience that would render this right meaningless are legion. The classic store of wealth, gold, serves as flight capital — we can exchange it on the deck of a smugglers boat for passage and in a strange land for sustenance; millennia of history validate this. It is thus both a store of value and currency.
This is not to say that a “right” created out of nothing cannot have value; a copyright or patent might be examples. But the value is chimerical without significant protections, and without actualization.
If I had a Bitcoin, and could get real money for it, I’d probably laugh all the way to the bank. Blockchains, like patents and copyrights, clearly have value, but that’s not what we “mine”, and the values should not be conflated with the “values” of the mined product.
Break the algorithm & flood the market, you have zip. One big fraud – you got squat. Tulips bloom and die ; don’t save the bulb you got nada. No such thing as a Bitcoin filling in your tooth or a Bitcoin necklace for your SO. Network down? you are SOL, buddy.
Practical Life 101!
“If I had a Bitcoin, and could get real money for it, I’d probably laugh all the way to the bank. ”
Of course you can exchange btc for anything you like. buy a house a car , even get fiat currency for
it.
you have BTC, you want currency? Easy Peasy.
PS:
There is no breaking the algorithm or flooding the market.
As we recently found out gold and diamonds are fairly common in the universe the first time someone ventures out to space (SpaceX already have plans to tow asteroids back) and a huge pile back your gold and diamonds are worth nothing. It’s every bit as likely as the situation you just described.
My son, 13, is trying to build his own gaming computer. Because of bitcoin, the price of graphics processors keeps going up. So, as soon as he earns enough money for the one he wants, the price goes up and he can’t buy it. He would like bitcoin to bust.
“He would like bitcoin to bust.”
Teach him patience.
“My son, 13, is trying to build his own gaming computer. Because of bitcoin, the price of graphics processors keeps going up. So, as soon as he earns enough money for the one he wants, the price goes up and he can’t buy it. He would like bitcoin to bust.”
Educate him. GPUs are not used for bitcoin.
He wants Etherium to crash
LOL Steven for someone who supposedly knows about bitcoin mining you know nothing.
The GPU has massive numbers of multicores especially on NVIDIA and using software you can retask them.
https://en.bitcoin.it/wiki/Mining
Four ways
1.) CPU Mining
2.) GPU Mining
3.) FPGA Mining
4.) ASIC Mining
The last two are outside the range of most because FPGA and ASIC require knowledge of VHDL or VERILOG something only a few in the electronics game know.
So GPU mining is the fastest alternative open to the average software savy person.
@ LDB
anybody who tries to mine bitcoin with ANYTHING BUT and ASIC is a fool
No, it’s because of ethereum, monero and z cash — you can’t mine bitcoin with anything but ASICS
This is in the “you gotta be kidding” category. Let’s take a passing fad, estimate the CPU cycles and energy consumption and then try to decide how much of that extra energy comes from renewable, hydro or coal. And then argue about it. Not even as much energy as we were all worried about a few years ago when wise men were doing carbon footprint of sleeping computers and idling appliances.
Anyone want to compare bitcoin mining to computer gaming? I’m sure we could come up with the number of power plants or dams consumed.
A 2008 study claims that video game consoles in just the US consume as much power as San Diego.
https://www.scientificamerican.com/article/video-gamers-use-as-much-energy-as-san-diego/
This 2015 article claims that just Gaming PCs (excludes laptops, desktops and gaming consoles) consume 75 terawatt-hours per year, and estimates that by 2020 that number will increase fourfold. I assume that’s worldwide.
https://www.forbes.com/sites/michaelkanellos/2015/09/07/the-big-surprise-in-home-energy-consumption-gaming-pcs/#888f05b1bff9
Before Apple adopted Intel processors they used IBM PowerPC chips, which consumed a lot of power and consequently radiated a lot of heat. So much so that Apple offered a series water-cooled G5 Mac towers in 2004 an 2005 that were plagued with problems.
One joke from that era:
I wish there had been an introduction re bitcoin. I’m a consultant in the mining business and considered a sophisticated investor (in higher risk investment you are not allowed to offer products to persons not able to evaluate or afford downsides) the use of the metaphor in this context didn’t help my understanding.
I know bitcoin is an unsupported i-currency bearing considerable risk but where does the electricity come into it? Is it simply because it uses computer time in trading and purchasing? It would have been a nice investment to take an early ride on, as it turns out, but to me, it has a ponzi look and coming in ‘laters’ tend tp pick up the tab . Electricity use may swoon rather quickly.
“It would have been a nice investment to take an early ride on, as it turns out, but to me, it has a ponzi look and coming in ‘laters’ tend tp pick up the tab.”
Such as these people? …
“New survey reveals staggering number of people are buying BitCoin with their credit cards.”
https://www.zerohedge.com/news/2018-01-11/new-survey-reveals-staggering-number-people-are-buying-bitcoin-their-credit-cards
“I know bitcoin is an unsupported i-currency bearing considerable risk but where does the electricity come into it? Is it simply because it uses computer time in trading and purchasing? It would have been a nice investment to take an early ride on, as it turns out, but to me, it has a ponzi look and coming in ‘laters’ tend tp pick up the tab . Electricity use may swoon rather quickly.”
The electricity is only imprtant to Miners: Miners build the transaction ledger.
if you just want to buy and hold or buy and trade.. electricity is not an issue
i don’t know how to convert 70,000,000 bags of uWave popcorn to hiroshimas…
Conversion of 70,000,000 bags of NuWave Popcorn to hiroshimas
NuWave Popcorn
1 Bag takes 3 min in a 1,000 Watt Micro wave.
1 watt = 1 joule per second
3 min = 180 sec
So 1000 Watts of microwave power
X 1 (J/sec)/watt
X 180 sec (3 Min)
= 180000 Joules
X 70,000,000 Bags
= 1.26E+13 Joules
or 12.6 Terajoules
Hiroshima
15 kiloton of TNT Equivalent yeild
1 Kiloton TNT is 4.18X10^12 Joules
So 15 Kilotons
X 4.18E+12 J/KT
= 6.27E+13 Joules
or 62.7 Terajoules
So 0.20 hiroshimas
Divide by three (ish).
Auto
Bitcoin and climate science have much in common–both are based on nothing but hearsay, have consumed scads of electricity in useless computations, and will divert our attention from more productive endeavors.
The hypothetical world has bounced far beyond the realm of reality.
I remember a long time ago, when Bitcoins were not that expensive and fairly new, you could buy Bitcoin-mining computers (PCs that were specifically built and set up for Bitcoin-mining operations). These computers were fairly expensive, and a lot of people thought they were too expensive to buy, given the price of a Bitcoin. So now that the Bitcoin value has risen insanely, has the difficulty of mining Bitcoins similarly increased?
When folks talk about using “only green power”, remind them that power is fungible! Because you happen to get your particular electrons from a grid-connected wind or water turbine, doesn’t mean you are not contributing to CO2 emissions. After all, someone else has to get theirs from evil coal, and it all sells in a big commodity market. If they didn’t buy that turbine power, someone else would, and they would use the evil coal anyway.
At least, that’s what I’m told when I point out that we get very little of our US-consumed oil from the Middle East. Just because we do not directly buy from the Middle East does not mean we’re not 100% responsible for it, because it’s a fungible market. If we bought Middle East oil, then someone else would buy the Canadian/Mexican/American oil that dominates the US consumption, and on balance, nothing would change.
That gives them serious pause…
But they won’t continue to appreciate in the same way. otherwise we might as well go back to buying Tulips. These D, Heads are in the same league as the global warmers. The scary thing is that they work for Morgan Stanley.
TBH, these article are making me lazy. I used to read the whole article before expressing my triggered-ness, but I just can’t be bothered to invest that amount of time anymore. I may miss the thrust of some articles, but I will quickly save a lot more time.
michael,
I agree about a lot of articles.
“I may miss the thrust of some articles, but I will quickly save a lot more time.”
For sure.
If I was in the fishmongery business, I would be looking to short carp.
There is just so much carp about.
Auto – with, perhaps, an orthography problem tonight – if a little delicately expressed . . . .
From the article: “One eager entrant is Hydro-Quebec, Canada’s biggest electric utility. It’s in “very advanced” talks with more than 30 cryptocurrency miners — many of them currently operating in China — and expects to announce agreements in 2018, Marc-Antoine Pouliot, a spokesman, said Wednesday in a phone interview.”
How do people living in China access Quebec’s hydro? Long transmission lines?
How do the Canadian people feel about large and increasing quantities of their power production being used in this way? How will they react if for example Bitcoin pushes up the price of power for all services – and hence for survival – to the point that ordinary people can’t afford it? Does anyone really believe that Bitcoin uses only “stranded” power, or that Bitcoin miners will voluntarily stop if it is found that they are damaging others? Bitcoin will collapse, we just don’t yet know how. Maybe its greatest strength – price support from power consumption – could turn out to be its greatest weakness.
“How do people living in China access Quebec’s hydro? Long transmission lines?”
They buy a “block” of power that’s part of the “chain” of overall supply created from their hydro source…so….yeah…
The answer to the question of “How do people living in China access Quebec’s hydro?” is that they would move their crypto mining operations to Canada and use “surplus” hydro generation as noted in the article. You can not consume Canadian Hydro electricity in China.
I assumed the /sarc in my comment would be assumed…bad assumption.
bitcoin is a fraud, how could it possibly increase in value? what backs it? what gets sold to increase its value????
Since it not government controlled, some people who want to trade in illegal items like to use it. I have no idea of what the % of the currency that would be.
Mac
Bitcoin ledger is open to everyone — so it can be traced — monero OTOH and ETHEREUM — hard.
To answer your question — people like bitcoin because they can’t get ripped off over the internet by people who buy stuff and then claim a fraudulent purchase and have the CC company reverse the charge
with altcoins (bit, mon, eth) once the transaction is done — its done
“…people like bitcoin because they can’t get ripped off over the internet by people who buy stuff and then claim a fraudulent purchase and have the CC company reverse the charge…”
What if you don’t receive your product, or it’s the wrong product, or your product is defective?
How can you get your money back on the transaction?
What backs the US dollar? — nothing.
Bitcoin is backed by Millions of users who exchange value outside the banking infrastructure — without the govt. knowing who they are and what they are buying.
Coinbase signed up 15 MILLION new accounts (largest US based crypto exchange)
Cool thing is, you don’t need an exchange — you can use a wallet — anonymous — then convert to bitcoins and get cash from a bitcoin ATM
or just buy something from someone with a wallet to wallet transfer
“What backs the US dollar? — nothing.”
Actually, the Constitution backs it in that it allows the government to issue/regulate the currency and those who use and/or attempt to manipulate that currency for their own gain.
How will the “Millions of users who exchange value outside the banking infrastructure” regulate Spoofy?
https://steemit.com/bitcoin/@sirwinchester/how-a-single-trader-manipulates-the-bitcoin-market-spoofing-with-large-sums-and-illegal-methods-on-bitfinex
The article claims the manipulations of this trader are “illegal”, but how is that possible given the market isn’t regulated?
Since the market isn’t regulated, how will you prevent other nefarious traders from manipulating the product’s price in the same way?
Matt Ridley used to say that rounded to the nearest whole number, the percentage of the world’s energy produced by wind is zero. It looks like that’s not true for the percentage of the world’s energy used by bitcoin. Maybe Las Vegas can offer odds on which will be higher.
Wow, lunacy, it actually preys on the power grid. Must be abolished forthwith. The Left has all the publicity connections and activist funding — who can get this onto their radar front & center?
Bitcoin is the result of control.
We are the Federal Government of the U.S.A.
You have our dollars. And we will tell you what you can spend them on. And we have warrants and everything. If you have dollars we will ask you where they came from. You have heard of the IRS?
Why do offshore banking havens exist? Control. People want freedom.
“If you want peace, prepare for war” – Flavius Vegetius Renatus.
For freedom, we have to pay taxes. ie, no taxes -> no military -> no peace -> no freedom.
‘First In’ – Bit Coin.
‘Last In’ – Coin Bit.
You might as well be mining Chain Letters… or Nigerian Princes.
Oh, yeah, please, please, PLEASE sign me up for a currency based on absolutely nothing, whose value is based on whoever last drank the bong water, that doesn’t even exist in a lousy piece of paper (let alone a chunk of metal), and is generated by digital electronic onanism.
Who invented this? ‘Cause there is a serious need to have a wee peek in the dude’s (or dudess’) tobacco pouch. There is some wicked, gnarly stuff in there . . . a couple of hits could put an entire continent on the bliss train.
Does this ring a familiar bell? “Professing themselves to be wise, they became fools . . .”
The comic potential of bitcoin is astonishing. Too bad George Carlin is gone . . . he could have done 15 minutes on this easy.
For bitcoin related comedy try a visit to Reddit site /r/buttcoin.
I’ve got a quantum computer that can create a 1M block stack in minutes. I will insert it after the ‘genesis’ box and render the current chain invalid. All your bitcoins are belonging to me!
Seriously, though, it’s driving the computer industry to improve processing speed and efficiency. What else might it drive improvements in? Energy storage?
“Seriously, though, it’s driving the computer industry to improve processing speed and efficiency.”
Isn’t this more likely AI and robotics…?
No it isn’t == they built SHA-256 specific ASICs to solve the encryption for the next block
“No it isn’t == they built SHA-256 specific ASICs to solve the encryption for the next block”
For what else can these ASIC’s be used?
Who is “they”?
Bitcoin bubble will not burst. This is because if people do not continue mining for bitcoins, they could lose the bitcoins they already have. If bitcoin mining is dominated by a single party, that person could rewrite the entire history of bitcoin production.
MikeN – that looks more like an argument that Bitcoin will burst.
Mining means adding a block to the chain by solving the algorithm for encrypting ALL the transactions during that block.
You can’t lose bitcoins you mined — you can lose the private keys if you are dumb enough to have an account at an exchange without cold storage.
You are assuming the upward pressure of bitcoin price is generated from mining, I would suggest it comes from speculative derivatives trading. There must be a good few savvy day traders out there making a ton of cash out of this market, and they need only a tiny fraction of the processing power used by miners. Brokers are cashing in on wide spreads and high volume. When the buyers eventually run out – which will inevitably happen – and liquidity dries up, hold onto your hats ‘cos it will be a bumpy ride, assuming that ride hasn’t already begun. The signs of bulls and bears knocking heads are clearly visible over the last month or so after such a meteoric rise.
Meet ‘Spoofy’. How a Single entity dominates the price of Bitcoin.
https://hackernoon.com/meet-spoofy-how-a-single-entity-dominates-the-price-of-bitcoin-39c711d28eb4
Heating your home (or whatever) with bitcoin mining rigs is just about the only way it’s worth doing. Go Canada, in the winter at least.
If I could figure out how to cool my house with em, I’d have some in the tropics…
Bitcoin, and indeed pretty well all other cryptocurrencies, are highly likely to crash and burn this year anyway. This particular extraordinary popular delusion has about reached its peak. My gardener asked me about “investing” in Bitcoin a few weeks ago, this is a sure fire indicator that the end is near.
Furthermore you do realise it was a carefully crafted plan by NSA and GCHQ (hence the anonymous and mysterious nature of Satoshi Nakamoto). Those who set it up and wrote the code have all the backdoors they need to shut this down at the click of a switch. They may be waiting for North Korea to get a bit more into it before doing so however.
I personally suspect it will crash to near zero of its own accord rather than due to NSA action though. The number of possible new bagholders for this scheme is very near to being exhausted right now. Stupid and gullible do exist in millions but it is a finite number.
Disclosure: I sold all my Bitcoins earlier this year !
You are FOS — and don’t understand the blockchain — the NSA CAN”T do SHIT to the ledger — HASHES are MATHEMATICALLY non-reverible
keys to wallets are protected by multiple layers of AES 256 bit encryption — so the NSA cant crack your wallet unless you hand out your private key (or are dumb enough to have your altcoins in an exchange without cold storage and 2 FA
I remember reading some time ago that someone paid real cash to buy someone else’s character in one of those online gaming … games. (Warcraft, I think.)
To me, “Bitcoins” is something like that. It’s not a real “coin”. What backs it up? A Danish tulip? A Beeny Baby? A Climate Model? Peoples’ imagination?
IMO “Peoples’ imagination” is the correct answer.
I was greatly interested in reading the comments here as my son and I are building another crypto miner.
Many of the comments echo my earlier thoughts regarding the subject, but due to my son’s interest and expertise in finance – currency markets I took the time to study the subject. There are more than a thousand cryptos today. Many are worthless. Many are real. It is truly the wild west.
But the blockchain is a game changer, maybe as big as the internet itself, and you really should take time to understand what it brings to the world. It is more than bitcoin. It is an incorruptible digital ledger of transactions that applies to anything of value.
Kodak just introduced its bitcoin variant which enables photographer to protect and secure value from their work. Kodak’s stock price has more than doubled in just a few days. Take a look at Ripple and be sure to check out the financial institutions that are behind this crypto. Look at the smart contract element of Etherium and the uses. There are many more examples. Consider credit cards and where the large percentage of the fees go (fraud) and how the block chain eliminates that problem. Regarding the use of power there are many fixes in the works. Ttake a look at the Lightning Network which is in beta.
This entertaining podcast at freakonomics http://freakonomics.com/podcast/why-everybody-who-doesnt-hate-bitcoin-loves-it-a-new-freakonomics-radio-podcast/ might pique you interest. Marc Andreeson is interviewed. While there you also might check out the link to the podcast “Still using cash.”
There is no point in talking about what my son has done in crypto trading the last few months because many of you will not believe it or dismiss it as a bubble or luck. But do take a look at the underlying technology. Fascinating stuff.
I recommend the book : “Attack of the 50 foot blockchain” by David Gerard.
This is his site:https://davidgerard.co.uk/blockchain/
Blockchain is not going to change the world. the concept has been around longer than Bitcoin itself. Fundamentally if you have an open blockchain (i.e. can be mined/secured by anyone) then it is open to the possibility of an enemy/hostile country (or other entity) simply throwing enough computing power at your chain, instigating a 51% attack and having the power to alter all your data. No commercial organisation in the world is going to risk anything of real value or substance when it has such an inherent weakness.
Therefore if you want security from the 51% attack your blockchain has to be closed. This makes it centralised and therefore the concept of “trustless” participants is destroyed. Furthermore a closed blockchain can be replaced with a centralised database which will be cheaper and more efficient.
In reality there is not going to be any real world use for blockchains for anything of value or substance. Some people may use them for trivial things like online gaming where if it all gets corrupted you can just start the games again but for real things like property ownership it’s either too risky (as an open blockchain) or pointless and expensive (as a closed blockchain).
Once you actually understand what it is as opposed to be lured in by all the hype, PR and the elegant mathematics and cryptology you can see it for what it is, pointless and useless really.
You misunderstand a 51% attack. Dont worry most people do. you read a book.. I know… blah blah.
Its effectively suicide. Today a 51% attack would cost you on the order of a Billion dollars worth of equipment.
If you suceeded, you would gain nothing as you would destroy the value of the very thing you are manufacturing.
State actors might attack, in which case we would just hard fork a new POW.
that would only be for the next block — hashes are non-reversible — no transactions prior to the 51% point would be affected, and the developers could do a hard fork and the 51% ers would be shit out of luck
Power consumption is real even if the currency is not and the market is a bubble.
I expect to see you all open short positions against BTC..
“I expect to see you all open short positions against BTC..”
Is that the “intra objective declining” bet?
🙂
Only rich players can afford the luxury of taking a stance on the long term direction of BTC, whilst good day traders can make nice cash hoovering up a lot of nickels riding the intraday swings, irrespective of direction, without all the setup and running costs for mining a resource of finite, diminishing supply. It is currently a highly tradeable market because of the sheer number of players, enough of whom are the greater fools paying the savvy for lessons in market smarts. SInce coming onto this discussion an hour ago BTC/USD has dumped 400 points, and there is nothing unusual about swings of this magnitude in either direction in this market.
Supply driven demand has been, for the last month at least, overwhelmed by a decline in demand, where normally tightening supply should maintain upward price pressure. The significance of mining on price (and all that goes with it) has been easily overrun by crowd driven speculative behaviour for the pre-existing commodity. If BTC can survive this absurd speculative bubble, which actually undermines its usefulness as a method of payment, it might still settle down to be a credible currency, and there is no problem with that at all.
[snip]
“Steven Mosher claimed in December that Bitcoin miners all use hydro, in response to my suggestion that bitcoin was causing a rise in CO2 emissions. Avoiding CO2 emissions seems to be important to Bitcoin advocates.”
Nope never claimed that
https://wattsupwiththat.com/2017/12/17/bitcoin-climate-dilemma-mining-bitcoin-consumes-an-entire-country-worth-of-electricity/#comment-2695877
Eric references Bloomberg.
what do they say
“While the figure is too small to be a major driver of global utility shares, it represents an important growth story for companies investing in wind and solar power combined with energy storage — a list that includes NextEra Energy Inc., Iberdrola SA and Enel SpA, according to the note. Other potential beneficiaries include big oil companies that are investing in renewable energy and green-power developers that are backed by initial-coin-offering capital raises.”
Eric references bloomberg to make his arguments and they basically agree with me.
what would I know about the power sources my customers use?
More than Eric. duh
Bloomberg gets a lot correct, but Eric doesnt read
“Within four years, Hydro-Quebec envisions miners soaking up about five terawatt-hours of power annually — equivalent to about 300,000 Quebec homes — from the surplus created by the region’s hydroelectric dams. “If we have to invest in our transmission network, these investments will be paid for by the miners,” Pouliot said.”
Bottom line:
1. Most large Bitcoin operations do direct purchase from the power generating facilities: It’s a mix
but largely skewed toward renewables. In some areas, as I noted, almost exclsuively. Cheapest power
wins the day.
2. The vast majority of the power is either excess or stranded in some way.. Stranded because it
hasnt been connected to a grid or excess–
3. For folks who want to calculate the power consumption you can do it for yourselves with open source
data. No need to rely on a Bloomberg paywalled analysis as trsuting naive Eric does.
Eric:
“Do all bitcoin miners use hydro power or renewables? In my opinion very unlikely. Even “certified renewable” power is suspect. In 2010, Spanish solar providers were busted producing solar power at night.
Huh? Nobody is arguing that they ALL use hydro or renewable. Most, many, nearly all in the US,
the vast majority, a huge number,
Yes, as I noted before, there are some who use coal, fuel oil, gas, Always execeptions.
the thing is Eric has no facts. Zero.
he has opinion.
he has what he reads.
he does not actually do site visits to see for himself.
he is strawman fake news.
lets recap the argument.
Eric version 1: Bitcoin is making a bunch of c02
SM: err no, we mostly use renewables.
Eric version 2: “Mosher says they ALL use renewables, here is a bloomberg article
that argues the same as Mosher, but I Believe this is unlikely.”
Eric never tells us WHY he believes it is unlikely. he never gives you one fact that comes close to establishing what he needs to establish.
Here is a simple question for eric
Eric what portion of the Bitcoin farms that you have visited were powered by Fossil fuels?
Do you think that using renewables is unlikely because you dont believe Hydro is cheap?
Bitcoins are very much like precious metals in only two regards, so far as I can see. First, their “floor value” is established by the cost of “mining” them. Second, their market value is established strictly by the law of supply and demand. It has been noted by others that tulip bulbs have those same two characteristics. You can check your history books to find how that one came out.
Among other differences, government issued currency has two characteristics that precious metals, bitcoins or tulip bulbs do not possess. The first is that it is backed by the “good faith and credit” of the issuing government. Second, it is by law, “legal tender”; that means all creditors are required to accept it as legal settlement of any and all debts.
Blockchain is so yesterday.
Hashgraph!
Ultimately Bitcoin will rely on government support and even more will rely on Bitcoin replacing the leading currencies like the dollar/yen/sterling etc. That can only happen if the governments can wield regulatory control over the currency. If regulatory control is a matter of trust and can be bypassed at will, governments cannot accept it as cuurency as they will be unable to reliably extract taxes from transactions and therefore will be unable to govern. By its very nature Bitcoin cannot offer control and therefore cannot be used as a global currency by sovereign governments.
Regulations will be imposed, if they are voluntary – they will not work. My guess is ultimately governments will declare transactions in bitcoin illegal. This doesnt mean that transactions will cease, but it is likely that the value of bitcoin will revert to near zero. Should this happen (personally I believe it is politically inevitable) – Bitcoin will join all the other bubbles AND Ponzi schemes as examples of greed and scamming.
And on the note of using renewables – can I write to my electricity supply facility and insist my power comes from wind only because I want to be green, or from coal because I want it cheap. Of course not I pay the same as everybody else. To be able to ‘buy’ a block of hydro power and claim your green credentials is just another political scam that is not available to the majority of consumers. This relies on politics and governments wishing to show their carbon efficiency and is total b/s. It is as meaningless as asking my power to be colour coded so I can select which colour I want to use when flicking a switch. If Mosher for instance believes in this absolute brain washing idiocy it only proves that he is a great ‘believer’, arguments such as his are often very interesting but on this one perhaps should be filed under ‘highly amusing’.
Works real well inside your country with your own government but is meaningless if others in the world won’t accept your local currency. There are a number of UN sanctions in force at the moment. Every currency has problems 🙂
UN sanctions can’t stop peer to peer exchange of crypto tokens of value
it’s backed by the full faith and credit of mrs watanabe, russian oligarchs, argentine refugees, chinese emigrants and those who don’t say no to drugs..
it is keeping some people alive by making it possible to escape serious predation and as long as that demand exists, it has real value.
Not to mention you need no bank account or identity to execute cryptocurrency transactions — simply a wallet with the proper currency addresses
nobody cards the cash buyer, either.
any transaction has 2 sides. it’s barely accepted anywhere in the world for anything, so it’s hardly competing with cash as a medium of exchange. it’s a forex type commodity for the speculators to gamble with and
it’s a medium of transmission that doesn’t use regular banks, but it is no more anonymous than any other thing done on any thoroughly monitored and recorded electronic medium
There is a 21 million limit on bitcoins and most of that has already been created so the bitcoin mining will soon stop. When that happens the real bitcoin bubble starts. However just as in all bubbles the thing that bubbles always has to rely on the prevailing governmental monetary systems to achieve value. Bitcoin attempts to masquerade as money and is trying to achieve a certain respectability ie traded on exchanges, but it will morph into a perpetual collector item whereby it bubbles and crashes and bubbles and crashes ad infinitum. The problem with bitcoin is it has no intrinsic value. It isnt like a piece of art and cant become a medium of exchange because of the 21 million limit. As the youtube video explained though, the Bitcoin network is the only cryptocurrency large and sophisticated enough to withstand hacker attacks to bring it down. That in itself will guarantee its survival. However as a medium of exchange to replace all the world’s money. FORGET IT.
you will still be paid to solve transactions, just not as much
each bitcoin transfer costs bitcoin (a tiny bit)
Bitcoins can be divided into 10,000,000 satoshi’s each — so that’s $210 Trillion bitcoin based tokens of value — at 41 per satoshi — that’s more than all the assets in the world
$1 per satoshi
If governments wish to kill Bitcoin, they will drive it underground. This probably leaves it with little value. For an underground commodity to continue to prosper, demand must be high (illicit drugs, prostitution). Why would anyone need to risk bitcoin mining. If the government is mostly agnostic, Bitcoin and its ilk will seek their value in the marketplace like any other commodity — their utility relative to the good or service that would be traded for them by the marginal buyer. No fad has repealed the fundamentals of market based economics for long and it is unlikely crypto currencies will be the first.
Many here, myself included, have compared Crypto-currencies to tulips. Tulips did not become valueless. They merely resumed their normal role in the economy after the fad passed. They have continued to have a value for some hundreds of years, have been bred and hybred, and are a welcome sight every spring. Possibly worth a drive to Holland, Michigan if you are close.
If tulips did not, in the open market, recover the cost of breeding; if the beauty of the flower did not justify the effort of growing them for gardeners who pay a small cost for the privilege, we would no longer have them unless they grew wild.
When a crypto currenciy’s exchange value is exceeded by the cost of acquisition, it will cease to be valued.
“Investment” in this context, also known as capital accumulation, is merely deferred exchange.
If blockchains remain unhacked, and the quantity proves undebaseable, and there remains desire for transactions outside of fiat money, and the untracability is real, and the mining is done so becomes a sunk, and possibly unrecoverable cost for those who mined, then Bitcoin will seek its real economic value for its transactional virtues. It could be nominally zero, if the world abandons it (used by gamers for game rewards?),
Or it could settle in as non-governmental medium of exchange. It will then be of interest to currency traders rather than speculators, because its value will rise and fall in small increments over modest time periods.
If it is ever declared a legal tender, it will “peg” to the currency of the declaring agency. They history of a fiscal anarchy with many banks and many banknotes, such as early 19th century America , is illuminating.
If Bitcoins cannot be converted into the baubles of our everyday life, from homes to hotdogs, the value WILL fall to near zero. If there is significant and easy conversion, and the technology continues to meet its claims, the value will reflect the convertablity. If the value is less than the cost of mining, mining will cease; it will cease anyhow soon enough as the design is that of a zero sum game. This is very strange, because a zero sum currency leads to horrific inflationary pressure, but zero barriers of entry to new currencies suggest massive deflation. Most 19th century banknotes suffered this to one degree or another. Perhaps someone will make a few bucks maintaining the website with the exchange rates between the thousands of extant crypto currencies. Wonder what the core value they all will be compared to will be?
The prediction I am most sure of is that, during the sorting out, there will be considerably widely disbursed pain, and narrow, concentrated gain that may well have to go into hiding…such is the nature of Ponzi type efforts, even if legal and well-intentioned.
At, this point, the problem that I see, when considering this blog post and the comments, is that most have a difficulty in distinguishing between Bitcoin, as per mining +exchange and the blockchain.
Bitcoin or cryptomint is not the same as blockchain.
Is sold out as such but is not.
These two are very much coupled but still not the same, One is the master and the other happens to be the slave.
The mint service of the Bitcoin is just a blockchain service offered, very tightly coupled, but is only a tiny service offered by the blockchain,.
The services offered in the Internet under blockchain are far much more and with far much more potential.
The safety of Bitcoin is not in crypto, but in the very coupling with the blockchain.
The safety and security of blockchain does not rely in crypto, but in its strength and flexibility.
It literally is a chain that is as strong as its weakest link, where every link is as strong as any other, and longer the chain, stronger the links. ..
Thinking that an attack could break a block in that Chain, is a silly crazy insane thought…….
Any simple trespassing will be considered as an attack, anywhere is the blockchain services offered, regardless, with no consideration of favoritism or discrimination, including Bitcoin.
Where the trespasser will be hold accountable, regardless of power might or what ever.
Trespass and be ready to face the consequences….As simple as that.
What I am trying a say here is simple, as far as my understanding permits, the blockchain is a completely different “animal” than Bitcoin, even when both happen to be coupled.
Bitcoin in all regards is a service offered and secured by the blockchain, one of the most basic and simple one….Blockchain is far far much more than Bitcoin and cryptomint…….Where the consideration of an equal sign in this regard is simply misleading….
Ok, maybe I again had too many Red Bulls..:)
But just in case for whatever it could be worth…
cheers
That is probably the closest to correct in the whole comments and a lot better than say Steven Mosher who claimed to undertsand it and didn’t even realize they use GPU multicores for the mining.
They don’t use gpu multicores for bitcoin mining — people use ASICS for bitcoin and lytecoin
Monero, ethereum, zcash — and now bitcoin gold use gpu rigs to mine –some can still be mined with cpus
The real answer on Power consumption is somewhere between 14TWh/yr and 27 TWh/yr, mean of 18.5
based on actual… ya know.. data
1/10th of a percent of world electricity
so 1 latte at starbucks every other week for someone making $100,000 US == in the noise
Whoever wrote the original blockchain program could set up problems for miners to crack that yielded cash in say $US.Lets call him Alpha.
Say, safe bets on the value of the Japanese Yen and the $US on the overnight money market.
Levering the value of his/her Bitcoins, Alpha, with increasing computer capacity at beck and call,could play the international money market to obtain real profit in hard currency.
This would put a floor under the value of Bitcoin, because it was worthwhile to Alpha as a mechanism to add more computing power.
If things went out of control, Alpha could vary programming to sort out the glitches, a sort of ‘Quantitative Easing’.
As new players, say Betas, were given skin in the game, for a real dollar price, Alpha would get a cut, plus have access to even more computing power.
It would be worthwhile for Alpha and Beta to continue the game.
Useful idiots would sell players computers so they could ‘make a fortune’.
A TPI pensioner, living in a Housing Commission flat would be the go to player here in Australia.
Eventually Alpha and Betas would be in a position to bet against nation’s currencies, with more computing power than that available to the sovereign currency holder.