The Energy to Sustain Blockchain – The debate rages on as the energy consumption increases
Guest essay by Shea Karssing
Earlier this year, we published an article (https://smarterbusiness.co.uk/bitcoin-electricity-energy-sustain-blockchain/) on Bitcoin energy consumption, reporting how Iceland has become one of the top locations for cryptocurrency servers, which now exceed the consumption of private energy users.
Now, the criticism amongst ecological circles and the debates around Bitcoin energy consumption have been fueled by a paper by Alex de Vries of PwC’s Experience Center in Amsterdam.
His paper, Bitcoin’s Growing Energy Problem, concludes that Bitcoin’s energy consumption could soon be heading above a consumption rate of 8 gigawatts (GW) per year.
The paper’s findings:
- At the moment, the Bitcoin network consumes at least 2.55 GW of electricity – as high
as the annual energy consumption of Ireland. - This could reach a consumption of 7.67 GW in the future – close to the energy
consumption of the entire nation of Austria (8.2 GW). - By the end of 2018, the mining of bitcoin could be using as much as 0.005% of the
entire world’s energy use.
The reality is that Bitcoin uses a massive amount of energy. Author Alex de Vries says: “The bitcoin development community is experimenting with solutions such as the Lightning Network to improve the throughput of the network, which may alleviate the situation. For now, however, Bitcoin has a big problem and it is growing fast.”
Why does bitcoin mining require so much energy?
The bitcoin mining process uses computers with software that can solve complex mathematical problems. A new block is added to the blockchain every time a new problem is solved, rewarding the miner with bitcoins. This process requires a lot of energy because the computers need to ledger all the transactions so that the same coins aren’t spent twice – this takes time and consumes a lot of electricity.
How can bitcoin mining become sustainable?
De Vries’ research reveals that if the price of bitcoin continues to go down, and the amount of energy needed to mine it continues to rise, bitcoin investment could become inefficient. One of the ways this can be avoided is if the world shifts to 100% renewable energy in the years ahead. With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.
New research from Renewable and Sustainable Energy Reviews journal found that a shift to total renewable energy using contemporary technology is both possible and affordable.Co-author of the research, Brian Vad Mathiesen of Aalborg University says: “There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research. Now let’s get back to the business of modelling low-cost scenarios to eliminate fossil fuels from our energy system, so we can tackle the climate and health challenges they pose.”
If we were to eliminate fossil fuel usage, this would eliminate the environmental and efficiency challenges caused by energy-intensive bitcoin mining.
It’s not impossible to imagine a world in which bitcoin is used exclusively, backed by green energy. If there’s one thing we’ve learnt over time, it’s to ‘never say never’…
About the author:
Shea Karssing is a writer for Smarter Business, one of the UK’s leading independent consultancies, helping businesses secure the most comprehensive savings solutions from utilities contract management and procurement to business loans and facilities maintenance. Smarter Business are experts on all things energy, and it’s the company’s mission to provide
whole-of-market business comparisons, maximise savings and improve profitability for its clients. https://smarterbusiness.co.uk/
If we were to eliminate fossil fuel usage, this would eliminate the environmental and efficiency challenges caused by energy-intensive bitcoin mining.
It’s not impossible to imagine a world in which bitcoin is used exclusively, backed by green energy. If there’s one thing we’ve learnt over time, it’s to ‘never say never’…
And many so-called intellectual types such as these scoff at me for believing in God?
A quick back of the envelope calculation shows that would consume all the energy currently used in the whole world.
Once again, we see that these folks are mostly innumerate. Somebody taught them to read and write and walk about in public without causing too much disruption but they’re kind of useless in modern society. And yes, they’re arrogant. They need a dose of Jordan Peterson.
But that is a static analysis; their desire for “100% renewable” is a Progressive colloquialism for “lets deindustrialize the world”. Its pretty hard to do Bitcoin when the sun sets over the solar-farm.
Well said.
Oh my God … would someone please tell their mothers to sew up the holes in their pants pockets! !
They are obviously blind AND delusional from playing with the unemployed for FAR too long!! 🙂 🙂
Would the author please fix up the power units. Are they GW which is a power consumption rate or are they meant to be GWh which is an energy quantity. GW per year is just plain wrong.
The ‘per year’ is wrong. It is 8 GJ/s on average, year round.
‘New research from Renewable and Sustainable Energy Reviews journal found that a shift to total renewable energy using contemporary technology is both possible and affordable.’
I have a bridge to sell for your audience.
You don’t need to have a real bridge, Hugs.
Believers in Karssing’s claims will buy any visionary dream bridge, as if it was real. I doubt they understand the value of money, gold, heavy industry, etc. etc.
Just tell them the electromagnetic waves generated from solar power will hold up the cars traveling over the gorge!
It could be a rate of consumption increase, but I suspect that’s not what was meant.
Guess I won’t quite manage that with my 12V 100MA wall wart, anyway.
And when the whole bitcoin bubble eventually crashes what will there be to worry about? Bitcoin can never threaten the world’s energy supply because it requires that the bitcoin user pay for his electricity usage. If bitcoin starts to cause electricity prices to rise, it will cause the price of all electricity input commodities including natural gas to rise as well and thus more exploration of natural gas will take place . Any commodity ‘s price will rise if the end use of that commodity has a demand/supply problem where the demand starts to outstrip the supply.
…demand/supply problem…
Also the money-printing problem, or “mining” as they call it with bitcoin. Ask Venezuela how that’s working out. If we keep producing more and more of them, their value will inevitably drop.
There is no “money-printing” problem with bitcoin. The amount of bitcoins that can be mined is finite and is set at 21 million. This limit is due to be reached about 2140.
In the mean time there are 17million bitcoins in existence today which means there are only 4million left to be produced.
Once all bitcoins have been created miners will rely on transaction charges for their income.
…set at 21 million…
Ah. Well, nevermind then. 🙂 In general I love the idea of alternative currencies gaining popular acceptance, its like a modern version of free banking that has been tried in various ways and places over the past few hundred years. I may be skeptical but that doesn’t mean I’m not watching with great interest.
The value of a Bitcoin in that state (all discovered) will be related to the energy it took to mine them. A Bitcoin has an inherent value as a store of energy which is a store of value. “Equipment” is also a store of value, expended on the mining. But with no secondary purpose, imaginary coins will forever be a gambler’s plaything.
Talk to Québec Hydro. They are basically 100% renewable already. Ask them for 10 GW on a continuous basis, make a deal. Any argument in favour of “100% renewables” can be tested in Québec or Labrador.
With today’s technologies there is no case for 100% renewables based on the EROEI. The imaginary renewable energy god doesn’t exist and does not call for human sacrifice.
Notanist
There are, from memory, 21M Bitcoins available. Like gold and oil, whilst the early ones were easy to mine, they get increasingly difficult to find. $100 dollars invested, again from memory, in 2008 would now be worth $1M and at one point was worth well over $3M.
One of its attractions is that irrespective of what happens to a countries fiat currency, Bitcoin at least, can never be devalued by the country itself. Bitcoins took a jump in value when the Greek problem hit with people there putting money into it as a hedge against their financial collapse. I would imagine plenty of savvy Venezuelans will have done the same. And unlike pure investments, it’s possible to spend Bitcoins electronically.
They are entirely portable, indeed, borderless so you can travel anywhere in the world with no currency restrictions. Your transactions are entirely private, there are no banking fees and no chance of a disaster like Northern Rock or the Bank of Scotland fiasco affecting your money. In other words, you are in control of your money, not a bunch of bankers taking it out your account and investing it ‘on your behalf’.
It’s kind of like keeping your cash under the bed, except that you’re risking a bit of a roller coater ride on it’s value. I’m no sophisticated investor but I suspect that if mining for Bitcoins were stopped overnight the vale of those in circulation would go through the roof.
We all wail about the crooked bankers and their manipulative interference, well, this is an opportunity to do something about them. And whether it be Bitcoin, or another electronic technology, things are changing and there is at last, an alternative to banks. It may suit only a few people, but at least it’s a start.
Can’t be devalued, but it certainly can be taxed/regulated within the countries borders. Don’t think governments aren’t wanting a ‘piece of the action’ in this regard. They’ll guise it in terms like, “protecting the public”, but, they will get their slice of the pie.
2 problems:
– no nation will tolerate permanently
“counterfeiters” disrupting economy with uncertified currency.
– With an upper limit of currency there’s an upper limit of acceptance too:
collectors* may show interest; but there’s no more convertibility nor flexibility.
* and who will collect as long as there’s 21 mil. items available.
Johann Wundersamer
But it’s not a currency. There’s no coins struck or notes printed, if anything, it’s a means of barter and I don’t think there’s a law against that.
Is there any upper limit on acceptance of gold? The more we use, the more expensive it gets to extract, the more it’s value increases. Same thing.
One can convert from fiat currency to cryptocurrency at the press of a button, and back again. It’s flexible enough to travel with you, with access from a smartphone, across borders, as much as you want.
There are now 176 Bitcoin ATM’s in the UK, 111 in London alone.
The Bank of England is examining digital currencies:
“Our Financial Policy Committee has assessed private digital currencies and concluded that while the underlying technology has potential, they do not currently pose a risk to monetary or financial stability in the UK.” https://www.bankofengland.co.uk/research/digital-currencies
It doesn’t sound like the BOE are going to intervene any time soon. And stating “the underlying technology has potential” is as good as acknowledging it as an acceptable ‘currency’.
Bitcoin has a scaling problem.
Beyond that there are other problems with distributed ledgers that go along with their advantages. In the end all exchange systems rely on some axiomatic level of trust.
And having a finite amount of currency (and it remains finite given that its fractionalization is also finite) does create known problems in economies, i.e. money supplies do need the flexibility to grow at times (no, don’t wave Venezuela and Weimar at me; go talk to Milton Friedman).
Tsk Tsk
I can’t claim to be an expert in crypto. I have no doubt what you say is true, including that all exchange systems have their problems, including our conventional systems.
I will however take issue with you on the question of axiomatic trust. Cryptocurrencies are ‘trustless’ financial concepts, in that they eliminate the need for trust between two or more parties. That’s why they were developed.
The distributed ledger is surely a concept that excludes the human corruptible influence and is therefore entirely trustworthy, but described as ‘trustless’ because it eliminates the need for trust, and is therefore misinterpreted to mean untrustworthy.
Having said all that, our current financial system is so riddled with holes, I fail to see why someone having another shot at improving it is such a bad thing.
The nice thing is, at the moment it’s a fairly free environment. When the governments get their grubby paws on it, much like the internet, a small piece of freedom will be subsumed, once again.
Enjoy it whilst it’s here.
If no trust were needed there would never have been Bitcoin heists, frauds etc. which represent breaches of trust.
milton’s claim to fame was this epiphany:
since the cost of manufactured goods decreases as infrastructure is amortized and the supply increases, the price naturally drops.
therefore, he tells his eager overlord, you can inflate at a rate that prevents prices from dropping and tell everybody it’s price stabilization!
nobody will feel you taking a bite of his life because the price stickers won’t change.
The more we use, the more expensive it gets to extract, the more it’s value increases. Same thing.
Not so, the thing about gold is it’s “value” remains constant. the fact that it is worth more “dollars” merely indicates that the value of the dollar has decreased instead.
If you believe I am just talking semantics a check on the goods and services gold can purchase demonstrates it has changed little over the centuries. On the other hand, the number of “dollars” required has varied incessantly.
getitright
OK. Happy to accept that.
You go your way, I’ll go mine. Gates did his own thing and everyone laughed. Bezos did his own thing and everyone laughed; Google, they laughed; Uber, they laughed; Zuckerberg, they laughed; Jack Dorsey, they laughed……….etc.
Will Bitcoin be laughed at? I sincerely hope so.
Hotspot
You are correct they were all laughed at, well along with millions of others that failed that is. Exceptions do not create the rule.
Bob boder
Except that science is, of course, the biggest failure ever.
Scientists fail far more often than they succeed, other wise there would be no point in experiments.
In science, exceptions do create the rule.
The point of experiments is to isolate exactly what’s happening. The number of failures is irrelevant to that enterprise, except as a measure of how difficult it can be.
When they have isolated a phenomenon, they succeed at demonstrating it as close to 100% as is possible in this universe.
As an enterprise that has raised human health, wealth, power and access to information by a near-infinite amount compared to our remote ancestors, I have to say ‘Science is the most resounding success of the human species to date.’
It’s a testament to the freedom of speech provided on this blog that the moderators permit such an anti-science comment to be posted. However, it’s up to the rest of us to publicly disagree, lest the blog fall into disrepute.
Leo Morgan
“‘Science is the most resounding success of the human species to date.’”
I entirely agree with you. Mine was an illustration to present that there is nothing wrong with failure. Bob boder seems to think that the internet success is at the expense of everyone else and that there are only a select few very wealthy people. Nothing could be further from the truth. It’s a global market place in which people succeed and fail as they do on the high street.
However, I still maintain that science is the success of perseverance over failure. But then I wouldn’t expect most scientists to accept that, indeed some would rather, somehow dress that simple fact up as something else. I have yet to see a scientific paper that grades its success on the number of failed experiments.
But it depends on ones perspective, is failure a bad thing or is it part of a process of elimination?
i use the ‘3 silver dimes’ measure
50 or so years ago you could get a burger or a pack of smokes or a gallon of gas.
today, with those same dimes, you can get 3 value menu burgers, a bit more than a gallon of gas. but taxes on cigarettes price them beyond the 3 silver dimes
Yes, HotScot – But it’s not a currency.
That’s why I referred to ““counterfeiters” disrupting economy with uncertified currency”.
and
– no nation will tolerate permanently
“counterfeiters” disrupting economy with uncertified currency.
Johann Wundersamer
Fair comment, my ignorance exposed once again.
But I think the link I provided suggests that crypto isn’t going to be outlawed any time soon. In fact quite the opposite, governments are considering how to capitalise on it themselves.
Government interest is not neutral: their ideal is to follow the chains of transactions a) to tax them, and b) to identify flows of funds to “enemies of the people” (and then chop them off). Governments now dislike the anonymity of cash, or other means of payment of large sums that they are not able to trace.
It is not a currency at all. It is a poker chip. It is backed by its owners. It’s value in a little crisis goes up. In a big crisis it drops to zero and becomes unconvertible. The crisis doesn’t even have to be real. If could be just a rumour. When claiming inherent value where there is none, one can wind up with nothing, like a ‘limited’ mining stock in November 1929.
Anti banking beliefs are just plain stupid.
Arthur, it may be, but Bitcoin is amazing in that you can send someone specific 1s and 0s and they cannot be counterfeited.
arthur4563
Personally, I don’t consider it anti banking at all, just an alternative assuming it suits ones purposes.
But then again, I’m not sure I like the idea of the Royal Bank of Scotland, bringing the entire western economy to it’s knees.
When will it happen again? Not ‘if’.
HotScot a couple questions if you would:
Your transactions are entirely private…
Among the many problems I have with this medium of exchange, the idea of anonymous transactions is one of the greatest. It has been touted as a benefit to bitcoin, et al., however, I’m not so sure it is.
For example, what happens when I order 1 (retail consumer) or 1000 (commercial business) units of product via some cryptocurrency, but it doesn’t show up? To whom would I turn to enforce the transaction and/or get my money back? Who would I sue in a court of law?
Of course, the common sense answer to my objection is, “Don’t do anonymous transactions,” but then there goes just one more of the reasons touted to utilize Bitcoin, et al.
We all wail about the crooked bankers and their manipulative interference, well, this is an opportunity to do something about them.
Down a little farther you make the following argument with regard to cryptocurrency:
“Indeed, the means of financial transaction isn’t the problem, the problem is the criminal activities themselves. We can’t blame crypto for those.”
You appear to be suggesting that blaming the system is invalid. I agree. But shouldn’t you also apply your logic to the “crooked bankers and their manipulative interference”?
Unless all bankers are so crooked, which I don’t believe that case can be made on the basis of unassailable evidence.
sycomputing
Mate, sorry, I’m not an expert on crypto, barely a novice in fact.
Having looked into it for a week or so, your questions are entirely reasonable.
I think what needs to be defined is the contract of purchase and the contract of payment. I can’t do that, but what I think I can do is understand that whilst the contract for purchase of goods carries with it the agreement surrounding delivery, quality and right of return (for example) the contract of payment means only that an agreed sum be paid and the transfer of money be made in exchange for the goods and the contract inherent within the purchase contract.
That’s probably a really clumsy explanation, I’m sorry, but frankly what retailer cares in what form, or where payment for goods comes from, as long as it conforms to their payment criteria.
The crypto currency payment is only anonymous in that it’s origins are confidential, not it’s outcome. So you pay for gas in Bitcoins the gas station advertises it accepts. Do they care where the payment emerged from? No. Do you care? Well of course you do. Do you want every government official, bank staff, lawyer or Tom Dick and Harry to know where your money came from and by doing so has a pick at your dollar as it passes over their desk? I’d rather not, but with our existing banking system, we have no choice.
As for criminal activities and the perpetrators of such, it doesn’t matter if the crooks are bank robbers, drug dealers, dodgy bankers, murderers or bent lawyers, the problem isn’t the money, it’s the crime. People may conduct crime for money, that doesn’t mean money itself is bad.
A crude comparison is to suggest a rape victim is bad because they were there. No, sorry, the crime is the criminal act itself, not the motivation.
However, as I say, I’m no crypto expert. I only started looking at it last week because I figured my kids needed a heads up on it for their future. This article was posted coincidentally. So my position is, you are entirely right to criticise whatever I say, and you’re probably right in every respect. I can only submit what I believe to be consistent with what I have learned so far.
Something to consider: crypto is confusing for us all, frankly, I don’t get it so far. But imagine being dropped into the world of credit cards, mortgages, payday loans, PPI, debit cards, and even cheque books, from the beginning of the 19th Century. The current financial system we have evolved into would seem a complete nightmare to the poor guy.
Crypto is the 21st Century creeping up on us really rapidly, in fact at a sprint. Whether we like it or not, the concept is here to stay, it may not replace fiat economics but it will exist in one form or another into the future.
Personally, I’ll embrace it, if it fails, I’ll embrace what comes along next.
That’s probably a really clumsy explanation, I’m sorry, but frankly what retailer cares in what form, or where payment for goods comes from, as long as it conforms to their payment criteria.
Sure, but part of the overall transaction criterion, which in my humble view must include both payment and delivery, is that the customer must be satisfied as well as the vendor.
The crypto currency payment is only anonymous in that it’s origins are confidential, not it’s outcome.
Yes but isn’t that the very problem for certain transactions, i.e., non POS transactions. The Point of Sale transactions (the gas station) are easy enough to dispute/resolve, since both parties are able to identify the other, e.g., via receipts, memory and such as this. Not so with say, internet transactions, where something was advertised for sale but the two parties had no clue who the other was and receipts might be worthless.
With credit card transactions, I’m able to dispute those transactions with my CC company in the case of the vendors failure to perform his part of the contract (e.g., to deliver my goods). In such cases, the CC company has the authority to pull funds from the offending parties account and place them back into mine, given I submit the disputation within a certain time frame. I’m not sure this is possible with crypto, or is it?
Anyway, thanks for your time friend.
Take care!
sycomputing
As I understand it, that’s the entire purpose of a ‘distributed ledger’ the premise on which cryptocurrency is founded. Transactions are recorded, reliably, permanently, and without the ability to tamper with them at the time of the transaction, or
A conventional ledger of transactions must be maintained by someone which means someone has the ability to corrupt transactions whether immediately or historically.
And it’s a question I have never explored because I didn’t think of it, but I suspect there must be a way of validating a transaction in the event of a dispute. Presumably one not violating the right of privacy.
I’m not sure if crypto would be credible without that ability, but as I say, I’m no expert. Not even close.
sycomputing
Whoops!………..Transactions are recorded, reliably, permanently, and without the ability to tamper with them at the time of the transaction, or later
Transactions are recorded, reliably, permanently, and without the ability to tamper with them…
But again this isn’t the problem for me. I’m happy to believe the above, but this doesn’t solve the problem of what happens in the anonymous transaction.
Because I have an unassailable case that I purchased something, doesn’t mean anything if the party from whom I purchased it is unknown, for who will I go after when I don’t receive my product?
Steven Mosher seems to have the best answer to the question, i.e., escrow services. Of course you appear to have your own questions regarding such services…answers are needed!
sycomputing
The product vendor isn’t anonymous. Virgin offers space flights purchased with crypto. Amazon could do it, I believe Microsoft already offers crypto as a purchasing option.
And I’m not sure anonymity is the issue or benefit with crypto. The underlying concept, as I understand it, is the ‘distributed ledger’. It means any contract, financial or otherwise, is undertaken without a third party human overseeing it. Humans are corruptible, so escrow, acting as a third party in an agreement between two people means that it is possible for one of the trading parties to bear influence on an individual within escrow to alter the transaction conditions.
I know it’s unlikely, but distributed ledgers are transactional contracts, not specifically financial. Any third party with an unannounced financial or political interest in a contract could alter any contract to their personal benefit or to the benefit of one of the trading parties.
As far as I can see, we need to get away from the concept of Bitcoin as a financial concept, that’s merely the first and most obvious use of distributed ledgers. In the same way the internet was simply a porn platform, it will evolve.
Again though, that’s just my simplistic perception from what I’ve learned over the past week or so.
The product vendor isn’t anonymous. Virgin offers space flights purchased with crypto. Amazon could do it, I believe Microsoft already offers crypto as a purchasing option.
Absolutely true, in the case of big business. But big business isn’t all business, therefore, not all vendors will be public.
Otherwise, why tout the anonymity factor as a plus?
sycomputing
TBH, I thought early on this week it was a principle reason for crypto. Everyone maintained it was, so as a beginner, I went along with it. Then this discussion started and I had to think long and hard, do some more research, and it seems to me, anonymity is almost the antithesis of what a distributed ledger is about.
Off to bed, long day.
Nighty.
…it seems to me, anonymity is almost the antithesis of what a distributed ledger is about.
I think of it like a bookmakers ledger. The ledger is clear enough for the many to read and understand, but the parties within the individual transactions are hidden.
sycomputing
“I think of it like a bookmakers ledger………..”
I suspect that in a couple of short sentences you have nailed what I have taken half a dozen long post’s attempting to describe.
sycomputing
PS……And remember, you’re dealing with a numpty here. I’m not quick on the uptake so I’m probably jumping to conclusions. I don’t have answers, only questions.
PS……And remember, you’re dealing with a numpty here.
Strongly disagree…
in 312 AD, romans were in the bread lines with their bone and metal ‘meal tickets.
the door to door salesman would strike when the gal had her boyfriend there and offer her furs from madagascar or perfume from france – mail order- delivered in a reasonable time but not amazon prime…lol
and if the b.f. said he left his wallet in his other toga- well, he could write a check.
diocletian thought up a trick, too- the ‘owl’ was a silver coin accepted worldwide- they’ve been dug up in siberia, even.
he figured he could strike them in copper and silver plate them.
the copper rod (called As) had shrunk from a foot long down to a couple inches, so something had to be done, right?
from mr Funk (yeah- funk & wagnall guy) ‘So You Think It’s New?’
gnomish
I enjoy your posts, but sometimes your cryptic delivery does my head in. 🙂
Makes my two brain cells work overtime, so I guess that’s a good thing.
Go back further, read Matt Ridley’s ‘The Rational Optimist’. He describes the earliest manifestation of trading and specialism.
A guy is very good at making fish hooks from bone, but he’s lousy at fishing. He meets a great fisherman who can’t make a fish hook, they do a deal and catch fish. The fish hook guy makes lots of fish hooks and trades them for more fish. Mass production, or more specifically, specialisation.
The currency in this case was fish hooks (and Matt describes it much better than I do) but it could be spear heads, spear shafts, spades, flint tools, anything.
So no, there’s nothing new, crypto is just another way to trade. A convenient way of not having to haggle the value of a sheep to a cow because both are appointed a financial value. Can I afford to trade two sheep for one cow? Lets look at what I have in my bank account first before I even consider the question.
I know, crude, but then again, man didn’t have to deal with credit cards, mortgages, loans, speculative investments, pensions, VAT, inheritance tax, stamp duty, internet banking, the stock market, GDP, government debt……well they did kind of, but the financial world today would be a complete nightmare for them.
And as a little foot note, it got me to thinking about Capitalism, the subject most of us are so entranced by. It is in effect, a term no less a political construct that socialism. The true condition of man is free trade, that’s where we came from, anything else is just smoke and mirrors.
20-20 reason. everything in order.
“For example, what happens when I order 1 (retail consumer) or 1000 (commercial business) units of product via some cryptocurrency, but it doesn’t show up? To whom would I turn to enforce the transaction and/or get my money back? Who would I sue in a court of law?”
You misunderstand.
Bitcoin ALLOWS you to do trustless exchanges but does not REQUIRE that you do so.
If you want you can write a transaction script to require a trusted third party to adjudicate all disputes.
NOTHING in bitcoin prevents you and the other party from agreeing to set up a third party to the transaction.
So today, you buy something using Visa. And a processing fee is charged.
That fee covers fraud, amongst other things. If the package doesnt show up
you complain and they will investigate. In most cases, you get your money back. But maybe you waited too long.. who helps you then. Or maybe you go to court and lose? who helps you then? In short there is always an end state in every system where you get screwed and there is nothing you can do about it.
In bitcoin you get to choose and you take full responsibility.
Do you want the “safety” of some third party who holds the funds in escrow until the product is delivered? Then you have the freedom to set up a transaction as a multi sig. A and B want to trade, they designate C as the escrow, and when A gets the product, B & C sign the transaction and funds are dispensed.
The onus is on you to decide, not some system. its a freedom and responsibility thing.
Don’t understand it so I’ll pass.
T p
Worth thinking about though. It was explained to me that, Joe, Bill and George all make stuff and sell to each other with cash. They buy and sell directly so no record of the transactions is necessary.
Introduce credit though and the trading relationship between the three becomes complicated so someone has to keep a record, a leger. Who does that, Joe, Bill or George? And how can you trust any of them when they are involved in the transactions.
So they nominate an independent individual, who is truly not associated with any of them, until he marries Joe’s daughter.
As I understand it, the blockchain concept itself is actually to do with that simple contract between the three of them, nothing to do with the money itself, just the contract. When it’s run as a blockchain (and I have no idea how that works) it is permanently and irreversibly encoded with a unique identifier so the transactions can be validated without Joe’s daughter in law getting her grubby mitts on the ledger and altering it.
The term’ distributed’ ledger has been ‘coined’ to describe it (no pun intended) and the first popular manifestation of it seems to be cryptocurrency. I’m aware an organisation called Etherium is putting the distributed ledger to other uses, however, and I suspect there is at least as much value in that as there is in the concept of an electronic currency.
I will probably be shot down on this description by others with more knowledge than me, but I welcome the corrections as it helps me to understand.
Every day’s a schoolday on WUWT. 🙂
Thanks Steven. I didn’t really misunderstand since I answered my own objection:
“Of course, the common sense answer to my objection is, “Don’t do anonymous transactions,” but then there goes just one more of the reasons touted to utilize Bitcoin, et al.”
It’s just that the anonymity thing appears to be touted as something great about cryptocurrency, when it’s hard to see how it will be once more people begin using it to game the consumer.
But maybe you waited too long.. who helps you then.
Seems like a Straw Man, Steven. Of course if one doesn’t report a crime within the statute of limitations, one loses the opportunity for redress…that’s pretty much obviously true.
Moreover, the big distinction here is that I can’t name a defendant at all, even if I wanted to file within the proper time period.
Do you want the “safety” of some third party who holds the funds in escrow until the product is delivered? Then you have the freedom to set up a transaction as a multi sig. A and B want to trade, they designate C as the escrow, and when A gets the product, B & C sign the transaction and funds are dispensed.
Now then this is actually helpful to the problem at-hand! Who’s the third party? Are they anonymous as well? How much will the escrow service cost?
Thanks.
sycomputing
I’m not sure if you saw my response to Stephen’s comment, but my understanding is, the whole point of crypto is to dispense with things like escrow, as a third party to a transaction can corrupt the transaction.
And my simplistic interpretation of the whole thing is that actually, Bitcoin and all the others are simply the first, and most obvious use for the underlying concept, a distributed ledger.
As I understand it, the distributed ledger is an incorruptible record of events. They might be financial, but they needn’t be. Almost any type of contract can be handled by a distributed ledger.
The essence being that we have operated for thousands of years with ledgers of transactions operated by third parties who are corruptible. The distributed ledger eliminates the third party and permanently records the contract with no opportunity to tamper with it.
If you look two posts above I explain my understanding of the concept to T p.
But then, as you know, I have to have things explained to me in Janet and John terms before I have a chance of getting it so it’s probably far to simplistic.
I’m not sure if you saw my response to Stephen’s comment, but my understanding is, the whole point of crypto is to dispense with things like escrow, as a third party to a transaction can corrupt the transaction.
Just now saw it. See mine above this one.
I haven’t a clue how the escrow services work, however, their existence could solve one of my issues with crypto. Looks like the creators may have thought about these objections before-hand.
I can envision some sort of rating system as well, e.g., product/service companies having their transactions monitored by some third party (TransUnion, et al.?) which rates them according to some standard.
I suspect it just won’t do to deploy crypto out to the world to replace any fiat currency without something like the above (and no doubt much, much more when government gets involved).
There’s just too much opportunity to game the consumer. As smart as I (incorrectly) think I am, one thing’s for sure, there’s a bunch of people smarter and meaner than I am that won’t think past a blink to separate me from my crypto wallet!
sycomputing
Again, my crude understanding.
I have used escrow in the past through lawyers. Of course you don’t see anything other than their fees.
From memory, the concept of escrow is that funds for a service are deposited with a third party until the agreed transaction is completed. For example, you engage someone to build a house for you but he wants assurance you can pay for the work. You don’t want to hand the money over before the house is built so there is an intermediary who accepts your money and guarantees the builder it will be paid when the house is completed.
But the money might never reach the escrow account and the lawyer might fraudulently inform the builder it’s there, before scarpering with the money. None of this is unheard of.
Now I’m not sure how yet, and you have raised a really valid query with me now, how does cryptocurrency, or to be more relevant and precise, a distributed ledger deal with that problem as it claims to do so.
Because cryptocurrency, as I’m beginning to understand, is nothing more than a crude, early manifestation of a distributed ledger; a contract between parties that has no lawyer to bugger off with the money, yet guarantees the same level of security to both, that a perfect escrow account should do, and to be fair, usually does.
Move your mind away from the Bitcoin element of it and into the distributed ledger ‘contract’ side of it and the manifestation of it begins to make a bit more sense.
A conventional ‘ledger’ is a contract between two or more people, overseen by a third party (the lawyer, or several lawyers). A distributed ledger is one overseen electronically, with no third party involved. Wrap your head around that and things become a bit clearer, at least to a simpleton like me.
What we’re all doing is struggling with the nuts and bolts whilst the clever guys are driving off with the car. They don’t know how a car works, and we do (or at least we’re trying) all they know is that the car works.
The Bitcoin side of it, to me, seems that you have an electronic wallet on you mobile phone for example. If you have operated your credit card on you’re mobile phone you have a head start here. You can pay for anything with your credit cards details copied onto the phone (you have to call your bank to get it all validated of course) and when you buy your petrol you simply swipe your phone and the money is taken from your account.
Bitcoin wallets work in much the same way. Swipe the phone etc. But you need to have a Bitcoin account to buy products in Bitcoins. So you visit Coinbase (other organisations are available) and deposit $100 in exchange for Bitcoins. But your $100 is then on an exchange market, so it’s value can fall as well as rise.
You’re a big roller, so you deposit $100,000 on Coinbase, but you want access to your bitcoins to pay for your fuel, you champagne, your ladies……But your not daft enough to have $100,000 in your mobile phone wallet in case it’s stolen, so you draw down as much as you need per day/week/month. In the meantime, your $100,000 might be making you more than you’re spending, or taking a dive so you have £50,000 by the end of the week. Next week though, you might have $200,000.
That’s it, job done.
There is more, to do with ‘keys’ for your money, in other words, complicated passwords you can store in many ways including on a bit of paper you deposit in a bank vault to ensure your $100,000 can never fall into the wrong hands. But that’s the nuts and bolts.
But here’s the rub. You can have complete control of your $100,000 by retaining the complicated keys to your Bitcoins on a bit of paper.
Go to Coinbase, however, and they have ‘hosted’ storage of those keys they, as a third party, hold on your behalf.
Already the concept is, whilst convenient, it’s corrupted by allowing a third party to act on your behalf.
That’s the ‘in’ for governments and banks in my opinion.
Sorry if you knew all this. Helps my thinking by saying it out loud though.
Move your mind away from the Bitcoin element of it and into the distributed ledger ‘contract’ side of it and the manifestation of it begins to make a bit more sense.
I’ll give that a shot, bud. Many thanks for all your thoughts on the subject matter!
Take care!
HotScott
Well, the car is moving. Rapidly.
Whether any of several individuals or groups will ever benefit because of that motion is debatable.
Whether it is being “steered” by any one of several groups who may or may not benefit from that motion is debatable.
Whether it is being driven in the right direction is definitely debatable.
Whether it is being driven off of a cliff into disaster is, well, also debatable.
RACookPE1978
But that’s surely the climate alarmist’s position isn’t it?
Meanwhile, the rent seekers and opportunists like Al Gore are driving off in the Rolls Royce not giving a dam what direction they’r driving in, as long as they have the Roller.
Steven Mosher
But isn’t Escrow simply a ledger of transactions, with the ability of the third party to tamper with it?
That’s what the trustless distributed ledger eliminates isn’t it?
And I’m not sure I even have your explanation clear, never mind my question so forgive my ignorance. I’m an old geezer struggling with a new concept, and that’s tough.
The Venezuelan government runs a big Bitcoin mining operation.
Crispin in Waterloo
Is that wrong?
“If we were to eliminate fossil fuel usage, this would eliminate the environmental and efficiency challenges caused by energy-intensive bitcoin mining.”
I read this as saying that we will all be on renewable energy, but bitcoin will still need a lions share of renewables as well.
Hope there will be enough left over for us.
Cheers
Roger
http://www.thedemiseofchristchurch.com
Switch to Ethereum – (one) problem solved! 🙂
Franz Dullaart
Ethereum is just another version of Bitcoin, like Bitcoin cash and Litecoin. However, it does seem to be the darling of the moment.
wrong.
You mean it is not the darling of the moment?
It is hard to keep up.
John F. Hultquist
Nah……just me. Never had a constructive comment from Stephen. Not sure anyone has, so maybe it’s not just me.
Steven Mosher
Doesn’t Etherium utilise the distributed ledger concept?
Is the distributed ledger only useful for currency?
Is the distributed ledger a record of a contract, financial or otherwise?
Is it wrong to describe Etherium as ‘another version of Bitcoin’ simply because it doesn’t use the distributed ledger solely as a financial platform?
As you present yourself as WUWT’s resident expert on everything Bitcoin, I welcome your sage advice.
Steven Mosher
From the Coinbase website
“Ethereum is both a cryptocurrency and a decentralized computing platform. Developers can use Ethereum to create decentralized applications and issue new assets, known as tokens.”
Not sure where I’m wrong.
Your comments are appreciated.
bitcoin investment could become inefficient. One of the ways this can be avoided is if the world shifts to 100% renewable energy
So much stupidity in so few words….
1. It is not the job of the public to ensure that bitcoin mining is efficient. That’s the miners’ problems, not ours.
2. If bitcoin mining becomes inefficient, the miners will stop doing it.
3. Every jurisdiction that has introduced large amounts of renewables into the grid has seen massive increases in electricity costs. This would make the mining less efficient.
4. There is nothing worse for computers than unstable power. You know, like the kind you get from renewables. OK, water might be worse.
This is nothing but an obviously contrived article to justify using renewables. Oh the horror! We have to save the bitcoin miners! Seriously? No more polar bears or choral reefs or manitees? Now its save the bitcoin miners? They really have lost the plot.
davidmhoffer
I wonder if it might be a bit more sinister than that. Cryptocurrenciesare a threat to fiat money, and that means an awful lot of politicians, bankers and lawyers are on notice of redundancy if it continues its success.
There are plenty of the rich and powerful criticising it yet people like Richard Branson and Bill Gates are putting their money into it.
People having control over their own financial destiny instead of handing it over to predatory governments and bankers to spend on weapons, Krug and prostitutes is one hell of a threat to the establishment.
I did not know that renewables were free with no cost of operating. Learn something new every day.
This argument only has meaning if those making it can tell me exactly how many GWH it takes to deliver a US $1.00 bill to my wallet. Thats all the buildings, all the computers, all the production cost, all the transportation costs, storage costs…EVERYTHING! Then we can have an intelligent discussion about which system will be a better use of energy. Since there has never been an analog system that was more efficient over a digital one I think we can safely bet which will come out on top. Further BTC mining is moving to operate on the overproduction from intermittent green energy projects as well as providing a buffer to the costs of maintaining fossil fuel backup for when the wind does not blow and the sun does not shine, it is a far better solution for our increasingly digital age.
Scott Manhart
Not forgetting that every transaction with your $1.00 bill has an increasing amount skimmed off at every touchpoint by bankers, lawyers, politicians and governments before it reaches your wallet, worth about 50 cents. Because it’s a centralised government system, it can be used to fund all the things we don’t want like armaments, political corruption and manipulation of entire countries.
It’s not the first time a new currency has threatened the establishment. At one time a Cornish copper mining company found they could manufacture coins better than the official manufacturers in the UK, they were much more difficult to counterfeit thanks to the ‘lip’. The ‘Royal Mint’ (can’t recall what they were called at the time) which I believe was also a private producer of coinage at the time, lobbied the government and had the Cornish coins outlawed but I believe they remained a valuable trading currency for some time simply because of their security.
Cryptocurrencies offer us all the opportunity to take control of our own money without innumerable ‘suits’ getting their grubby paws on it before it reaches us.
And your question is entirely valid, whilst they attack the energy use of miners, how much energy does our existing system use globally. And what we must bear in mind, is that Cryptocurrencies were global from the get go.
I know this is off topic but it is important to those who think that the number of IR photons leaving the earth surface overwhelms the 408ppm CO2.
Molecules and photons are extremely small.
First we start by finding the mass of the atmosphere
Area = Surface Area of Earth
The earth is a near sphere. A sphere has an area of 4*PI*radius^2. Earth has a radius of 6,371 km = 6,371,000 meters. Area of Earth = 4*PI*6,371,000^2 meters^2 = 5.1 * 10^14 m^2
Force = Pressure * Area
Pressure near earth surface = 101,325 Pascals
Force = (101,325 Pascals * 5.1 * 10^14 m^2) = 5.17 * 10^19 Newtons
Force = mass * gravity
mass = Force / gravity
mass = 5.17 * 10^19 Newtons / 9.8 ms^-2 = 5.27 * 10^18 kilograms
Now that we have a mass in kilograms, we need to convert this number into grams
(5.27 * 10^18 kilograms) * (1000 g / 1 kg) = 5.27 * 10^21 grams
The molar mass of air is around 29 grams / mole
(5.27 * 10^21 grams) * (1 mole / 29 grams) = 1.81 * 10^20 moles
Finally, multiply by Avogadro ’s number to convert moles to molecules
(1.81 * 10^20 moles) * (6.02214179*10^23 molecules/mole) = 1.09 * 10^44 molecules
Since CO2 is 408ppm by volume (this is where my calcs may not be quite correct) there are approx 2.6 x 10 ^35 no. of CO2 molecules
Now we need to calculate for number of photons
Multiply the the Planck constant, 6.63 x 10^-34, by the wave’s speed. Assuming the wave’s speed to be the speed of light in a vacuum, which is 3 x 10^8 meters per second: 6.63 x 10^-34 x 3 x 10^8 = 1.99 x 10^-25.
Divide the result by the wave’s wavelength. If you’re calculating, for instance, for a wave with wavelength of 650 x 10^-9 meters: (1.99 x 10^-25) / (650 x 10^-9) = 3.06 x 10^-19
Divide the power of the wave by this answer. If, for instance, you are calculating all the photons emitted by a 100-watt bulb: 100 / (3.06 x 10^-19) = 3.27 x 10^20. This is the number of photons that the 100 watt light bulb transmits each second or 3.27 x 10^18 photons per watt.
Now disregarding the NASA energy budget diagram and any back radiation( argue that on another thread please) we have 163.W/m^2 hitting the surface but 40 W/m^2 leaving the surface directly and 86.4 W/m^2 by evapotranspiration and another 18.4 by convection that leaves 18.5 W/m^ leaving the earth surface in long wave IR.
So because the earth surface transmits on average 18.5 watts /m^2 or (see above for photons per watt) 6 x10 ^19 photons per second/m^2
and because the earth surface area = 5.1 x 10^14 m^2 that leaves 3.06 x 10^ 34 number of photons per second leaving earth surface.
so every second there are ((2.6 x 10 ^ 35) of CO2 molecules / (3.06 x 10^34) of photons) = over 9 CO2 molecules to catch each photon leaving the earth surface.
Now if there is back radiation that is another story.
A very interesting math exercise. I’m guessing the big question is just what percentage of the photons actually hit a CO2 molecule and are absorbed? There is a lot of space between these guys for a photon to slip through.
AT,
I’m not going to derail an interesting discussion on crypto-currency but you are using averages when there is a difference between night and day. Bring it up again in an appropriate thread.
It’s not impossible to imagine a world in which bitcoin is used exclusively, backed by green energy. It is incredibly foolish to Imagine it can be done anytime soon, however. So please stop the fantasy and along with it the CO2 lies!
So, if a bitcoin server farm owner decided to use and pay for wind, solar and batteries (for storage and for power regulation) dedicated to just that task, I say go for it. That would not necessitate the whole world to be on renewables, just those that are willing to pay for it voluntarily. In other words, leave me out of it!
The author claims that their business is “experts in all things energy” … riiight … as though anyone could be expert in ALL things energy.
Then they say they know that we can “eliminate fossil fuels from our economy”. Experts? I don’t think so.
They also claim that the energy is used to “ledger all the transactions” … don’t think so. The energy is actually used to do the mathematical operations necessary to the mining, it has nothing to do with the ledger.
Next, they say bitcoin consumes “2.55 GW” (gigawatts) of energy … seriously? Energy consumption is measured in gigawatt-HOURS, not gigawatts (or more commonly in MTOE). Experts? Don’t make me laugh, they don’t even know the difference between GW and GWhrs …
Another epic fail …
w.
This IS an eye-roller. Consumes 2.55 GJ of energy per second = 2.55 GW. Any ‘expert’ can fail and write ‘GW of energy’ or ‘per year’. Just not any energy expert.
Absolutely Willis, and isn’t it amazing how a serious article on cryptocurrencies morphs into marketing for supposedly cheap green energy?
There is, however, a fundamental issue not addressed – the simple fact that THE WORLD HAS NO NEED WHATSOEVER FOR CRYPTOCURRENCIES. It may be trendy, and certainly the criminal fraternity loves them because of the camouflage of transactions and assets they facilitate but, at the end of the day, our global currency systems, backed up by central banks, regulation, advanced payment systems, liquid markets etc etc, are all that the world will ever need. Further, if you want to play the commodities markets, well there are plenty of opportunities for that too, and in markets like gold and oil that have foundations in the real world. When people finally work out this very simple fact, cryptocurrency use will reduce significantly, and energy will not be a big issue.
Ian Magness
There are many more opportunities for Cryptocurrencies than just the criminal fraternity. Indeed, the means of financial transaction isn’t the problem, the problem is the criminal activities themselves. We can’t blame crypto for those.
Crypto is being used more and more as a hedge against incompetent governments like Venezuala, and market manipulation, like in Greece. Anyone who bought Crypto during the Greek ‘tragedy’ took control of their funds away from the government, Germany and the EU in general, and put back into the hands of the individual. Investing everything in Crypto is risky but then as Greece was going down the pan anyway, the risk was probably less than keeping money in a Greek bank.
Our global currency system robs every one of us, at every stage of its movement, of our money. It’s also used, in our name, to manufacture armaments and fund innumerable corrupt politicians, bankers, lawyers and enterprising individuals like Elon Musk, and to subsidise things like renewable energy, and we all know what a lie that is. All this through a centralised banking system that’s so sophisticated the collapse of the Royal Bank of Scotland brought the western world to the brink of financial collapse.
Nor is Crypto dealt with on the commodities market to my knowledge, it is however, forming a credible option in the Foreign Exchange markets. It’s volatile but like everything else, it’s a young technology made possible by computers, the internet and intelligent people with an amazing grasp of financial, political, technological and legal concepts.
You may think it a toy, but had you invested $100 before the 2008 crash, you would now have $1M in your pocket and at one point it would have been over $3M. The question being asked now is, not if, but when Bitcoin itself will hit £100,000 from it’s position of less than $10,000 right now. Not bad for a currency that started around the turn of the century at virtually zero.
Good luck putting your pension into crypto currencies Scotty – you’ll need it!
The world however, doesn’t need them. Save for the “riding the rise of the bubble” (which has now burst) bit, the issues that you raise above could be coped with by other means, using existing currencies and commodities.
Ian
Where on earth did you see me suggesting anyone bet their pension on crypto?
The internet ‘bubble’ burst with the dot com collapse, which was far too many people betting on idiotic concepts for changing the world with carrots, or cabbages, or silly concepts that cost a fortune to deliver but with tiny chances of a return. It was an experiment though.
Since then, Amazon (amongst others) has moved from being a bookseller, to providing you with almost every consumer good known to man, delivered within 24 hours, and sometimes less. Drone delivery up next, did we even consider that ten years ago? Even five years ago.
I’m keen to understand what the public detractors of Amazon are now saying about Bitcoin.
The Bitcoin bubble started with numerous inputs, possibly the biggest being the 2008 financial crash, and the Chinese recognising an opportunity to free themselves from state controlled money. The Bitcoin ‘crash’ (to around $6,000 now, above its inception price of virtually zero at the turn of the 21st Century) is actually rather impressive.
I’m not defending the concept, I don’t care, all I see is a mimicking of rise and fall, and rise again of the internet.
Personally, I think we mock the concept, whilst our children will have to deal with cryptocurrency, or some other form of currency, as yet unknown. I would far rather understand the phenomenon so I can hand down that knowledge to my children than condemn it and hope it will go away. It won’t.
“had you invested $100 before the 2008 crash, you would now have $1M in your pocket”
And had you invested in Bitcoin in December 2017 you would now have lost about 70% of your investment. These are the types of foolish cheery-picking arguments that too many money managers consistently conjure up, and people lose significant savings following them.
Max Dupilka
But then I’m an optimist.
Never bet what you can’t afford to lose.
And if, as some people did, you went short on crypto in December 2017, you are very wealthy, thanks to crypto’s crash. The same way some people made money on Greece’s financial crash, or the Royal Bank of Scotland’s crash.
That’s not a money managers perspective, that’s a consumers perspective.
HotScot
I am a realist. Optimism alone makes you very little in the stock market.
I actually have a “bet” on crypto through an ETF called HIVE on the Canadian exchange. It is just some fun money. If bitcoin goes to $250,000, as one “guru” said, then I will do very well. If it falls to nothing then I lose my fun money.
Max Dupilka
I live within commuting distance of the City. London’s home to the financial heart of Europe. I have not yet met a trader who is not an optimist. They may be realists, and cynical, and careful, and display all the qualities you suggest, but no one deals without being an optimist.
And what you have just done is what every responsible crypto investing medium tells you not to do, reveal that you even invest in crypto. Not only that, you have told WUWT and the world where you invest.
Now whilst you might not think that’s important because, of course your crypto investment is secure, Anthony’s site isn’t secure to financial standards. So there might be, as we speak, an enterprising hacker rummaging around in Anthony’s site for your details, armed with which, however basic, he builds a profile to hack into you account, and perhaps others on HIVE.
And for anyone that’s interested, don’t bother with me, I have no money invested in crypto because I can’t afford to lose what little I have. And yes, I hope you waste your time trying as it will divert you from Max’s account long enough until he can withdraw his funds and start again!
HS,
Did you invest a measly $100 to become a millionaire yourself? Maybe $200? It always helps to have a little more than you need.
eyesonu
What business is it of yours what I do with my money?
Just curious as you have been telling the entire world everything that you think about everything, at least in this thread. 42 comments and counting. That’s about 20% of the entire total.
Maybe too much stress on your crypto bets?
it’s not mindless pontification here. he’s using his brain and he finds it delightful. understanding is hardwired to the pleasure center.
who doesn’t love eurekagasms?
gnomish
Correct. I find the subject as interesting as climate change because they are the future of humanity. Or at least part of it.
I’m not clever, so I have to ask a lot of questions.
I think stalking people and counting posts is a sad pastime when one could be asking questions.
eyesonu
Wow! A stalker! A first for me…..well Chris does a bit of stalking but not at your level.
I spent 11 hours in a car today travelling across the UK. Maybe I’m a faster thinker than you and a faster typer. But you seem rather to interested in whether I deal in cryptocurrencies than is healthy.
I don’t deal in them, I have no financial interest in them other than I would like to be ahead of the game to inform my kids of them for their future.
Happy?
If you want to make nasty little puerile comment, please try harder.
Dear Mr Magness
When the criminals are the government, honest folk will need cryptocurrencies to keep hold of their wealth.
DP
DP.
I wouldn’t go that far, but there’s nothing wrong with taking a punt on crypto, just in case.
The author’s dumb mistakes aside, cryptocurrencies could become a serious problem.
Imagine if Bitcoin became really popular, and its price soared to $100,000 per coin. Everyone and their dog could make a profit by converting electricity to Bitcoin. Power would be drained from the system by all those Bitcoin miners turning energy into currency.
If the situation got extreme enough, governments would have to outlaw cryptocurrencies and ration power just to ensure that basic services (hospitals, police, schools, home heating) got enough power to function.
Power is not limitless, even though we often treat it like it is. There are many good reasons to conserve it, regardless of what you think of “climate change”.
NO . You are an example of why we need more economics courses in high school. The world doesn’t start and end at the bitcoin door as the author would have you believe. The bitcoin user has to pay for his electricity usage. Also the bitcoin miner has to always buy new computer hardware to keep up the speed.
If bitcoin starts to cause electricity prices to rise, it will cause the price of all electricity input commodities including natural gas to rise as well and thus more exploration of natural gas will take place . Any commodity ‘s price will rise if the end use of that commodity has a demand/supply problem where the demand starts to outstrip the supply. Furthermore As Scott Manhart has said “BTC mining is moving to operate on the overproduction from intermittent green energy projects ” He means when the spot cost of electricity is free sometimes when the wind blows too much.
However Not everyone and their dog can make a profit off of bitcoin mining. Bitcoins are only awarded to the 1st one verified to add to the blockchain. What is more they are faced with the eternal problem of whether to allow more bitcoins or limit them . Most people think that the limit now is 21000000. However that is not true. The original programmer Satoski programmed it in 4 stages each approaching a limit of 21 million coins which would be 84000000 by the year 2864 based on present technology. Because there is no 1 printing press, (it is done by majority vote) the danger of bitcoin inflation is real; as is a bitcoin crash if a new artificial limit is set. Anytime an artificial limit is set, you run the risk of demonetizing the currency. If they leave it the way it is there will be 4 very long periods where there is essentially no new supply. In each of those long periods they risk demonetizing the currency.
In a way it is like a big Ponzi scheme where the earlier ones that can turn their bitcoin to real cash are the fortunate ones. As more and more people get in it it is becoming harder and harder to make a profit. Not only that but there are lots of ways to lose money when trading bitcoin. And there are actually 2 bitcoins Bitcoin and Bitcoin Cash . Not to mention the thousands of other cryptocurrencies. Even some banks want to start their own. And fraud is ever present.
So don’t worry about Bitcoin wrecking society. It is simply another way to spend resources and time but everyone spends resources all the time. The key word is SUBSTITUTION. WHEN SOMETHING GETS TOO SCARCE THE PRICE GOES UP and then when more is found or a cheaper substitute is found the price goes back down. The Cycle of economic life.
Alan Tomalty
Really interesting post, like I say, every day’s a schoolday at WUWT.
I didn’t know Satoski programmed it in 4 stages. That does indeed put another complexion on the concept. I have been digging around trying to understand how it all works as even if I’m too old to take it seriously, my kids will have to deal with it in one form or another in the future. May as well give them a heads up if I can.
People have made lots of money from crypto although it’s been a rollercoaster, but the concept of inflation or deflation exists in our existing financial system. Isn’t that what governments have been doing with quantitative easing? for which, I suspect, there’s a price to be paid in the future.
Like many new technologies, engagement is more a leap of faith than a rational calculation of the risks. Wasn’t it an IBM guy who said there wouldn’t be enough useful applications for more than 5 computers in the world ever? (Paraphrasing).
Yes any monetary system runs the risk of inflation /deflation plus the risk of being crowded out with another currency. In the end who do you trust more? your government or the votes of bit coin miners?
Of course there is always a threat that the whole system could be hacked but for BitCoin it seems less of a threat as the years pass. However the other cryptocurrencies do not have the same legacy and they may be more vulnerable. However the true threat of hacking is not with bitcoin blockchains themselves but against bitcoin exchanges which are a necessary evil to be able to mesh with the real world of cash. Hackers have regularly stolen bitcoins from these exchanges.
Alan
two bites at the cherry at this one. 🙂
Who do I trust more “your government or the votes of bit coin miners?”
Y’know, that’s actually a really difficult question. I might say miners because their interests lie in nothing but money. And whilst money is cited as the root of all evil, we know that’s only true because of political manipulation. Money itself is clean, it’s the utilisation of it that’s corrupt.
I could say I trust our government more, other than it engages in wars, using our money, over which we have no say.
Imagine if governments had to actually plead for money from it’s citizens to go to war. A vote, or referendum wouldn’t be necessary, government officials would have to go door to door, in every village, town and city of the world to beg for money to wage a war.
That is of course the dream of crypto, and I’m not daft enough to believe it for a nanosecond. The internet was supposed to release man from surveillance by the state, instead it has turned into the opposite. Will crypto go the same way?
Are you kidding? Of course it will. But it will still be a useful source of opportunity.
And to your second point about hacking. Our conventional banks are hacked every day. Why should they be considered safer than crypto, especially considering they have so many more touchpoints to humanity.
As far as knowledge of economics goes, there are a lot of holes in your argument. For example:
* It takes a long time to bring energy production on line, on the order of years. For natural gas see here: https://www.planete-energies.com/en/medias/close/life-cycle-oil-and-gas-fields.
* For green energy projects to really work, energy storage has to be introduced: batteries, stored hydro projects, etc.. The “free spot cost” of electricity is a transitory phase that won’t last long.
* Cryptocurrency mining is already causing electricity prices to rise substantially in some localities. See here: https://www.thenewstribune.com/news/business/article212008409.html
Economic behaviour has always been subject to manias, booms, and crashes. The Dutch had a tulip mania that lasted years, and it severely damaged their economy. If people make a mass move to cryptocurrencies, we could easily see people value them to the point that the highest value use of power is Bitcoin (etc.) generation, and it prices people’s survival (economic or otherwise) out of the market. What substitute would you suggest for survival?
Chris in Calgary
Surely if any currency proved a threat to survival, it would be abandoned.
That then raises the question, is our current financial system threatening our survival, which is why crypto is becoming an alternative, albeit a small one.
And that’s also important. As far as I’m aware, crypto is a tiny bit of our financial markets.
David M Hoffer came closest to encapsulating the problem, but didn’t quite make it, and the author was nowhere near. The problem is competition, due to the high price of bitcoins, and the bitcoin work parameter. The bitcoin algorithms ensure that an approximately fixed number of new bitcoins can be mined/created/made in a day. So there is a supply and demand problem, due to the fixed rate of supply, and when the demand increases the algorithms actually make it harder to mine bitcoins, so the electrical cost of doing so goes up.
This problem will continue to intensify until:
a. The price of bitcoin drops dramatically, few people want to mine it, and the algorithm will make it cheaper to mine, or
b. The controllers of the algorithms realize the problem and change their monetary policy to allow more bitcoins per day to be produced, which would lead to a price drop anyway, or
c. The algorithms’ finite supply of 21 million bitcoins has been exhausted, but unfortunately that is not expected until 2140.
Rich.
.005% of the world’s energy consumption! The horror!
If you combine all the data centers of the world, they consume 400X of what bitcoin does.
all to store cat photos
Steve Mosher, what’s wrong with cat photos? I have those, plus bird photos, plus wildflower photos, plus a few fun photos of clouds.
It’s also not impossible to imagine a world in which we all ride to work on magical flying unicorns. That doesn’t mean I’m going to invest in a Unicorn Farm.
~¿~
As my pscyh professor used to say “Anything theoretically possible. We only care about that which is probable and likely.”
A good portion, in fact the lions share, is already green.
SM,
lol … If all the claims that “their” energy is green or comes from renewables and an accounting of the actual usage “they” would have to convince us that they had figured out how to all use the same production of energy. One single shiny toy claimed by many as their very own. That is an illusion but I guess it sounds good if you believe it. Sort of like Nobel Prizes to some.
This is clearly one of those “so stupid, it burns” articles. It is so bad, it must be witten as a spoof-honey pot to see if ignorant but legitimate news organizations pick it up and quote it due to its Green virtue, without questioning it assertions. The energy versus power is just one “tell” of several that it is spewing nonsense.
So I see this Bitcoin segue to Renewable energy gibberish as Sort of like those investigators of fraudulent journals. They write a gibberish science paper and send it out to dozens of journals to see which ones “approve for publication”.
Exactly what I was thinking…..
Just think one day the last FF’s (Fossil Fuels, not the new FFS acronym) could be used up on BitCoin calculations or even the last IPCC meeting!
By then, another boogeyman will arise and the IPCC will be vilifying something like tall buildings or malls as causing massive climate change while raking in billions.
if there were no multi-storey buildings, could there be a population density problem?
because pollution and crime and all the major complaints do seem to be population density problems. they happen in cities where people don’t own the property they dwell on and dependency is subsidized.
I expect someone somewhere is busy working out how to hack the bitcoin algorithm and produce counterfeit coins. I look forward to that .
Whatever that can be done digitally can be undone digitally.
Bitcoin has also crashed through the floor. One of the bitters was ‘worth’ $20000 early in the year. Now they go for less than $5000. As an informed Dutchman I predict that in a years time you can buy with one bitcoin precisely one tulip bulb.
the huge problem is there are so few ways to buy anything useful, like groceries or gas for your car, with Btc.
joelobryan
You can buy a flight on Richard Branson’s space flight with them if you want. 🙂
More seriously, both Branson and Bill Gates are putting money into crypto. I believe you can also buy Microsoft products with them and there are now ATM’s where you can buy crypto to use on your smartphone. No idea how they work though.
But there seems to be more uses for the ‘distributed ledger’ the whole concept is based on. Etherium https://www.ethereum.org is exploring smart contracts and I can think of one good use to which that might be put, the broken peer review system.
If Branson and Gates are putting money into crypto, doesn’t that leave far more hard currency for everyone else?
Sheri
Money is a concept. The cash in your pocket is only worth what a government says it’s worth, you have no control over that. $50,000 might buy a nice car in the US but in another country it might buy a nice house.
The money Branson is spending is to develop BitPay (a company dealing in crypto currency exchange) although I would expect him to have invested in cryptocurrency directly, that is to say he might have committed say, $1,000 cash into a central exchange like coinbase.
If so, he can use the electronic wallet on his smartphone to access the bitcoins he bought, to spend as he wishes, which will show a reducing balance on his $1,000.
The difference is, cryptocurrencies are volatile but dynamic. He might be spending his crypto, but as fast as he spends it, crypto is increasing in value so his $1,000 remains, or increases. On the other hand, a minute after he buys, crypto might drop in value, in which case, he has less than his $1,000 to spend in the ‘real world’. Except that Bitcoin and other crypto can be spent in the real world now was well.
He could also just leave his $1,000 in crypto, untouched, ride out the market for a year and see where he ends up. In my opinion, probably ahead by a modest amount, unless another 2008 financial crash happens, when everyone flocks to crypto to hedge their bets and the price heads north.
It may never happen again, but had you invested $100 in Bitcoin shortly before the 2008 crash, you would now be a millionaire. At one point you would have been worth $3M.
It’s an emerging phenomenon, and like the internet itself it’s poo pood by the establishment. Amazon was considered a ridiculous concept, selling books online, who can make money from that? The internet itself went through an early crisis with the dot com bubble burst, but it has recovered, with a vengance.
We are in a bold new world. It’s fast paced and full of opportunity.
Some say it’s full of crap, but I’m an optimist so prefer to see the benefits of new opportunities rather than the downside.
here’s a fun one-
colombian drug lord wants a way to launder his money…
he’s accustomed to paying a percentage for the service…
he starts his own crypto currency and sells it cheap…
but it is actually backed by the full faith and lucre of pablo escobar…
thousands and thousands of people obfuscate all the dietbitcoin transactions…
they all get paid for their unwitting aid
gnomish
I love you and all that, but with the best will in the world, sometimes I think you live in your own fantasy world.
The problem in the drug world is not how to capitalise on the profits, that’s easy with our current fiat monetary policy, and easy with crypto, the problem is the crime of running the drugs themselves. Stop that bit and there is no money to launder.
People blame money for everything yet money has never been convicted of one single crime in all of history.
Money may be a motivator, it is not the instigator.
not sure how familiar you are with the day to day problems of the successful drug trafficker but rooms with 20,000$ bundles of 100$ bills stacked on pallets are something that is ever more difficult to deal with cheaply in the days of networked finances. tracing movements of money across borders makes it challenging and mules packing cash in their prison purses is really not how it gets dealt with.
moving the cash is a problem. the kingpin really wants to have personal control over that. it grows legs too easily.
perhaps it is not so easily dismissed as fantasy?
https://www.dietbitcoinico.org
of course money is not the root of all evil. in point of fact, it is a token that represents the standard of value. it’s a special commodity that makes it possible to preserve and exchange the values your life was spent to create. you can’t put more years in your lifespan with a commercial transaction. you can produce and trade and accumulate more than you could ever do in one lifetime, though- and money is what acts as the store of value that is the hours and minutes of your life.
gnomish
I’m not sure I understand your link. I somehow doubt people are going to invest in anything with Escobar’s name on it. It rather stinks of being a 2 bit scam.
And again, I’m not sure, but as far as I’m aware, there are only a few ways to buy crypto and all of them involve transactions starting with identification and either a bank account or credit card. Then there are limits, so Pablo can’t just dump a billion cash into an account because paper money is meaningless to crypto.
And I suspect that to operate legally, deposits should comply with normal international money laundering agreements. But then, I’m still operating with a conventional banking mentality and getting my head round crypto is more challenging that I thought.
And there’s a couple of things here. I imagine in an effort to remain squeaky clean and not be considered just a criminals paradise, crypto organisation would be delighted to work with global law enforcement to ensure the criminal fraternity is excluded as far as possible.
And whilst criminal activity might filter through, our current system is riddled with criminal activity, much of it from people one would consider trustworthy.
There’s always new ways to game the system. Major retailers and banks having their customers data hacked is almost daily news these days. So I don’t understand why the resistance to trying something new from so many people.
Like everything else, if it’s a bad idea, it’ll wither on the vine. If it’s a good idea, our governments will take control. I mean, look at the internet itself. Sold as the most private communications means ever invented, which attracted the porn merchants in droves. Now it’s a convenient and highly effective means of government surveillance, and I suspect porn is frequently used as bait.
So much for our bold new world.
And I thoroughly enjoy your comments, they make me puzzle out things I hadn’t thought of.
PS
“and money is what acts as the store of value that is the hours and minutes of your life.”
Errr…. well, I would dispute that. I’m by no means wealthy, not broke, but my real wealth is all the hours and minutes spent with my family. And that only really became apparent to me the older I got.
Legalize and/or decriminalize the drugs and the profit goes away. And people in the business can then report competitors that resort to violence to the police. And people with addictions can get treatment without fear of being arrested.
never gonna happen.
self medication is a form of witchcraft!
only state certified witches may traffic in potions.
In a way the bitcoin crypto financial platform is a very efficient money laundering platform.
It revalues the capital you do inject in to it, and it does not discriminate.
Only the real value of work of the capital will be returned, if there is any.
So injectin drug money in to it is quite a very risky gambling … not a good idea.
The interest rate in that platform is an automatic evaluation very much individually tailored….not like “one size fits all” kinda of…completely decentralized.
So injecting capitals of no much work value is quite a risky business .
As overtime interest will set against such as, and then when, such capitals
will gamble against the casino, due to desperation of maintaining a continuation….the proper impact of the laundering takes effect.
Something like an antitrust process in full time active modus operandi.
(pretty sure the above may not make much sense)
cheers
what if you don’t look at it from the perspective of a consumer?
in former days, businesses minted their own trade tokens.
an ico is a bit different since the only product is the token- but if you create the tokens (or, say just most of them) then you have purchased a virtual bank into which you may make deposits and from which you may take withdrawals and which can be used to transfer funds – but you don’t answer to anybody and don’t report diddly.
being fungible and actually supported by a whale with an abiding personal interest, it seems worth watching to find out the rest of the story.
Like I said, nothing useful. There’s nothing useful about a few minutes of weightlessness and a view outside a window. A form of drug for people with too much money.
joelobryan
I, on the other hand, think its an opportunity.
I wonder if you can buy a house, for instance. You may find an owner who could accept BTC but can you find a notary who takes BTC to do the paperwork and legal stuff?
Urederra
Seriously?
I don’t mean to be rude, but you spend $400,000 in Bitcoins on a house and your worried whether a notary accepts $2,000 in Bitcoins?
Notary?
Sure, we run a notary service on the blockchain.
we only take crypto.
https://www.jmbullion.com/10-oz-perth-mint-gold-bar/
you can buy gold with it cheaper than you can with a credit card. so yeah, it’s fungible.
..With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated….
I can’t see that ‘efficiency’ is any kind of issue. In any case, ‘renewables’ are typically low efficiency energy producers.
But I am more interested in environmental concerns. Both photo and wind power use huge amounts of land. The proposed 8Gw requirement would need about 10 Isle of Wights (back of envelope calculation), or about the area of Zanzibar.
I can’t see this being good for the environment…
ALL computer installations are tied to a grid using at best hydro. NONE WHATSOEVER run on wind and solar alone. They play fast and free accounting with “credits” for renewables, but it’s nothing but lies. Nearly all use fossil fuels just like everyone else. The reality that they can LIE endlessly about this is a testament to the stupidity of our media and their willingness to lie to a political end, plus the stupidity of our people who have no understanding of electricity beyond “that plug in on the wall”.
Good luck with finding “sustainable” graphic cards built in a factory that only uses green energy and “sustainable” materials.
Is Shea Karssing a comedian ?
If that’s her intent, she shouldn’t quit her day job. Oh, wait, she seems pretty useless at that, too.
All that “local currencies” vanished faster than they emerged.
Thei’re bleaching in some kitchen drawers.
Who pays for the energy invested in bitcoining + cooling of the servers: the latest bitcoiners in the queue.
Another Bernie Madoff / ponzi scheme.
____________________________________________________
“There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research.”
Till hell freezes over.
Iceland is crawling out of the last finance crash towards the next one.
Why not just use your credit card? This all seems so stupid and silly. Pretend money for pretend people.
Your credit card is traceable. Bitcoin is not supposed to be. It’s hidden currency that the government cannot track. Yes, there is a paranoid factor in all of this, merited or not.
Nothing online is untraceable. Nothing. The fact you use it as currency makes it traceable, otherwise no one would accept it. At some point real world, actual currency must be attached to it, otherwise it has no value. And does anyone honestly think IRS can’t follow what you are doing simply because the word “bitcoin” is involved? The more I ponder upon this the more I see it as a neat little operation created by IRS to entrap people for trying to evade them. INTERPOL would love to take part in such a brilliant scheme.
My paranoid delusional fantasy was more along the lines of “someone is using a massive distributed computing network (à la SETI@Home) to solve a very particular cryptographic problem.”
you’ve got a terribly exaggerated notion of police power…lol
how many murderers are even apprehended? the stats contradict the myth.
how many people pay no federal income tax? tens of millions?
these people are state employees, ffs. they aren’t paid to freakin work. they take the easy way every day.
crime pays more, and all the cops know it- their bosses are politicians!
find me a politician who doesn’t understand where the money comes from and how he gets it.
if you live in china and want to escape with your wealth- bitcoin makes it possible.
if you live in venezuela and the currency is inflating so fast they chop off 3 zeros a year just to make it possible to carry enough cash for a loaf of bread- bitcoin preserves your wealth.
those are 2 legitimate drivers of bitcoin – it saves lives.
You are honestly trying to tell me people in Venezuela use bitcoin to feed themselves? Really? As for China, you escape THEN make your fortune by out working lazy people in America, and those Chinese who are rich inside China are quite intelligent enough to get their currency and bullion out of government reach, thank you very much. And yes, I entirely can see IRS creating this scam called bitcoin, using it to entrap people avoiding them AND loading their offshore and Swiss bank accounts. How else do people working for IRS become millionaires? Graft and corruption. The same way senior members of FBI such as Robert Mueller and James Comey have become vastly wealthy.
Bitcoin ain’t saving nothing for nobody, it is a criminal enterprise profiting criminals.
i’m sure i can tell you nothing you care to hear
but they can:
https://qz.com/1300832/bitcoin-trading-in-venezuela-is-skyrocketing-amid-14000-inflation/
they can
https://www.coindesk.com/bitcoin-day-proves-argentinas-crypto-love-alive-well/
https://www.coindesk.com/bank-argentina-just-added-bitcoin-cross-border-payments/
they can
https://www.coindesk.com/china-bitcoin-crypto-millionaire-real-estate/
(these guys are driving the housing market in the bay area and points west up to marysville)
nobody cares if you bleeb the opposite of reality.
but if you wear that big old KICKME – I’M STUPID sign you might get a boot to the head.
hmm.
i did reply but it ‘comment is in moderation’ and then it has vanished.
https://www.coindesk.com/bank-argentina-just-added-bitcoin-cross-border-payments/
https://www.coindesk.com/bitcoin-day-proves-argentinas-crypto-love-alive-well/
chinese drive the bay area real estate market all the way east to marysville and beyond
https://www.coindesk.com/china-bitcoin-crypto-millionaire-real-estate/
https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1017&context=international_immersion_program_papers
https://techcrunch.com/2016/03/16/why-latin-american-economies-are-turning-to-bitcoin/
so as you sit in the supreme consolence of sublime ignorance, real people in the real world have more serious concerns than you do, posting fallacies on the internet.
tried to reply twice. got moderated like an argentine dissident…lol
so i guess you don’t get to know.
I already know.
“You are honestly trying to tell me people in Venezuela use bitcoin to feed themselves? Really? ”
Yes really.
Y’all need to take that routine on the road, it is hi-larious.
oh, please don’t gobble me up!
wait for my big brother to come.
he’s fatter and will make a more satisfying feast.
So we only need 3 “breakthroughs”:
-fetching gold from clay ( by the way: whom to pay with gold when everyone has clay in abundance )
– sustainable electromobility with electric energy for free
– coin your own currency with instructions from the Internet
I wondered from the title why such an article was posted to WUWT, and figured it must come under Anthony’s “other interesting topics” label that I recall once underlined the WUWT homepage header. So, I read on in anticipation of the punch line.
And lo! I was rewarded for my patience with, “One of the ways this can be avoided is if the world shifts to 100% renewable energy in the years ahead. ”
I almost fell out of my chair laughing.
Another alarmist living in the lands of delusion.
In Shea Karssing’s world, there are plenty of Easter Bunnies for all, Santa visits every winter and all food is manufactured, wrapped and sold at grocery stores without any of that messy dirt stuff or gross conservative religious farmers.
A) Any fool with an envelope and a pencil can quickly determine that Karssing’s world of 100% renewable energy is impossible; at least under modern technologies.
B) Karssing apparently believes all of the fossil fuel derived and produced allegedly renewable energy generation equipment is produced via magic, never requires maintenance and last forever.
C) Karssing directly equates “renewable energy” to inexhaustible free energy that can be devoted to utterly useless pursuits, such as manufacturing bitcoin.
* i) Forget the poor. Forget industry. Forget science. Forget all the world’s problems! Bitcoin and imaginary “renewable energy” solves all!
I can’t imagine anyone getting any further over the rainbow while avoiding the world’s problems. No knock on the head tornadoes required.
“There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research.”
No amount of research can avoid the inherent weakness of renewable energy – unreliability, massive environmental footprint, need for special climate locales (desert for solar, eternally windy areas for windmills) – we’re talking stuff no better than 16th century energy technology. The usual claim – that adding batteries for storage does not solve the unreliabilty of these enery sources and only adds greatly to the cost. A more rational argument would be for these people to avoid “100% claims”. A more intelligent
low carbon system would be to wait for small modular molten salt nuclear power plants to come online.
Anyone who calls themself an energy expert and doesn’t point to SMRs as the future is no expert.
When I read the article, I realized right off the starter’s block that the author doesn’t have a clue about Iceland’s power generation capabilities.
Per a Fortune 2/2018 article, Bitcoin’s energy usage in Iceland is about 840 GWh for this year, whereas the rest of the population will use about 700 GWh.
http://fortune.com/2018/02/13/iceland-bitcoin-mining-electricity/
The concern in February was that if all the proposed data centers were to be built, there was insufficient power generation to meet the power-hungry, gigawatt-guzzling data processing equipment.
Here’s a quote: ““If all these projects are realized, we won’t have enough energy for it,” Johann Snorri Sigurbergsson, a spokesman for Icelandic energy firm HS Orka, told the BBC.”
Since Iceland’s power generation is 70% hydro and 30% geothermal, it is a finite resource, something that the author of this silly article did not take into account when blathering on about renewables.
There is a limit to how much electric power can be generated by any resource of any kind. Period.
If Bitcoin’s power demand exceeds the capacity of the island’s ability to supply electricity, then Bitcoin will have to place its additional equipment elsewhere. It’s that simple. It doesn’t matter who pays for “mining” or electricity usage. It only matters whether or not the demand can be met. If it cannot be met because the demand exceeds the generating capacity available, then additional “projects” will not happen in Iceland.
There is also the fact that Iceland, as a hydro and geothermal dependent entity, can easily lose its available power generation in the blink of an eye, if one of the more explosive volcanoes (like Hekla) decides to erupt and shut off the hydro flow and geothermal resources available now. It happened when Ejefjallajokul decided to explode a few years ago, with the destruction of a long-existing waterfall near that volcano. The water source went elsewhere and the waterfall is gone permanently.
The author has a very narrow and uninformed view of the real world and what can and cannot be done. The entire body of “sustainable” and “renewable” arguments do not bear close examination, as many of you have indicated in your GW vs GWhs responses.
The people who propose these things do not have the slightest understanding of load or capacity or anything else. All they see is ‘look! sustainable!!’ They consistently fail to take into account that it costs money – REAL money – to build, maintain, and expand power-generating plants to meet demand, and that there is a physical, real-world limit to what can and cannot be done.
Geothermal power generation depends entirely on the will of the volcano gods. Hydropower generation depends entirely on water being available to spin the turbines in a generating station. There is NO guarantee that these natrual resources will stay as is any longer than it takes Hekla to develop a belly ache and start burping.
That articles is possibly the silliest thing I’ve read in a while, and I’ve read some real silly stuff here and elsewhere. The only way to put a stop to this ridiculously starry-eyed “warm/fuzzies’ idiocy is to continue to put data and facts into rebuttals.
Okay, Anthony is in a mean mood. Pushing this poor lady into his tank of sharks.
Or did he just forget the “Friday Funny” tag line?
Pushing poor people like this into a tank of sharks is just following the ideas of Darwin—if she survives…..Just saying.
I thought we were a wolf pack.
There was a figure went in front of my face some while ago about energy required to fabricate Large Scale Integrated silicon chips.
What I got as ‘The Take Away Number’ was that it took as much energy to manufacture one reasonably large silicon chip (e.g. a 4 gigabit RAM chip) as the entire PC it would be installed into would use in its typical 3 year life. And then be binned.
My lappy here now has 16 chips like that JUST as its memory – before we get into the CPU itself or the graphics card/memory, disc drive (a 240GB SSD in my case).
Apparently most of the energy used goes into (simply) keeping the clean-room clean – air filtration.
Not far from where I am is a place called Scunthorpe.
Everybody knows about Scunthorpe as it is where an inventive fellow name of ‘John Harrison’ invented longitude.
His prize was £20,000 Sterling – which the Government of the time had promised, were reluctant to pay but did eventually cough up. So and in due course, some horses & carts arrived at his house bearing 9071.8474 kilograms of Sterling Silver. (Work it out)
Someone here mentioned ‘dollar bills’
I’m not au-fait with them but the UK version (paper, now plastic currency) is not actual currency at all. UK currency is in fact just a series of IOUs – paper money are simply notes promising to pay. It says as much on each one.
Smallest UK note is now the fiver and it carries the wording of a promise from the Bank of England which and it goes:
“I promise to pay the bearer on demand the sum of five pounds”
The current UK ‘cost’ of Sterling Silver is £8.51 per ounce.
So, the fiver in yer pocket is worth 80 ounces of Sterling Silver at £8.51 per ounce.
What do we need bitcoins for?
What are we waiting for, see you down Threadneedle Street first thing Monday morn.
What could possibly go wrong?
Or more particularly, what DID go wrong?
Inflation. Kills you every time.
“Let’s get back to modeling…”
Right. Nothing about putting himself on this magical whirlwind that uses only renewable energy to power a modern life.
What a fool.
yodeling about the modeling?
moar bagpipes!
“If there’s one thing we’ve learnt over time, it’s to ‘never say never’…” Of course. We can violate the laws of physics and do anything. It’s called “magic”.
These people get dumber by the minute and more delusional.
There’s a lot of magic going on nowadays. I woke up this morning with the penis I have had for decades and magically I can become a woman tonight to get cheap drinks from the local night club by rubbing my little ‘genie’ and becoming a woman. Tomorrow I gonna be an intergalactic alien! Magic is like …. so mystical!
“The amount of bitcoins that can be mined is finite and is set at 21 million.”
Sez who? Bitcoin is an open invitation to crooks and swindlers.
software sets it at 21 million. the only way that can be changed is if nearly everyone (95%) who mines bitcoin and who runs a full node ( about 100K of those) decide to run new software that changes the number.
aint gunna happen.
“With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.”
Really? There is no environmental impact from covering millions of hectares of land with solar panels, or wind turbines? There is no environmental impact from producing all those cells or generators?
This is beyond parody.
“Mit der Dummheit kämpfen Götter selbst vergebens.”
“Die Jungfrau von Orleans” by Friedrich Schiller,
“Against stupidity, the gods themselves fight in vain.”
Well, well. A currency is a medium of exchange. In it’s use as currency, the intrinsic ‘value’ of a thing is not relevant. It’s cost to acquire is not, either, once it has been accepted for exchange. Once a gold coin is in circulation, it’s cost to mine is not relevant. It’s value is based on what you can acquire for it in exchange, or what you will give for it in exchange. It also has an intrinsic value in commerce; as a metal. Fiat money has no such intrinsic value. It derives its value in commerce, as does the gold coin, in what you can exchange it for. Government make it valuable by accepting it for government debts. It tries to add value by declaring is useful for private debts. It then supposedly tries to maintain its integrity by limiting the supply. This has actually worked very well to enhance commerce over quite a long time and in many places.
Excess debasement of the currency is a known issue and has similar results from Weimar to Venezuela.
There is a cost to maintain the blockchain the must be added to each transaction. This is larger than the cost to maintain other currencies. Cryptocurrencies are not as useful in times of social stress; even local stress. Getting on a train after a ballgame, using bitcoin for the fare would depend on the cell tower not saturating. Never mind the ferry over a remote river. Coinage has worked well for several millenia.
It is very difficult to evaluate a medium of exchange that is invariate. This is because the economy is always growing, except when it is shrinking. Commerce works best with approximate price stability.
A Britain where an endowment might have the same purchasing power for generations is lost in the mists of history, but relative stability form year to year is important for reasonable commerce. One of the salubrious effects of gold and silver was the fact the mining and supply more or less tracked the growth of the world economy; folks noticed the inflation or deflation during brief periods when the balance did not hold. Increasing value motivates increasing effort to mine and extract, decreasing value the opposite. Not so with Bitcoin. But, one argues, there are other currencies just as there are many forms of fiat money! And (they say hopefully) Bitcoin is the first and the best and the most reliable, so it will be the most valuable….would you rather have gold or silver or copper or paper? Yes, I’d rather have gold or silver or copper or paper. If one thinks gold will increase dramatically in value, because it will become scarce, one will hoard it. A fixed supply of bitcoin almost guarantees hoarding. A tulip at least blooms. What does a hoarded bitcoin do? It sits until you need real exchange value, so you find another hoarder who will pay you in a generally accepted media of exchange for the chimerical value. Such bubbles almost always burst.
This is true even when they represent something with intrinsic value, if the imputed value gets to far out ahead of the real value. Many dot-com companies survived and even prospered as shareholds lost most of their investment. millions of homes are happily occupied and have real value, even though real estate tranche investors lost millions on the same properties.
It will be interesting to see what happens to cryptocurrencies. If they are to be a medium of exchange, increasing acquisition and transaction costs do not bode well. Not does a party like the Venezuelan government coming in as an issuer help…I have not noticed that Gresham’s law has been repealed.
There has always been commerce outside the realm of governments, the image of gold for bottles on a ship offshore comes to mind. Governments tend to take effective action against and stop, or more often, co-opt it.
For what it’s worth, Nvidia no longer thinks they’ll be in the “mining equipment business”.
I also listen to the Dutch for sea level predictions.
http://flatheadbeacon.com/2018/08/16/building-virtual-gold-rush
I am not sure how correct my understanding in realation to this article here is.
but for what it could be worth of, will just let it fly.
Considering, the so many silly errors in there, seem more like dishonesty in steroids…. which mainly may consist as “fishing ” for info.
So this like more in the lines of a “reconnaissance thinktank ” product.
Not that there would be much problem or wrong about it in principle actually……
but considering the level of the mess and dishonesty, it makes the approach look
and be quite ugly….indeed.
Pulling the middle finger at it will not be such a bad idea…. at such an agly dishonesty.
Hopefully am wrong in this one.
But could not resist expressing this point. 🙂
cheers
Just curious…what do you buy “Bitcoins” with ??
Marcus
It is more like what can you sell or offer for bitcoins.
A little different from how you put it…. bitcoins consist mainly as value,
not as commodity or stock matterial…. 🙂
cheers
whiten
Rather, bitcoin is seen as “perceived value” … Worth something only to those who want it now, who want them because somebody else might want them in the next 15 minutes. Oil, copper, gold, silver, iron, wheat, cotton or the proverbial pork bellies are also only worth something to the “somebody else” who might want them in the future (an investor really doessn’t want 50,000 tons of pork bellies to show up on his front yard in 6 months, but at least those futures are ultimately based on a real product.
The potential 30 trillion in “Carbon future allowances ” are however ONLY “worth something” to their international carbon futures traders and holders if the CAGW community can create their value for the international bankers by their political power and propaganda.
I wish I could “up vote” you 10
All values are “perceived values”…..!
Cash, bank transfers….
That’s hilarious. Renewables will produce so much energy that they will have energy to spare? Wow ! Who knew. But who is stopping renewables from blasting their way into a brave new world where fossil fuels will no longer be required? GO FOR IT. You’re already part way there. Let’s see. The last time I checked, wind and solar, despite the hundreds of billions of dollars spent on them were contributing a massive 3% to the world’s energy needs. Looks like we’ll have to gear things up a notch if we are ever going to get to the promised land.
Clean, green, and sustainable as in out-of-sight and out-of-mind. Also, backed by the full faith and credit of a disparate exchange.
Will the crypto-currency go the way of Algore’s Chicago Climate Exchange (CCX) ?
If Mark Zuckerberg has any investment in crypto-currency, beware when he cashes out like he did on Facebook stock recently. The ones at the top of a pyramid scheme or director can make changes leading to a crash. All the 1’s and 0’s will become just that, 0’s. The organizers at the top will convert their share of holdings to tangible assets, the rest will be losers. You may just as well invest in conceptual penis’ as a social construct. At least then you will have a copy to pass on to your grandchildren!
Anytime I see a news article in which the writer botches the energy units, I tune out. If the writer can’t master the fundamentals, why should I trust the information?
Despite all the hype and explanation I still don’t “get” Bitcoin. Like religion, and Climate Change, it’s a trust based phenomena with no substance. The proof is the fact that the worth of Bitcoin is always compared to standard currencies. It would be nothing without them. The day of reckoning will be when the sell off starts and everyone stampedes for real money. May never happen, but I think it will. Being “safe” doesn’t add buying power value and that’s Bitcoin’s claim to fame.
I wouldn’t invest your money in bitcoin. Bitcoin is like Beanie Babies but at least when Beanie Babies went bust you had a cute little doll.
A number of problems with the original quoted article:
1) renewable energy. It wouldn’t surprise me if much, if not all, of the renewable energy generated in the past decade was consumed by bitcoin (and the other cryptocurrency) mining operations.
This talking about bitcoin using only renewable energy is nonsensical, much like companies and airports going “carbon neutral”.
2) bitcoin is not anonymous. If you were to actually use it to buy things, it deanonimizes surprisingly quickly. And since the blocks are public forever, once deanonymized, you can’t go back.
3) the energy consumption isn’t because of the blocks being updated. It is an architectural feature of bitcoin: each time a block comes up for “work”, every single bitcoin miner tries to get in on the action. So basically every single transaction has significant CPU cycles consumed by just about every bitcoin miner – it is this tremendous parallel waste which is how bitcoin is decentralized.
4) the present mining isn’t free – the transaction cost is the free bitcoin created and given to the miner. Which isn’t free either – but somehow this structural dilution of bitcoin is unacceptable to the faithful even as central bank printing and bank money supply expansion isn’t. Whatever.
5) The biggest problem with bitcoin and other cryptocurrencies isn’t transaction speed or energy use, although these are major.
The biggest problem is theft and fraud. Thefts from exchanges will very likely top $1b this year – that is a sizable percentage of the entire cryptocurremcy market cap. On top of this are the outright scams, thefts, and fraud. In particular, the rise of cryptocurrency price manipulation scams – taking the classic boiler room, pump & dump etc into this new realm.
Yet again, the faithful don’t want to acknowledge how large a problem this is.
I see a number of arguments that crypto is a protection from gubmint. Are you certain that CIA/FSB/… is not involved??
Not involved.
Not really, but their current level of incompetance seems to indicate they probably are not.
“It’s not impossible to imagine a world in which Bitcoin is used exclusively”. True. But how many of the perfect worlds that people have imagined have actually happened? How many times have people set out on the journey to perfection and found that it didn’t take long to become a nightmare? Maybe Bitcoin is yet another dictator’s path to the population’s poverty, as the electricity needed for everyday living is instead used to maintain the dictator.
My money’s all invested in tulip bulb futures. I just bought a huge position in March 2035 calls. Can’t wait to laugh at all you guys when I’m rich.
Mods.
I guess the picture of Charles Ponzi was too much.
Crypto, like Bitcoin, will have a real run for real money when whomever develops the better quantum computer platform. Being orders of magnitude faster and cheaper to operate, whoever has the best quantum platform will ‘mine’ the majority of the crypto currency and gain control of the particular crypto currency. Then the crypto will be deflated as well, since it became a lot easier to mine the ‘coins’ with a super quantum computer that works 1000X times faster than traditional silicone computing.
Currently, the Chinese are spending 10X the R&D that the USA is on a truly functional quantum computing platform, which has a lot of implications far more important than crypto. But that may be how we tell when someone actually has perfected quantum computing, since they will suddenly have a lot of this crypto currency. Then it is vapor currency, as it will soon be worthless after that due to rapid expansion of the crypto currency itself.
Sorry, but you are ignorant. The actual process of selection has nothing to do with prime number factoring. It’s much closer to a random guessing.
Secondly, the majority of cryptocurrency is already issued, so even winning all of the future mined cryptocurrency from now on does not dictate the market.
Most importantly, if quantum Co outing at real scale does occur, then the asymmetrical encryption used by the cryptocurrencies will be broken hence the whole system will break down.
Guys you are not thinking clearly.
First the value relies in the “size” of environment that work required to be
done.
Second in the work value itself, which can not be externally effected,
even in the case of quantum Co… and it’s speed.
Any body has any idea how much it costs to have and ran quantum Co??!!
Hypothetically the only thing different may just be the time to do the task.
Hypothetically, as quantum can not decide the outcome of the work point,
as that is up to the block chane.
So quantum Co will be most likely the most expensive whack a mole game, when it comes to bitcoin mining , provided that it exist and some how it could be employed for such task.
cheers
It’s April Fool’s Day in August – wahoo!!
Bitcoin production is now using Cheap Norwegian Hydropower in several locations in Norway. Some of the producers are oligarks from China, who are probably whitewashing dirty money. One such plant is using the equivalent power of Mandal town, in southern Norway. Why the h… are we putting up windmills on every other mountain top in Norway (also with foreign money), to fuel these guys and this type of rotten NONSUSTAINABLE ‘industry’….?
I think you know the answer to that…..
Am I the only one who finds the entire Bitcoin concept ridiculous?
I mean, it seems you could develop a similar system for coining currency where the test is blowing smoke rings out of your butt – although that might be more difficult to verify than the current bitcoin scheme.
This bitcoin scheme provides no added value to society – it just consumes a lot of time and a lot of electricity, and thus appears to have a negative social value.
As a Professional Engineer, my life objective is to provide real value to society, for example, by:
– initiating concepts that lead to the economic development of practical, sensible energy systems, the rational investment of capital and the creation of good, high-paying jobs
– providing informed guidance on energy policy, and calling out phony global warming, climate change and green energy scams
– saving lives by “blowing the whistle” on major dangers to public safety.
I have been successful in these endeavours, to a significant degree.
When I look at schemes like bitcoin, and I am no expert in the bitcoin game, all I see is nonsense – and in the past when I see nonsense, it usually blows up into nothingness sooner or later.
Am I calling BS on bitcoin and similar schemes? Probably.
The only excuse I see for bitcoin etc is that organizations like the Federal Reserve are equally if not more irresponsible, when it comes to printing money out of thin air.
https://fred.stlouisfed.org/series/BASE/
So maybe bitcoin is no worse than the Fed – well, that’s not saying much (and one should never bet against the Fed).
Regards, Allan
I also see bitcoin is one auto deflationary coin as its own existence requires energy consumption.
Bit-volivares would i call them
Bitcoin? I can see the emperor’s nether cheeks.
My father used to jeer at me for time spent on my then-hobby to experiment with algorithms that used bit-shuffling, Golay code, modulo arithmetic and the products of primes… in an empirical effort to ‘crack’ the factoring problem. My approach was unenlightened… but so was his criticism.
Imagine his surprise when I tell him that a significant amount of energy is now being devoted to the computational equivalent of sorting through a garbage landfill looking for small green round objects, to no useful mathematical end. He’ll be stupefied.
Was checking out Bitcoin and was surprised to find there are over 1000 crytocurrencies out there, according to several sources. Learn something new everyday……
Gigawatts are a unit of power, not energy. You would think that even reporters would have taken a little science in high school or college, but it appears that it did not stick.
“With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.”
That’s some serious dumbassery right there. Renewable = very limited and very expensive, not unlimited and free.
It seems that the author doesn’t quite get economics. If there are limited resources, regardless of whether or not they are green, an energy hog such as bitcoin will be a problem. The utopia is born with unlimited resources — a la Star Trek. And of course in Star Trek they didn’t have money — what an antiquated concept!
As for bitcoin itself, just because there is no government doesn’t mean that there is no regulation. There is nothing that ties bitcoin to any real world resource, and thus there is nothing to distinguish it from any other coin out there. The bit coin algorithms are all open source, and “PizzaCoin” and “CareBearCoin” have just as much validity. In a closed system such as a college campus each may work. Bitcoin is literally the king on the block simply because it was first on the block. When it gets tied to a government or to a campus, it will be regulated as being a currency or special privilege token or whatever.
The amount of bitcoin available is an arbitrary number — it will reach a theoretical max for the simple fact that the rewards for having people verify network transactions (mining) will reach a max.. also an arbitrary decision.
Bitcoin removes the central.. cop.. by distributing the transaction verification workload to its miners, who get rewarded in bitcoin. So right now, the network pays its maintainers. That will only last until the last bitcoin is “mined”. Then real payments by real companies to real people are going to be needed.. Or somehow everyone will need to agree on the next generation algorithm.
Meanwhile, bitcoin transactions are *not* anonymous.. Or more specifically, its operations happen on the “account” level. So if someone has your account information, they can track your transactions. But at least the accounts are not tied directly to you — you can hand your ‘wallet’ off to anyone and they’ll take over the account. So sure, there is nothing on the network that directly ties you to the transaction. However just like an ISP can determine which person sent which anonymous email by who’s router had the IP at that moment, a party can track you down if they know that you used a specific account to make a transaction happen. And unlike a bag of dollar bills that can change hands in an alley, your transfer of bitcoins from one personal account to another is recorded by the entire network for anyone to track if they want to.
My 2c. And why I don’t own any bitcoin.