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.
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
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.