Bitcoin Forum

Let's say that Bitcoin takes the place of the USD within 10 years and see what the energy consumption of the bitcoin network will be.

facts:
 - USD "M2" money supply in 2009: 8E12 USD (http://money.howstuffworks.com/how-much-money-is-in-the-world.htm)
 - in 2023 there will be 19E6 BTC. Mining will be honoured with 6.25 BTC/10min => 329'000 BTC/y (https://en.bitcoin.it/wiki/Controlled_supply)
 
assumptions:
 - BTC takes the place of USD => one BTC will be worth 421'053$ (of course valuation of BTC will devaluate USD...but let's leave that aside.)
 - let's say 1kWh costs 10cts USD
 - all miners use the same recent technology. Or at least with equal efficiency in MH/J
 - people are not paying significant transaction fees by 2023 (the more people will pay fees, the higher the resulting profitable global energy consumption)

(edit) In a free market the following formula approximates energy consumption of any PoW based cryptocurrency:
GlobalEnergyConsumptionForMining ~= (MiningReward + TransactionFees) * bitcoinValueInUSD / EnergyCostInUSDperkWh

So mining would be profitable somewhere below an energy consumption of the bitcoin network of:

break even price: 421'053$/BTC*329'000BTC/y = 139E9$/y
equivalent energy: 1.39E12 kWh/y

Today's global electricity consumption is around 20E12 kWh/y (http://en.wikipedia.org/wiki/Electric_energy_consumption)

This means that the bitcoin network by itself would raise global electricity consumption by up to 7%

Please show me where I'm wrong!

We could of course put this less dramatic:
  - in 2033 it would be 174E9 kWh/y
  - in 2100 it would be 2.65 GWh/y

today we would be at 5MWh if all miners were using newest ASIC's (https://en.bitcoin.it/wiki/Mining_hardware_comparison)

(edit)
CONCLUSIONS:
 

• according to economical basics, energy consumption of the bitcoin network does not depend on mining gear efficiency!
• the problem described applies to every proof-of-work based currency (including Litecoin) because proof-of-work equals proof-of-energy-consumption at a market equilibrium
• bitcoin value is NOT directly backed by energy consumption. But mining rewards and transaction fees are.
• the slower the bitcoin value rises and the lower the transaction fees, the lower the energy consumption of the bitcoin network on the long run

You are wrongly assuming that bitcoins will still be used then.
People will switch to LTC, or any other altcoins easier to mine ...

Your numbers are way off.

Energy consumption is massively impacted by the size of the semiconductor die, e.g. 110 nm vs. 50 nm vs. 20 nm. Currently, most ASIC rigs are using 110+ nm chips, but the currently available semiconductor techology available to OEMs is in the 2x-nm class. The 1x-nm class isn't far behind now.

Have a read around here:

http://www.samsung.com/global/business/semiconductor/minisite/Greenmemory/

That will give you an idea about how die size affect energy consumption.

With ever smaller classes of chips, energy consumption will decrease. So, any prediction of future energy consumption must take into account the energy efficiency of semiconductor technologies available in the future.

For example, would you calculate it in cords of wood or tonnes of coal for a steam engine to produce your electricity? Of course not, because that technology is pretty much obsolete now (outside of a few specialty cases).

I'm an electrical engineer, so I know about the technological constraints you are talking about. But you are wrongly assuming that the efficiency in MH/J affects overall energy consumption. It does not (at least to my understanding of a free market). More efficient HW will just make the Hashrate go up what in turn will make difficulty level go up.
As long as additional gear can be run profitably, this will be done.

The power efficiency of the mining equipment is not as relevant as you think. Mining is a nearly perfectly competitive market. Miners will increase the amount of mining (and therefore the amount of energy consumed) until their profits are reduced to some tolerable level (below that they stop mining).

The relevant numbers are:
1. The number of bitcoins mined (from the reward and the transaction fee) and their value.
2. The cost of the equipment.
3. The cost of the power.
4. The operating margin of the miners.

The cost of mining will rise to the value of the mined bitcoins minus the margin. The cost of mining is the cost of the equipment plus the cost of the energy. So, the amount of energy spent on mining is the value of the mined bitcoins minus the margin and minus the cost of the equipment.

Also, as the cost of the equipment drops (assuming that it does), energy cost will become the dominant limit, regardless of the power efficiency of the equipment.

Gavin got some interesting idea for future.



http://www.huffingtonpost.com/2013/04/16/gavin-andresen-bitcoin_n_3093316.html (http://www.huffingtonpost.com/2013/04/16/gavin-andresen-bitcoin_n_3093316.html)

I want a bitcoin heater !

It is possible that in the future, a handful of ASIC companies developed extremly power efficient mining rigs with leading <10nm technology to mine and raise the difficulty, thus majority of miners would mine at a loss and quit the mining, so the total power consumption will be less

The worst case is everyone in the world will have same technology and mine, the electricity usage will be huge

But then there is a limit on circuit breaks in each household

Internet power consumption is how much % of total world? 10%? Or 15%?

Please consider that many phone carriers, TV, mobile also use internet for data transport.

Good point.

However:


It then seems that X years down the road, mining will only be done by massive supercomputers. Or that seems to be the implication to me anyways. Could be wrong, but if the hashrate an difficulty go up like that, we should see ASICs pushed out as being unprofitable the same way that CPU mining has been pushed out, and the way that GPUs older than <insert # of months/years here> are not profitable now.

The question then seems to be about the initial cost of hardware? i.e. Are we assuming that the limiting factor will be electricity when the limiting factor in the future may be the cost of hardware?

Because of the scaling factor I don't think that HW cost will dominate. There will be such a huge market for mining gear that prices will drop. However: If a producer of top-notch mining gear can earn more money by mining than by selling his gear, the game could change. The bitcoin network would then become dominated by semiconductor-fabs. And knowing that such fabs are incredibly expensive to run this unfortunately means that bitcoin will be dominated by a handful of players (The end of all that's good about bitcoin).

One more thing: We didn't so far talk about the grey energy that needs to be spent before mining gear even starts to mine. That might at one point become important as life-cycles may be expected to be quite short for mining gear.

Cost of hardware influences your decision do you buy new mining hardware or not.  

Once you have the hardware, the decision when you turn it off depends only on running costs.  So, yes, the electricity will always be the limiting factor. There will always be some miners that run at the edge of profitability.

And actually this is good, it pushes more people to research for the more efficient energy resource

I'd agree with johnyj and the great thing is we can fund all sorts of crazy ideas with Bitcoin :P it's not like our governments could freeze our accounts anymore like in the old days trolololollol :D But seriously guys, I think bio-engineered carbon dioxide eating bacteria is the answer.

If you look closely, this is already happening.  Prices on BTC-E (Russian exchange) are consistently lower than elsewhere.  There are likely more miners, making use of obsolete mining equipment for supplemental heat, in colder areas.

In the next few months, there will be incentive for mining to shift to the southern hemisphere.  (We could use an exchange in Australia or South America to take advantage of this.)

But one thing about this concept, is that it is still constrained by fiat currencies.  In order to take advantage of these arbitrage opportunities, to bring cheap Bitcoins produced in colder areas to the market, we must have easy access to either a common, global exchange or another currency that can be easily transferred and used to purchase them.

You also need to substract the amount of energy, fuel and other ressources that are used for our current currncy system,

Unfortunately, this won't help at all. Let's say that we find a supercheap possibility to produce electricity a 1 cts $ /kWh. This only multiplies the profitable energy consumption of the bitcoin network. It's the proof-of-energy-consumption principle that is the problem in the first place.

We could even convert the whole solar irradiation on earth into electricity with an efficiency of 100% (we never will..of course). The bitcoin network would still burn a significant part of it, given that its market cap is significant on global scale.

As the bitcoin revolution would be historically comparable to the internet revolution your point is valid. But it then comes back to the benefit for society that we expect from bitcoin. I'm not yet convinced, that the majority of the world's polulation will have a better life thanks to bitcoin breaking through. But that's a different topic.

Yes, brenzi is right. If energy is cheaper, more will be used.
It happened in a lot of other technology,too.

You're right.  And I haven't checked your figures.  But if you think that 7% is "significant", then we'll just have to agree to disagree.  As pointed out, this is well within the range of energy already used for heat in colder areas.

Heating with electricity is a stupid option in the environmental sense because each Joule of electrically produced heat causes even more primary energy consumption at the power plant because of low efficiency. Of course, a geothermal heat pump is a different case (But then you won't be mining at the same time anyway). So Gavin's "bitcoin heater" to me just makes things a little less worse.

And how to use your mining heat in summer anyway?

OK, let's try to estimate this: I'll take switzerland as an example, just because I know where to get the figures. As you sure know, in switzerland the financial sector is a big part of economy and switzerland is highly developed in global comparison. So it's not really representative. But lets try anyway:

The Credit and Insurance Sector uses 4.4PJ of a total of 211PJ Electricity.
(http://www.bfe.admin.ch/php/modules/publikationen/stream.php?extlang=de&name=de_828732397.pdf)

As bitcoin does not replace insurances and only a part of financial services, I'd arbitrarily reduce the 4.4PJ to 1PJ that is used for things that bitcoin could replace (I'm sure its a lot lower than that). This would be < 0.47% of switzerlands electricity use.

So if the benefit of bitcoin has to compete with classical banking in terms of energy use, 0.470% of todays global electricity use is the figure.

Somebody fancy researching the numbers for global banking?

You can't just go by the electricity directly used by the financial system.  First of all, you have to include other forms of energy than just electricity.  But, more importantly, you have to include all of the energy used by all of the subsidiary industries and by those who work in the financial system.

The financial industry is a huge portion of the economies of developed countries.  It's over 8% of US GDP.  You can't compare the electricity used by Bitcoin to that.

I'm open to your suggestions. But please be more specific.

It's really hard to estimate and I know I'm on thin ice here, but if I read other people on this forum just wildly guessing what fits their beliefs (or what they've read from other people doing exactly that) I want to counter with at least trying to get the right order of magnitude in a more scientific way.


Other forms of energy: These account mostly for heating of buildings and transport (for the switzerland case this is 1 PJ for Oil and 1.7PJ for Gas, the others don't matter. Same source as above). Now think about where the employees go that are no longer needed by banks because of bitcoin (those are not so many because new fields of banking might arise thanks to bitcoin). Those employees will work in some other office that need to be heated as well.

Are you sure they will disappear because of bitcoin breaking through? Which ones exactly?

I could think of telecommunication industries, but bitcoin needs the internet and will cause a lot of traffic in my scenario.

Why? GDP is a bad measure for what we are looking for. We should compare apples to apples. And please quote your sources.

My prediction is that if Bitcoin gains real global acceptance, Iceland will become the bitcoin mining capital of the world. It has an enormous supply of low-cost renewable energy.

I would like to point out that my proposal for a stable value currency (Decrits - see sig) solves this problem by separating the security of the network from currency creation. Detailed more in the thread, part of my goals was to eliminate the "hardware tax" where people are forced to ever upgrade hardware used only for mining -- aka a complete waste of resources in the grand scheme of things. The quick and dirty idea for why getting rid of the hardware tax is a necessary idea for a free and stable currency: https://bitcointalk.org/index.php?topic=178140.msg1891309#msg1891309

Okay, first of all, I'm going to voice a general objection to your using Switzerland as an example of anything.  Switzerland is completely irrelevant to the resources consumed by the global financial system.  Most are consumed by the United States military, which you haven't even begun to account for.  Who do you think, ultimately, balances all the ledgers of the global financial system in the same way that the Bitcoin network does?  I'll give you a hint, it's the world's biggest collections agency.

So, this argument strikes me as an example of Europeans holding themselves up as models of efficient economy, while actually being completely dependent upon Federal Reserve money printing that supports the largest military on the planet by an order of magnitude, and which has, additionally, directly bailed out Europe twice in the last century.  So, with that out of the way,


Why?  Why can't they go home instead?  This is like my arguing that Bitcoin mining doesn't waste energy because "what would the Bitcoin miners be doing otherwise?"  Same argument.


But they won't last long unless they are either productive or supported by central bank money printing.  That's the difference that you fail to recognize.  Ultimately, if Bitcoin wastes energy, it will be because people voluntarily choose to waste energy, because it is their economic preference to do so.  Because of this distinction, the energy wasted will always be less than the energy wasted via force and fraud under the current global regime, which, believe me, is substantial and of which you have only scratched the surface.  You haven't even begun to address the mechanics of energy production, and the fact that the reason most of it is centralized and wasteful is directly attributable to the centralized financial system.  What percentage of energy produced do you think is wasted in production, more or less than 7%?


Which people?  The ones who do nothing but leech off of others and subsist on money-printing.


Source. (http://en.wikipedia.org/wiki/File:NYUGDPFinancialShare.jpg)

You know, I almost hesitated to use GDP, because it is generally a terrible metric.  But it happens to be a great measure for what we're looking for because, despite its name, GDP measures consumption and not "production".

So the gist is:

1) People in the financial industry should never work again
2) People voluntarily choosing to waste energy is more efficient than not voluntarily wasting energy
3) Energy is centralized because of the financial system (I've always wanted 3 separate power lines from 3 companies running to my house...)
4) % of GDP = % of energy used

you forgot

5) The financial system also is the cause of cancer and many other incurable diseases

I've been thinking for a while maybe it's possible to build fridges and air conditioners in a way that they need generated heat (for the compressors, or maybe some other idea) that could come from electricity spent for mining.

Other than that, if OP doesn't know yet, there's also the "proof of stack" approach that doesn't require this kind of processing (but may have other problems). Or the "centrally issued and web of trust for consensus and less privacy" model that ripple.com uses for their XRPs.

You know, actually that just makes me want to underline this particular reason this argument is dumb.  Energy is not the same thing as electricity.  The electricity that is used in houses is almost completely irrelevant to the energy consumed by society.  It's something like 15%.  Yet, thanks to financialization and centralized money printing forced at the barrel of a gun, it's sold to you at 4 times the production cost.  That's the mark-up, for a technology that hasn't changed in a hundred years.

So, when you say "7% of electricity" as though that's supposed to be a big number, who cares?  It isn't.  The worst case is that it's slightly less efficient than the current economic system without, you know, subsidizing murderous psychopaths.  The best case is that it ushers in a new golden age of renewable energy and slightly subsidizes those living in colder areas.

Would this not be the best case under any scenario where crony capitalism or whatever term you want to give to the us government+MIC+financial sector loses a lot of its power? Electricity is only one part of bitcoin mining. Energy use encompasses every stage. Bitcoin is not more efficient with renewable energy if billions of tons of earth are being dug up to find silicon for circuit boards to produce devices designed to mine bitcoin in a more electrically efficient manner in an ongoing effort to compete for more of a fixed piece of pie.

You seem to assume that thanks to almighty bitcoin the world will be a better one and that there will be less wars. I do not share your belief.

Bitcoin has a serious design flaw being its potentially enormous energy consumption.I think bitcoin is an absolutely brilliant idea whose time has come. But I sure hope it will not be bitcoin that breaks through but a more energy-efficient successor.

Disclaimer: I hold Bitcoins. (But probably not for much longer).

 ::)

I don't think there's an eye-rolling icon big enough to convey my thoughts on this.  Silicon is extremely common.  The largest cost of production is energy.  I can setup some renewable energy source almost anywhere, sell when it's profitable, and use the excess energy to refine silicon.  But I won't even need to do that, because the amount of silicon used by Bitcoin mining doesn't even grow that quickly thanks to reductions in die size.

Listen, in 20 years, by the time Bitcoin energy usage matters at all, our problem will be that we have too much renewable energy at certain times and in certain places.  Bitcoin mining can make use of that energy.  Our other problem will be that we won't have enough energy at certain times, in certain (cold) places.  And Bitcoin can help to even that out, as well.

7% of electricity seems like a shocking figure.  But, really, it isn't.  It will be easily absorbed into the future structure of otherwise wasted energy when the time comes.


It's kind of hard to prosecute wars when they can't be financed.  "It is no coincidence that the century of total war coincided with the century of central banking."


It's not a design flaw.  It's an intentional feature.  And it can be changed if absolutely necessary.  But it likely won't be.


That's unfortunate, since the value of Bitcoin is in decentralization, not "efficiency".

That is quite debatable. In fact, to think so is incredibly short-sighted with ASICs right around the corner. Maybe it's the largest cost *right now*, but are you familiar at all with the term amortization?

I mean we can use costs in $ as an indication of how many resources are being dedicated to bitcoin, can we not? You did the same by equating financial GDP with consumption.

I'm just going to make up some numbers here for second that I know are not real-world, but I that doesn't matter--as has already been explained and I will explain again in a second.

Let's say an ASIC and a GPU are both 100% guaranteed to mine bitcoin for 5 years straight and then fail. Let's say the ASIC costs $1000 and uses $1000 in electricity in that time. Total 5 year investment: $2000. Let's say a GPU costs $200 but uses $1800 in electricity. Total 5 year investment: $2000.

Your only counter-argument to this is "well the ASIC is 100x faster, it is therefore more efficient". Sure, in terms of mhash/joule, it is. In terms of resources consumed, there is no difference. All a 100x faster machine is going to do is drive up the difficulty and weed out GPUs. Now if the world were a static place, ASIC guy would win all the monies. Unfortunately for him, anyone with a computer has a built-in calculating machine that can figure out that there is a profit margin to be had by purchasing an ASIC.

Replace ASIC with "solar panel array" or whatever consumption activity that you prefer to make it sound better and you have the same thing. Resources must be consumed until there is only a small profit margin remaining from the mining system.

Your counter-argument to that is that this consumption will drive innovation (lol where's ur deflation economy now), but the innovation only drives to further consumption--expending the maximum amount of resources possible in the name of profit. Instead of acknowledging the fact that hey, maybe this is batshit, you must rationalize this epic fail in the most extreme of ways, namely hinging on the hope that oil will no longer be our dominant energy source in the near future. Pathetic.


Wishy washy, flippy floppy, bitcoin good bcuz i say so and if not good we change.

That sure is a whole lot of words you put in my mouth.

…a very good reason to use sustainable forms of energy, not just for Bitcoins…

I don't know.
I'm still updating on alternate concepts, haven't crossed and understood a better solution yet

Good point. We might have to change the thread for this discussion. Still:

Why do you think bitcoin can change this? The US still dictates in what currency US citizens have to pay their taxes.
And even more: The USA are very good at evilizing what "they" don't like. Expect Bitcoiners to be treated like enemies of the state once Bitcoin really starts to weaken the States

 ::) I gotta say, I think that this would do nothing but increase the efficiency of electricity generation. If it becomes more profitable to generate electricity for your mining purposes by installing your own solar array, or your own hydroelectric, wind, or tidal generating system, then that's what people will do, and in the Bitcoin 'arms race', that would almost guarantee that in order to remain profitable, EVERYBODY mining bitcoin would be required to convert to renewable energy, in order to remain competitive. And it's really not hard to scale up an installation economically. So if you have to put in a (arbitrarily picking a number here) $50,000 installation to run your farm, and it takes another $$3000-$5000 to go ahead and scale up enough to run the rest of your home, then it's safe to assume that most folks running a home-based operation large enough to justify continuing to mine (meaning they economically have no choice but to switch to renewable energy) would go ahead and do it up for their homes as well. Less residential consumption (although probably an insignificant impact, some is better than none, right? It's a start).

7% of the world's energy generation being shifted to renewable energy, essentially 'overnight' would have significant impact in areas that would 'trickle down'. Economies of scale in alternative energy production equipment would make it affordable for the average joe to now also invest in cheaper renewable energy (like solar or wind), for his home/business which would have a domino effect on the current constraints limiting people from switching (cost). People aren't burning oil and coal because they hate the environment, they're doing it because it's too expensive to shift. Implementation is currently so low that there's no economy of scale that allows producers to make energy production equipment cheap enough for the average consumer. Most people can't justify the upfront costs of spending $10,000-$20,000 for a solar system that is going to take 20 years to pay for itself (assuming no maintenance costs), and last for 30, just to save $75-$100/month on their electricity bill.

The bitcoin mining 'climate control' systems are also interesting to me.

As to the question regarding how heat from a mining farm could be converted to COOL a building, you might want to read up on "Absorbtion cooling" It's one of the most efficient methods for cooling, and the original way that refrigerators worked (propane or natural gas). Not a new concept, zero moving parts, so maintenance costs would be essentially ZERO. Not to mention, you could ALSO use the heat to heat water. Be that residential water, a pool, hot tub, what have you...

Sounds to me like if your theory is correct, we could potentially move a very large portion of our current energy consumption to renewable energy, move heating and cooling to a nearly 100% efficiency scale (turning "waste" heat into building heating/cooling), all while kicking the banksters and oligarchs to the curb.

Empty the banking buildings, move in huge mining farms, harvest the heat waste for climate control, and move in legitimate jobs in their place. Win/Win/Win.  ;)

Renewable energy IS CHEAP, it just takes a long time to recover the costs, unless you're a high volume consumer. I personally don't have a problem with clean energy like Nuclear either, but I seriously doubt that bitcoin mining is going to drive the creation of even a single new nuclear power plant. Certainly not here in the U.S., where it's practically illegal (and effectively impossible) to build a new nuclear power plant, and has been for as long as many of us have been alive. Not a single nuclear power plant has been built in the U.S. since 1974...

So for your part of the world, it might be a different story. From where I am, if 7% of our energy consumption were cryptocoin mining, it would absolutely drive a move to renewable energy more than any socialist government programs ever could.

A combination of wind and sun works out pretty well too. But you're right, it's not a good idea to just jump completely "off-grid" (and nobody's suggesting that, at least I'm certainly not) since the majority of energy is consumed during the DAY for air conditioning, etc, solar can offset coal by generating surplus energy during the day, and then pulling from the grid at night (this is called net metering).

Very little energy is used by the grid at night, and gets grounded out and wasted, since they can't actually shut the plant down at night, even though demand is lower (this is why off-peak electricity costs less).

A solar system that creates a surplus during the day (when demand is high) and pulls from the grid at night (when demand is low) serves to not only supplement coal (or whatever) during the day, and ease demand (which can cause brown-outs and worse), but also serves to make coal generation more efficient, since the power isn't wasted at night.

Also, your wiki article only refers to cost of generation. Not cost to consumer. If the person doing the generating is also the consumer, he's getting his energy essentially at "wholesale".

If he could buy "wholesale" coal energy, you'd be right. But he can't. So we have to compair "wholesale" Solar to retail coal.  ;D

With net-metering, you pay wholesale solar price, even when you're pulling back out, what you previously put into the grid.

Moore's Law does apply to solar energy.

http://www.digitopoly.org/2011/11/07/moores-law-in-solar-energy/

Who said that it didn't?

I do expect Bitcoin to be treated as terrorism or whatnot.  Similar projects (Liberty Dollars) already are.  And I am making plans (https://bitcointalk.org/index.php?topic=183045) for this eventuality.

As for the influence of the US government over its citizens, in the current economic environment, after over a decade of failed wars and false flag terrorism, meh, we'll see.  It certainly isn't going up.

A 19th-century Member of Parliament predicted that, given the rate of growth of traffic, London would be six feet deep in horse manure by 1910.

It's hard to predict the future by extrapolation, one aspect missing in the discussion is that if bitcoin becomes more widespread and accepted and devalues the USD than maybe the calculation shouldn't be based on current electricity costs in USD.

3 words for OP: Application-specific integrated circuit.

Back in the 1970s, they would have said the same thing about computers in general, and now you hold a phone in your hand that can process more data then a server the size of a room at that time. Something tells me that energy will keep being inefficient for as long as its cheaper to follow the crowd, and technology will continue to compensate through innovative developments in and of themselves.

It will be pretty cool if they make a completely unrelated-to-bitcoin-mining breakthrough in bio-solar technology. I'd love to wear shoes that generate enough electricity when I walk to power all my devices.

This is an excellent point  Renewable energy is fairly cheap.  What is expensive is moving that renewable energy from where it is produced to where the money is printed.  Centralized, fiat currencies don't create homogenous prices.  They create price disparity that makes resources (nominally) cheap at the periphery and expensive at the center, yet (due to money printing) relatively abundant at the center and scarce at the periphery, when, without this centralization, the opposite would be true.

It's TOTALLY relevant. If you consider what a "computer" cost 40 years ago, how HUGE and power hungry it was, and how pathetically not "powerful" it was, you could have predicted some insane power consumption trends, based on current technology.

Now consider that your cell phone is 100,000 times smaller, 1,000,000 times cheaper, and 1000 times more powerful than a university-grade computer from 1965.

That's a BILLION (with a B) fold increase processing power, cost efficiency, and reduction in size in the past 47 years... Think about it.

What would have taken 1000 university-grade computers, the size of a house to process, 47 years ago--which would have consumed MEGAWATTS of electricity and put off MASSIVE amounts of heat--can now be processed, with ease, on a mere cell phone, that consumes a few milliwatts...

My Samsung Galaxy S3 can put down about 3khash of CPU processing power on litecoin. Which is roughly half of the hashing power of a 4-year-old laptop roughly 20-times its size, with a Centrino Mobile processor in it... This was a $1000 computer 4 years ago, and it consumes 90 watts when running full-out. My phone consumes about 2-4 watts... MAAAAYBE 5 if the screen is on full brightness...

More efficient miners will drive less efficient miners out of the profitability realm. If you want to compete, you'll have to use more power efficient equipment, or find a way to get free electricity. This will drive the entire 'mining industry' toward power efficiency, constantly. The cheaper people CAN process, the cheaper they will. And the cheaper those people process, the more necessary it becomes for others to move to power efficiency in order to compete. Sure, there will always be a few people operating on the bleeding edge of profitability, but once that line is pushed behind them by the increase in difficulty by the more efficient people, they will be forced to either move to more efficient equipment, or abandon mining.

Nobody's going to mine at a significant financial loss. Not even speculators.

..as the GPUs do now, meaning no net change? That's how I understood it anyway.

You didn't get the point. Your billion or whatever increase in computing efficiency will just increase mining difficulty. It will not reduce energy consumption of the bitcoin network. Variable costs of mining are dominated by electricity price. Mining gear will be run as long as those costs are not higher than the expected mining reward plus transaction fees. (Amortisation has no influence on this - it's the miner's risk)
So what follows from the above is that more efficient mining gear will of course produce more GH/s per Watt. So it will be more GH/s per $ on your electricity bill. This means that it is profitable for more people to run even more mining gear. And what's profitable will be done on a free market. If such a thing as free market really exists, Bitcoin is it.

Efficiency goes up
Difficulty goes up
Energy consumption stays exactly the same.

The Energy consumption of the Bitcoin network can be approximated by the following formula:

GlobalEnergyConsumptionForMining = (MiningReward + TransactionFees) * bitcoinValueInUSD / EnergyCostInUSDperkWh

The efficiency falls out of the equation because of how a free market works

Brenzi, the cost of the hardware will factor heavily into it, especially as electrical efficiency increases. Like I mentioned earlier with amortization. If the machine that gets 1000x mhash/joule costs 1000x, the overall resources consumed is effectively the same making the assumptions about cost being equal to resources consumed. Since electricity can be renewable but beat-to-death hardware is not very recyclable, the drain on resources probably gets worse as electrical efficiency increases.

My opinion is that technological developements arnt being considered here.  As technology improves energy consumption will deminish and hashing will increase.

It's an interesting point. But it also assumes that miners are helpless victims to the current power companies. If you look at just the half of the equation, which is the equation you posted, it seems that way, but if you look at it from the perspective that energy costs can also drive people to move toward their own energy generation (Solar, Wind, Tidal, etc), in order to be competitive in that market, the total energy consumption isn't as relavent as the source of that energy being consumed.

If you think of the trilions of gigawatts of energy that are wasted by not harnessing the Sun's power... There's not a big issue with consuming a lot of energy.

The issue is with consuming a lot of energy generated with 20th century technology.

The day it becomes less cost-effective to generate energy with 20th century technology is the day it gets abandoned by bitcoin miners (and other consumers alike).

So if the issue is just what percentage of current power generation will look like when compared to future energy consumption, I don't really see it as a problem, provided that energy is coming from clean sources, who cares how much of it gets used?

In the far future you might even be right. There are clever people around that think energy will be 100% renewable and almost for free in the future. But I think we should consider the status quo and not rely on utopia when judging weaknesses of today's bitcoin technology. Bitcoin value might rise a lot faster than renewable energy will progress.

In the case of Photovoltaics one should bear in mind that today PV cells are produced in china using non-renewable energy. So their embodied energy is not renewable at all.

As long as renewable energy is more expensive than fossil and nuclear energy, I consider excessive energy use as being bad because real costs are externalized.

I'm going to have to respectfully disagree. Basing future predictions on current status quo is just bad policy by just about ANY standard. I'm not saying that there won't be any bumps in the road, but what I am saying is that if it gets to the point that it begins to be problematic, the economic incentives will be enough to drive change (economic interests are the only TRUE driver of change anyway).

The idea that just because something is produced using another type of energy makes it not 'clean energy' is disingenuous at best. In order for that statement to be true, it would require that every cell produced consumes more 'dirty' energy in the the production process than it will produce in its working lifetime, which, if that were the case, solar energy would already make ZERO economic sense. People would never be able to come out ahead, as the solar installation would cost more in energy costs alone to produce, than would ever be recovered...

Repeat after me:  it's only more expensive in fiat.

did fuel become an issue when cars broke through ? yes ... what happened well people started fighting for it and an exclusionary mechanism was introduced ...the raise in price ! :))

hardly the same but I think you get my point ...

imo energy costs will translate into transaction fees which will get bigger to include a small 0.1-1% fee extra for all the juice we waste...



this is all imo however ...':)

What will cause even more juice to be wasted. Transaction fees shift the economic equilibrium towards higher energy consumption.

You're talking about M0 money supply. Bills and coins. They make up for about 10% of the M2 money suppy. (http://money.howstuffworks.com/how-much-money-is-in-the-world.htm (http://money.howstuffworks.com/how-much-money-is-in-the-world.htm)) including all money located on bank accounts and funds.
Money on bank accounts and funds is most probably less "costly" if you only count storage and transaction energy and infrastructure.

If you want to convince me, you need to do a little more research.

I'm very tempted by the Proof-of-Stake concept: https://en.bitcoin.it/wiki/Proof_of_Stake
It certainly addresses the issue of energy consumption. I'll need to do more reading to understand the possible drawbacks. The checkpointing is a violation of decentralization, but might be acceptable. What makes me sceptical is the fact that mining can only take place with an unlocked wallet. I can already hear people whining for lost coins....

Good reads:
http://ppcoin.org/static/ppcoin-paper.pdf
http://www.links.org/files/decentralised-currencies.pdf

Just got myself a couple of PPcoins ;-)

It's funny that the developers didn't even find the time to consequently search/replace the word bitcoin by ppcoin in their software....so I guess they're at a very early stage....

But heating with electricity is done right now in many places, because it's more convenient than other methods in some cases. In the scenario where bitcoin becomes the world's main currency, then all of those heaters could be dual-purpose devices that also produce bitcoin.

Also there is a lot of waste energy all over the world that could be used, since bitcoin can be produced any where in the world with electricity, and can be sent a lot more easily than electricity can be transmitted.

Finally, the block subsidy will eventually end, and the block generation reward will become only what block generators get from transaction fees, which could and likely will result in the block reward being a much lower percentage of the total market capitalization of bitcoin than it is now.

what about the Absorption Refrigerator (http://en.wikipedia.org/wiki/Absorption_refrigerator) someone mentioned? Why are the electric ones mainly used in hotel rooms only so far? Can't be that they're less efficient then.


I'm afraid such a currency will soon find itself to be under total control of MtGox and (later) Goldman Sachs.

You got a good point there. Food for thought, thanks. PPC probably only works if people do not let banks or ewallet providers take care of their coins. But: Isn't this risk comparable to pooled mining in bitcoin? What about a BTC guild 51% attack?

Actually, Proof-of-burn could be a way out of bitcoin's waste of real-world resources (https://en.bitcoin.it/wiki/Proof_of_burn)
At first sight, it seems to me that this approach would even be compatible with bitcoin. Maybe even without a hard-fork. However, I'm no expert of bitcoin protocol.

Basically this would replace spending fiat currency on hardware and energy by spending the cryptocurrency itself in such a way that the same randomness of possible reward results.

Thermodynamics are not my strongest field, but I just did some reading for the fun of it (the german article has more detail: http://de.wikipedia.org/wiki/Absorptionsk%C3%A4ltemaschine)

Probably one should use a lithium bromide / water system which needs >70°C input and produces 5°C output at a COP of 0.7

The 70°C might be just about acceptable for silicon devices. And the 5°C are perfect for air conditioning.

But this doesn't change anything in my criticism of bitcoins PoW concept. I just don't see why such energy consumption should be necessary just to make a currency stable. PPCoin has yet to mature and proof its stability - but it already shows a possible way out.

The question is, less efficient than WHAT? Are they less efficient than using electricity to heat the solution to create the heat absorbtion effect? Yes. That, and the fact that they're not as compact as electric units.

If you don't already have a waste heat source, it's not worth the extra space consideration of such a system, even if it's a little more efficient, so nobody uses them.

Now, fast-forward to some distant point in the future. People are burning lots of juice to mine bitcoin. In the winter, this is a great system, because waste heat can be used for everything from heating buildings, to heating water (potable, swimming pools, hot tubs, whatever). In the summer this is a problem. You got countless BTUs of heat that you need to get rid of, as well as a building to cool (including keeping your mining hardware cool). Enter absorption refrigeration. You can now use those BTUs of waste heat to cool your building, or even do industrial refrigeration. Combine a mining farm with a food packaging plant? You were gonna burn that energy to refrigerate the food anyway, right? Why not harness that wasted energy and also mine some money. It's win/win/win. How about combining a mega-mining operation with a mega casino? Can you imagine what amount of electricity is spent on just cooling a casino floor? Let alone cooling 3000-5000 hotel rooms?

There's no reason that "waste heat" has to actually be wasted.

As if banks don't use electricity.

Flaff made a point that I think this entire debate was missing.  Yes, mining bitcoins has a price beyond just the cost of the ASICs, in electricity.  But how much energy do all the banks in the states use, not even counting the ones elsewhere in the world?  You could count just the energy the banks use directly, but I think it'd be more fair to count the banks' energy, the energy used by the armored cars transporting money, that used by the Federal Reserve, and so on and so forth.

That's not even getting into the energy used to encrypt credit card transactions online.  Actually, with the speed of computers currently, that's the cheap part of the cost: you just have to pay for an SSL certificate.  The expensive part is making sure websites comply with PCI Compliance and so on.  That may be derailing the conversation somewhat but it's to make a point: there's a real opportunity cost in accepting credit cards. 

Granted, if you're selling things online and not accepting credit cards, for most markets you're pretty much shooting yourself in the foot.  But the bitcoin protocal handles all that security so that if all the world used bitcoin instead of credit cards, e-commerce websites wouldn't have to worry about these things.  In other words: how much energy does PayPal use?  Even if credit card transactions are being done and not PayPal transactions, they are often still using PayPal as a credit card processor.

So the question to me isn't, does the bitcoin network use energy?  But rather, does the bitcoin network use more energy than the traditional financial network?  And, would it use more if it scaled up to the volume of, say, Visa and became a replacement for Visa in many cases.

I tried to estimate this in  this previous post. (https://bitcointalk.org/index.php?topic=181759.msg1913572#msg1913572) You are right that one should compare it to today's banking usage. But keep in mind that banking is not just about issuing and transferring money. There are services included that bitcoin doesn't supply and never will (funds/asset management, customer services, loans....)

I would be very interested in the figures, but they might be hard to get. But please read my linked post. If you can show me with quotes to reliable sources that the ratio of (paypal transaction volume)/(paypal plus credit cards energy use) is better than in the case of bitcoin, I'll be more than glad to change my opinion. I came to the conclusion that bitcoin's ratio is worse by orders of magnitude.

Energy consumption *could* become an issue? 
Energy consumption is a huge issue.  Some key facts which prove humans are extremely stupid:


1) More than half of all hydrocarbon energy of our spaceship earth already was burned off with no attempt at use or capture ("natural gas flaring").

2) Continued pouring of energy as visible light away from Earth at night for no fucking reason at all (see pictures of the Earth from space).

3) Horrendous inefficient use of energy for transport, including millions of folks bringing 2 tons of steel huge distances every day with them.

4) So-called "defense" or "military" using energy just to destroy other energy, in efforts to demonstrate how psychotic they are so other folks will be afraid of them. 


Yes, piss-poor use of energy resources is a *huge* problem on spaceship earth right now.  No, proof of work networks don't add meaningfully to the total.  But yes, it is something we should think about, so my apologies for getting upset.  It happens whenever the topic comes up.   
     

Haven't you just disproved your own argument?

But in so doing you asserted based on the absolutes..."every cell produced"..."zero economic sense"...

and economics of A vs B is never based on absolutes.  We see solar cells used for ranch gate openers - GOOD.  For city stop signs and other markers where there'd be a high cost to run the power wires - GOOD.  For a city stop sign right next to a power line - STUPID.

This isn't terribly complicated unless you preface the argument with a moral premise such as SOLAR = GOOD, then proceed in a twisted and warped fashion to ignore actual numbers because you've predefined GOOD.

In fact, you've argued against the other poster who simply stated that externalized costs (and pollution) have to be entered into the equation.  Sorry, you can't do that.

I would happily give you the figures if I could, but you have a valid point that they're hard to get.  I don't work for paypal / ebay and even if I did I probably wouldn't have access to that kind of information.  I'm not arguing the original point, bitcoin IS an energy hog, that's probably its biggest weakness.  Just trying to make a comparison and unfortunately it's not a very good comparison because I simply don't have the data to compare it to.

I'm also not really sure I buy your point about bitcoin being unable to supply all the services you listed.  Can it supply customer services?  Probably not very well.  But funds / asset management, and loans?  I don't see why not.  I don't think bitcoin is mature enough to do it yet, but that doesn't mean that it's impossible.  The hardest part would be loans and that may very well have to be pegged to some fiat currency to be possible, so I could be wrong about it being possible.  Easy?  No, it'd be quite tricky to do based on the very nature of bitcoin.  But probably not impossible.

He is saying that bitcoin does not replace those services. e.g. they will still use the energy that they do now, even if they are operating with bitcoin. So it is not fair to use the lights that a bank uses to operate as part of the energy cost of fiat because it is related to the energy cost of money in general.

Ah, I get it, that makes more sense now.  I meant more the parts of the currency costs that wouldn't be necessary with bitcoin such as the armored cars full of trucks, all the security needed to secure credit cards, etc, but I admit that I didn't make that clear with my original post.  Technically, security (ie not losing your bitcoins) is still an issue in the bitcoin world, it's just shifted from the responsibility of the banks / companies / credit card processors to the individuals who own the bitcoins themselves.

Seriously people, any comparison to the energy consumption of the current financial infrastructure would conclude that BTC is HUGELY WASTEFUL, because BTC is performing so few transactions.  Just look here at the cost per transaction, the miners are getting paid on the order of 8 dollars per transaction and even before the bubble it was more then a dollar, that makes BTC easily the most costly system ever devised.  Now a lot of that cost now is just pure profit for miners but competition dictates that it will eventually become energy expenditure.

http://blockchain.info/charts/cost-per-transaction

Synechococcus bacteria, solves the problem of too much carbon dioxide in the atmosphere, we found the answer to this problem years ago.

You're welcome :)

http://microbewiki.kenyon.edu/index.php/Synechococcus_elongatus

Even if that would be true and these bacteria would solve our CO2 problem without causing even worse side effects (hear my doubt?), there would still be the other side of energy supply: limited resources.

True, it may well be that this kind of bacteria is a key component in terraforming though which I find pretty interesting :D

I looked at those a while back and determined that the physics was flawed, stress strain and tidal forces would never allow such a thing to exist.  It's a real shame because the Matrioska brains could provide us with lots  of free beer.

Hmm....maybe not 4%, that'd be 40,000 ppm, and we are currently < 400 ppm.  Seems like 7000 ppm is the max IIRC.  So but yeah, your point is that weed would grow better with the higher CO2...

OOPS, never mind.  I see you were referring to food.

Imagine a membrane with a sufficiently high strength to weight ratio that it could support itself and a tethered load against solar gravity based on the pressure of the solar wind without requiring orbital motion.

Now imagine building enough of these that they form a sphere around the sun.

If that's true it means there will never be a global cryptocurrency that's not controlled by any government.

I'm in prime wind power territory. Anyone want to invest in HashFarm? Buy some ASICs, a couple turbines, and sell extra electricity back to the grid to buy more ASICs. Use it to show energy conscious skeptics that we're not all "wasting" power. Who's with me?

/half joking
//it would be cool

"There was an echo." (http://www.youtube.com/watch?v=11Fl9ZVJ7B8)

Well, since you brought it up: Report: 97% of scientists believe global warming is real. (http://content.usatoday.com/communities/sciencefair/post/2010/06/scientists-overwhelmingly-believe-in-man-made-climate-change/1)  Don't listen to us, listen to the experts.  

Even if what you said was true, there is still a limited amount of resources on the planet, and the point that the bitcoin infrastructure is wasteful in resource terms alone is entirely valid.

I'm pretty sure Ukigo's post was dripping with sarcasm (more humans == more slaves kinda gives it away). But it can be hard to detect over the internet sometimes. :P

Unfortunately, you are still "wasting" energy. You could be using that energy to power your house instead.

That's taken out of the extra.

Oops, good point.  My internet sarcasm detector is pretty bad, which is ironic considering that I'm highly sarcastic on the internet as well.

It doesn't matter if there is a natural cycle and if there is currently actual global "warming" or "cooling" going on.

The more we interfere with the natural (chaos-theoretical) global eco-system by depleting resources too fast or releasing too much CO2 too fast, the more we disturb processes that have been settling down through millions of years and to which we've adapted through evolution, and the higher will be the probability of effects to backfire at us (think atmospheric turnover).

I'm not talking about Earth itself, it will survive, at the end of the day we can only harm ourselves.

About Bitcoin, I'm confident that the energy issue will be solved in one way or another, probably in a somewhat surprising way.

that's not necessary. Population only rises in 3rd world countries where survival pressure is high. They bear much offspring to compensate high child mortality, it's an evolutionary program. Population in the 1st world is stagnating at best. All that's required to live more harmonious with nature is that there exist a well enough living standard everywhere. And we in the first world wouldn't need to depend on exploiting the 3rd world if we'd properly recycle our stuff.

All of these issues come down to the nuclear energy in any way. It's cheap, clean if necessary precautions are taken, and dangerous as hell. In those regions that has nuclear, electricity per kW is way cheaper, so is the mining.

Nuclear power from the proposed thorium reactors is safe and easier to deploy than uranium reactors. It has very little backing because of political motives. www.energyfromthorium.com

It's not thorium that makes those reactors so safe and effective, it's that the proposed design is a molten salt reactor instead of a water-based reactor.

The cool thing about a MSR is that as a liquid-fueled reactor it can burn U-235, U-233, Pu-239, or a mixture of all three at the same time.

Don't forget the protists.  Bacteria are the obvious rulers of this rock.

And for the record, the humans are kingdom animalia, phylum chordata, class mamallia, order primata, family/genus/species homo sapiens sapiens.     

hmm lets see

we are using room size computers as PC's still nope

innovation in chips will sort this all out with extra impitus from an increasing btc price, as it has already done with asics

I predict threads started by wishful thinkers will greatly expend more of our resources than bitcoin will before it gets eclipsed by the next currency in a year or two.

Where exactly did you spot wishful thinking in the OP?
Your own assumption might be wishful thinking though. A currency that could rise above bitcoin within a year or two can only be one of the major cryptos that already exist. PPCoin and XRP are the only ones I know of that are not excessively wasteful.

I'm planning on moving back to an area that gets a ton of sun and eventually getting solar panels.  I may do this exact thing, except with solar instead of wind.  Might have to do it during the off-peak months though since I was planning on using the solar grid for AC during the summer months.  If this mining profit calculator is at all close to accurate, it would make the payback period for the solar grid really quick if I could run it 24/7 during off peak months.  With these numbers, the payback is 50 days for a $15,000 solar grid, which is insanely short.  The only question is, does a solo mining gear actually pay for itself within 10 days?  Maybe I'll go ask on the mining forums.

You know that green plants already do this?
Bio-diesel powered Bitcoin water heaters.

Here is a great idea for next gen ASIC's  3x more efficient heat recovery.

http://www.treehugger.com/clean-technology/worlds-most-efficient-semiconductor-chip-aims-harvest-waste-heat.html
http://www.kickstarter.com/projects/1005823715/micropower-chips-energy-savings-and-energy-efficie

Interesting development. But according to the text, they operate between 200°C and 600°C. Good luck with your ASIC's.

The OP is more or less correct. As long as extra mining is profitable, more electricity will be pumped in to mine. Efficiency of mining technology isn't important for this question. The important thing is how much the annual distribution of coins are worth at the time. Electricity worth a similar (but smaller) amount will be used for mining.

Good point Arrow,
On that note miners may also heat there homes in winter regardless of the value of coins.

also as sunny king pointed out, BTC and move to  POS model and has the dev power to do it.

end of problem

Here's a few nitpicks with your assumptions/reasoning, that do change the results a bit:

1. The monetary base is about 1.2 trillion dollars http://research.stlouisfed.org/fred2/series/MBCURRCIR?cid=124 (http://research.stlouisfed.org/fred2/series/MBCURRCIR?cid=124). This is a much better approximation than M2, because most of what goes into M2 (and M1 for that matter) is actually the value of outstanding bank loans. Bitcoin will not replace loans, so it can't "soak up" that value. So you're overestimating future BTC value (assuming it replaces USD entirely) by 10x.

That alone brings down energy consumption to less than 1% of the world's total. Other effects may come into play depending on the nature of bitcoin's behaviour as money (but I can only speculate whether it will drive value up or down).

2. Then your steady state formula assumes equal energy efficiency for all miners. And therefore you assume all miners are at the edge of profitability. Realistically only a small fraction of miners will ever be at that point, as long as energy efficiency increases over time.
Example: Assume 50% of mining hardware 1GH/Joule and 50% is 10GH/Joule, and 1GH/Joule is the breakeven point. Then energy consumption of the network is only 55% of what the everyone-has-the-same-efficiency model would predict. This can be even more drastic (10%/90% split). In other words, real energy consumption can only be equal to or lower than what your model predicts.

Yes, energy efficiency doesn't matter in a steady state world, because eventually enough hardware is brought online to make everyone uniformly efficient, and competition drives revenues down to electrical cost.
But as long as Moore's law holds, there will be significant increases in energy efficiency every year. Which means each year it's profitable to bring new hardware online that outclasses the existing stuff, and takes a while to drop down to near-zero profitability. This keeps electrical usage down by driving the least efficient miners out of the market on a regular basis.
Moreover it introduces the need for mining investments to pay back their fixed costs in a relatively short time (less than a decade), which means that mining cost is mostly dominated by fixed hardware costs, rather than electricity, as long as hardware efficiency keeps increasing.
I honestly don't know what the adjusted formula should look like.

This doesn't change the total amount of money Bitcoin mining will consume, but it does change what portion of it is spent as electricity, versus hiring electrical engineers, or making chips.

3. Subsidy halving means that, if Bitcoin mining is as competitive as you model, miners can't expect to make money for more than four years before needing to throw out their hardware and start again. This means that they will not get into mining unless they expect they can make a net profit in that short time.

Disclaimer: Obviously we're both speculating, no one really knows the economics of mining well enough to actually make good projections right now.

Thanks for your very interesting review.

At first thought, I didn't agree with you because it could well happen that BTC is no longer traded in the sense of "full reserve" (Who really knows if mtgox still operates with full reserves?). As soon as fractional reserve comes into play, I guess M2 would be the correct reference. But you might be right indeed, because the leverage ratio would not benefit the miner but the exchanges or BTC banks. But what would happen if mining (or pooling) would be taken over by banks?

Yes, my calculation is the worst-case limit. But the absolute numbers are not my concern. It's the underlying dependencies that are worrying me. Even if I'm overestimating by a few decades, it remains an awful lot of energy.

However: Your point is valid and I should mention it in the OP.


This is true and has been mentioned upthread. One should keep in mind that hardware needs energy to be produced, replacing mining gear more often reduces the overall lifetime efficiency of the gear and therefore (at least partly, but possibly even over-) consumes the gain in "runtime efficiency".


Thanks again for your reasoning on the matter.

At the point when energy is the dominant cost and it nearly equals the value of the mining revenue, then miners have two ways to increase profits. One is to add capacity and the other is to reduce energy usage. I think that rising energy costs and a rising difficulty will favor energy efficiency as a way to increase profit since a higher energy efficiency will reduce costs and extend the productive life of the mining equipment.

Dunno if this could lead to situation where in countries like Germany there would be large pools of rather inefficient, but cheap hardware which is only run when energy cost is low or zero...

Waiting for the "Heating my pool to tropical temperatures while feeding my pool hashes" rig.  The miner/water-heater combination!

That's actually a really clever idea.  Someone's bound to invent it eventually. 

Actually, Germany would be a good place for mining, cost wise.  Because it's so subsidized in Germany, they have one of the highest rates of solar panel use in the world.

And if you own a company you pay a lower electricity price than regular people because the German government is corrupt like hell :D

Bitcoin can be replaced by a proof-of-stake currency. Seems to be an elegant solution to the energy consumption issue, isn't it?

If you haven't spent thousands of dollars on mining equipment, yes!

I don't know, have been mentioning it for years so may have to do it myself.  Well heated pools are good things.  Also dual use engenders efficiency gains that reduce mining cost and more mining is also a good thing.

Energy consumption of the bitcoin network continues to increase. visa, eg, is thousands of times more efficient per transaction.

https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mining-electricity-consumption-ethereum-energy-climate-change

What is the solution to this? The way I see it, as the value of bitcoins increase, the energy consumption will continue to increase. The miners will not care how much electricity they are using and what the carbon footprint is (for the same reason that so many ppl have caused tremendous damage to the planet in order to make money, because the consequences may not affect the one causing the problems). Therefore the limits on the use of electricity will be imposed by government. This will shift the miners to use renewable energy.

I do not see increased energy consumption as increasing market cap of PoS coins (assuming that the security is equivalent), because there is no economic incentive for someone (or all bitcoiners) to move from bitcoin to ethereum, eg. But, if there is government interference in bitcoin mining, will that shift the interest to PoS coins?

I don't think government intervention will change anything. There will always be some government somewhere that won't restrict PoW mining.
4 years after the OP, we're still at the same point. The problem has maybe gained a wider awareness, but solutions are either not very popular (PPC, NXT...) or need yet to be proven (Ethereum's Casper PoS, Cardano's Ouroboros PoS)

edit: there's not only PoS solutions. IOTA could be an ecological alternative too.

Let's say that PPC has equal security, etc, to bitcoin, that both of them have the same transaction fees, and PPC uses dramatically lower energy consumption. What would cause a shift to PPC? It seems to me that there is no economic incentive for anyone to switch from bitcoin, now and in the near future.

Yes. We are all need electricity because we are all surrounded by technology. It has now become part of our daily lives. Almost devices we used at home and in our businesses are running because of electricity. It may be the issue, as we go along electricity will be more expensive as the days goes by. That is why we should think about shifting to energy resources.

a motivation for environmental friendly products.

Early bitcoin investors believed in ideas not in quick money.

That was in the past, I think the power issue is no longer a problem because currently there are power grids that are completely untouched in Europe and North America. European countries are Switzerland, Belarus, and Netherlands. In North America we have Canada (Quebec), where there is huge amount of power at very low cost 0.04 kw/h maximum.  

Six years after the OP it's quite interesting to revisit the argument:

The OP still holds IMO. Empirical facts have proven the theory.

So I suggest we face the inconvenient truth:

• PoW Mining serves the sole purpose of decentralization
• Bitcoin isn't decentralized! See the Hashrate distribution among pools (https://www.blockchain.com/en/pools) and recognize that (at least) BTC.com and AntPool are owned by one company: bitmain. I'd say that's more of a consortium than of decentralization.
• PoW therefore has failed its promise.

So why are we wasting 70TWh/y (https://digiconomist.net/bitcoin-energy-consumption) today?

Bitcoin will never take the place of the dollar. Cryptocurrency will be only one of the types of means of payment and is not able to replace the national currency.
Regarding energy consumption for the extraction and use of cryptocurrency, here I do not see any problems. Basically this problem is far-fetched, cryptocurrency does not consume more energy than other types of human activity. In addition, alternative sources of energy production, such as the energy of the sun and wind, continue to develop very quickly and efficiently. These are inexhaustible sources of energy and their production is becoming cheaper.

You are assuming that the future mining rigs will consume the same level of energy as the current ones. That is wrong in my opinion. As the technological advances are made, the mining rigs will become more energy efficient. Right now, none of the major players are involved and companies such as Bitmain, Asicminer and Innosilicon have almost a complete monopoly over this sector.

But in case there is a major spike in the Bitcoin exchange rates (i.e if it hits $50K or 100K per coin), then the demand for mining equipment will rocket upward and we can expect major players such as IBM to enter the mining rig sector. With their entry, there will be more innovation, and the performance and the energy efficiency of the rigs will go up.

Energy efficiency has no effect on the amount of energy used by miners. The amount of energy used in mining is only related to the value of the block reward and the cost of the energy because of the economic incentives. If mining equipment become twice as efficient, then miners will simply double the amount of equipment.

Consider this: Today's mining equipment is thousands of times more efficient than it was a few years ago, and yet the amount of energy consumed by miners has increased tremendously simply because the value of the block reward has increased (while the cost of energy has been about the same)..

Well... I don't agree. Here you are making the assumption that electricity costs account for most of the expenses in a mining farm. From what I have heard, that is not the case. Capital costs (purchasing mining rigs, installing them, setting up cooling systems.etc) constitute the largest chunk of expenses. And nowadays the most hi-tech mining rigs can cost you a fortune. And at the same time, the electricity prices have remained very cheap in some of the countries such as Russia and China.

Most of the mining rigs have a limited lifespan. And they need to be replaced after a fixed time period. If the miners don't purchase the newer rigs (with higher hash power), they won't be able to stay afloat. But at the same time, if you purchase a solar power unit, it can work for many years without the need for replacement.

How do you arrive into this conclusion?  Honestly I see your laid logic broken.  Energy efficiency have a huge effect on the amount of enery used by miners.  You are giving a situation about doubling the number of miners then with the same logic, without the improvement in energy efficiency the amount of energy used by these mining equipment is doubled.  See the huge difference now?



Still considering how efficient the new mining equipment now than way back, it is still a huge difference if you compare the energy consumed at the same hash today than years ago.  The block reward has nothing to do with this. Seems you are confused now.

I agree with you that capital costs are significant, though I don't know to what degree. However, I believe that history shows more support for my assessment.

It is possible that I am confused. As I understand it, the person wrote that as mining equipment becomes more efficient the total amount of energy consumed by mining will decrease. I disagree, but if that is not what was stated then I apologize for my misinterpretation. However, I believe that I am still correct and my statement that you quoted supports me -- you must agree that the total amount of energy being consumed by mining has not gone down even though the efficiency of the equipment has increased.

The economics of why the amount of energy consumed depends only on the value of the block reward is little difficult to explain. Suppose there are only two miners and their hash rates are the same. Now, suppose one of them installs new equipment that is 10 times more efficient. He could maintain the same hash rate and lower his energy consumption by 90% and increase profit, but he could also raise his hash rate and make even more profit. So he raises his hash rate. In response, the other miner is forced to upgrade his equipment and raise his hash rate in order to compete. Now both miners are raising their hash rates in order to maximize their profits. How much do they raise their hash rates? Each miner raises their hash rate until the marginal cost approaches the marginal revenue, i.e. until the cost of the energy being consumed approaches the value of the block reward. This example shows that the energy being consumed depends on the value of the block reward and not the efficiency.

In 2013, when this topic was created, few people knew about the current possibilities of alternative sources of energy production. This is especially true of solar panels, whose production is becoming more economical, efficient and cheaper every year. In my opinion, the problem of electricity production, given the possibility of obtaining direct thermal energy of the sun, should soon disappear altogether. Soon, any mechanisms will be able to feed directly from the sun through the appropriate solar panels. Therefore, I do not see any problems with energy in the future.

Energy deficiency have huge effect on constantly increasing hash rate. Energy spent increase way slower if at all.


To return to the subject.  If Bitcoin break thought price of energy will increase. Since demand for energy will be higher, it will push price up.

but while some people think only about society’s money, nature suffers. Most of the problems now are due to the lack of morality in people. Mining should not be uncontrolled. For such an environmentally hazardous activity, you also need to introduce your own rules and gradually transfer the industry to renewable energy. While the government acts radically, they completely forbid this activity. But in everything you can find a balance how to earn and how not to worsen the environment even more

The question is not only about the source and price of power but also about protection of environment. Increased electricity consumption is a global issue and threat to our planet and Bitcoin is not excluded. So I think we should look at that from the different angle and try to find sustainable solution.

What people don't realize is that even tho hashrates are going higher and higher (meaning more miners are used) the closer we get to lightning network type of resolutions. Definitely right now, it takes a lot of hashrate to mine bitcoin but that doesn't mean that it will continue like this.

Remember that in 2017 December there were a lot of clogging and there was a lot of trouble with miners not being able to reach the demand but in last April (of 2019) we broke that transaction record and there was no issues at all, it was still cheap and easy, why? Because of segwit and that is just thanks to segwit, when you put lightning network on top of that there won't be a need for so many miners and energy will be saved from it. It just needs a bit of time to establish itself some more.

It actually depends on the purpose if that person is actually a miner he should think about the energy consumption since when you are mining a cryptocurrency you need a higher power supply because you need your rigs to be open at all times for you to earn a lot of cryptocurrency. If you have a bigger power supply that won't be a problem but if you dont have and you are just paying it, you must have a better solution for you to earn a lot of cryptocurrency and for your technique to be effective.

With time there is development of more efficient mining machines. This gives increased output with much reduced electricity consumption. Already there were more mining firms that are functioning on the sustainable energy. Governments that are against cryptocurrency state that bitcoin is causing pollution and a global disaster to the environment. Even there big political play is happening in the global arena.

I believe that environmentalists should not care about the ban on Bitcoin, but about the development of alternative energy sources around the world to stop using nuclear power plants and thermal power plants, because people can easily use the energy of the sun, wind and water, while  without throwing harmful substances into the air and without polluting the environment.  For the extraction of Bitcoin, users use only the energy that exists at the moment and nothing more.

All the said things make sense but you should also think that all the growing businesses require energy and every day our demand for energy is also increasing and the energy required by bitcoin Miners isn't that big amount at all. The politicians are making a big deal out of it, they are connecting bitcoin mining with rising climate temperature and also global warming which isn't true at all.

This is the lamest thing that I have come across today on internet. If governments are really concerned about weather changes and global warming, they shall focus on planting trees and work on projects that help in the purification of air and reduce CFCs in the air. Bitcoin mining is not damaging climate at all as compared to the waste that comes out from ammunition companies and nuclear weapon plants.

I think it will still depend on the value of bitcoin. If bitcoin price is much higher than the cost of energy it consumed to be mined, for sure miners would definitely find a resolution to their major resource.

Practically speaking miners can't get high profit due to electricity consumption issue especially individual miners who only got a single computer even 2 of it to mine. I've been seeing a lot of posts saying that they quitted mining due to high high maintenance in electricity bills. I have also read that electricity consumption is one of the reasons why China has been very bad at miners on their country tackling about e-waste it produce that could've been used in other ways. The resolution for this? Find a country that has a low electricity rates to maximize the profit in mining.

You might want to start a new thread on it, though.  I'm not sure if all these posts will get deleted because of a necrobump.

You're right, however.  It still is a relevant discussion, although I have to plead ignorance as to how much of an environmental impact bitcoin mining has.  People didn't think burning coal harmed anything many years ago, and now we're paying for it--and all these gas-powered cars, too.

I've gotten into PoS coins somewhat, although bitcoin is my first love in crypto.  At least with PoS, you can help secure the blockchain without having to mine, and it definitely uses less electricity and has got to be better for the environment.  But I'm not sure what to believe these days.

Renewable energy needs to generate electricity. Electricity is important to continue Bitcoin production. A lot of energy is being used to produce bitcoin. In this case, positive thoughts about the future are shaken. For miners, the price just doesn't matter. Production costs are very diverse.

Energy consumption, in that mining bitcoin today takes a lot of energy, this certainly affects the financial condition.