"#Bitcoin #mining now consumes two whole percent of electricity in the US, all to perform math problems that are entirely pointless by design.
None of that touches on the vast architecture that has accreted around #cryptocurrency—the forums and the exchanges and the #NFTs—like some cancerous tumor."
@HeavenlyPossum
https://arstechnica.com/science/2024/02/over-2-percent-of-the-uss-electricity-generation-now-goes-to-bitcoin/
@josemurilo the energy is being spent to buy bitcoin.
It’s not that bitcoin consumes it but that people are willing to trade it for the value they get for Bitcoin.
No, that is the electricity wasted to perform math problems to “mint” new bitcoin.
@HeavenlyPossum not at all.
Bitcoin could be run from a solar panel and a car battery. It doesn’t take that much energy to run the Bitcoin system.
However, people do decide that they would like to pay more in energy as they bid for new bitcoin. That is their choice, and It reflects the value of Bitcoin to each person exchanging extra energy for the Bitcoin.
Mining bitcoin doesn’t have to be expensive. But people have decided it’s worth more energy, so they trade more energy for it.
And yet 2% of all electricity consumed in the US is wasted on bitcoin mining.
@HeavenlyPossum it’s not wasted, it’s traded.
The people trading it value what they get in exchange.
Otherwise they wouldn’t.
No, it is wasted, in the sense that bitcoin is a vehicle for speculative arbitrage. It is wasted in the sense that the point of the computations that unlock more Bitcoin are purposefully pointless. It’s a solution in search of a problem.
@HeavenlyPossum but it’s not wasted in the sense that the people putting their own resources on the line do so because they value what they get in return.
It’s like, people pay a whole lot of money for super bowl tickets. Is that money wasted? I wouldn’t say so, because those people value super bowl tickets.
I don’t, and that’s fine, it’s their money to spend the way they want.
Same thing here. People value bitcoin and so they trade their own energy for bitcoin.
Because they value it, regardless of whether you and I might.
That something might be instrumental someone does not prohibit it from being wasteful.
@HeavenlyPossum If someone decides that the value is greater than the cost than it is not wasteful.
And that’s exactly what happens with Bitcoin.
People invest energy in bitcoin because the value they received from it is greater than the value of the energy, so it’s not wasted.
Someone can desire something that is wasteful—both in the sense of *inefficiency* and *externalities.*
@HeavenlyPossum but the reason they are trading energy for bitcoin is because it is the most efficient way they know to get Bitcoin!
It’s only wasteful because you don’t value it, and that’s fine, but they do value it, and therefore it is not wasteful to them.
They’re paying for what they value. You might not value it, and that’s fine, but there are probably things that you buy that they are I don’t value, so we would accuse you of being wasteful by the same metric.
But no, it’s your money or whatever, and you trade it for what you value. Same here. They are trading energy for what they value.
I’m not going to accuse you of wasting your money on buying whatever it is you’re into. That’s your business.
But realize that it’s the same thing here. These people value bitcoin same as you value whatever you’re into.
> “but the reason they are trading energy for bitcoin is because it is the most efficient way they know to get Bitcoin!”
That doesn’t mean bitcoin is efficient.
> “It’s only wasteful because you don’t value it, and that’s fine, but they do value it, and therefore it is not wasteful to them.”
No, it’s wasteful because it’s inefficient and produces enormous externalities by consuming huge and growing quantities of electricity at a time when we desperately need to reduce our carbon externalities.
> “They’re paying for what they value. You might not value it, and that’s fine, but there are probably things that you buy that they are I don’t value, so we would accuse you of being wasteful by the same metric.”
The fact that someone values something does not intrinsically legitimize that thing.
> “But no, it’s your money or whatever, and you trade it for what you value. Same here. They are trading energy for what they value.”
Yes, wastefully.
> “I’m not going to accuse you of wasting your money on buying whatever it is you’re into. That’s your business.”
Thanks!
> “But realize that it’s the same thing here. These people value bitcoin same as you value whatever you’re into.”
No.
The goal of Bitcoin is not to be cheap, just as the goal of a bar of gold is not to be cheap. The goal is to provide value, and when it comes to Bitcoin the value is often expressed by the exchange of energy for Bitcoin.
You’re talking about efficiency but missing that the amount of energy that people trade for bitcoin is the direct measure of its value, not a measure of its processing power or anything like that.
Would you consider a gold bar inefficient because it costs a lot of dollars to buy? That would be a silly metric. And same with bitcoin: it’s pretty silly to talk about the energy that people are trading for Bitcoin as if that is a measure of the efficiency of Bitcoin.
No, it’s not a measure of inefficiency since the point of the currency is not to minimize energy usage. That is simply not a goal of the system.
Value is not a synonym for efficiency. Just because something is valuable does not mean it is efficient.
> “It’s pretty silly to talk about the energy that people are trading for Bitcoin as if that is a measure of the efficiency of Bitcoin.”
Measuring the resources consumed by a process against the output of that process is the literal definition of efficiency.
@HeavenlyPossum I’d never equate value with efficiency, so I don’t know why you’re going down that path.
But my point is that so many DON’T consider the output of the process.
The energy that people are choosing to trade for Bitcoin is exactly a measure of the output.
> “I’d never equate value with efficiency, so I don’t know why you’re going down that path.”
Because you continually insist Bitcoin isn’t efficient because people value it. I’m “going down that path” because this has been your argument from the beginning.
> “But my point is that so many DON’T consider the output of the process.”
The output is a receipt demonstrating someone performed pointless math problems, which some people value as a speculative asset.
> “The energy that people are choosing to trade for Bitcoin is exactly a measure of the output.”
That’s not how any of this works. Electricity, compute, and time are inputs. A receipt is the output.
If we measured output as a simple function of input, we couldn’t talk about efficiency at all.
That’s exactly how Bitcoin works: I trade some amount of energy for a chance to score Bitcoin.
That is the definition of mining.
In other contexts–car fuel efficiency, lighting efficiency, whatever–there are more externalities and complications, but not in this case.
The way Bitcoin works allows people to buy the chance to earn in exchange, directly, for energy.
Each miner decides whether it’s worth each 1kWh he might want to spend on it.
> “That’s exactly how Bitcoin works: I trade some amount of energy for a chance to score Bitcoin.
That is the definition of mining.”
Yes. That doesn’t mean Bitcoin is somehow efficient. It’s a grossly inefficient mechanism for creating anything, much less money.
> “In other contexts–car fuel efficiency, lighting efficiency, whatever–there are more externalities and complications, but not in this case.”
At least with a car, it gets you somewhere. Bitcoin produces emissions in exchange for a receipt that you consumed resources.
> “The way Bitcoin works allows people to buy the chance to earn in exchange, directly, for energy.”
That doesn’t mean it’s efficient.
> “Each miner decides whether it’s worth each 1kWh he might want to spend on it.”
That has nothing to do with efficiency.
It seems like you’re misunderstanding over and over.
For example, when you say that has nothing to do with efficiency, I say YES! That’s exactly my point!
It doesn’t have to do with efficiency, which is why we need to stop acting like it does!
The purchase price in energy for Bitcoin is not about efficiency but about value. The energy traded for Bitcoin doesn’t have anything to do with efficiency, so let’s stop buying into the stories saying it does.
BECAUSE it’s about value and not efficiency, let’s stop misunderstanding that as a metric for efficiency.
@josemurilo @volkris
The inefficiency of bitcoin is a function of the resources consumed by its production as a ratio to output, not a question of its price or the amount of value that people assign to it.