Bitcoin Forum

With China announcing their intention to cap electricity usage of BTC miners last year, many saw that as a great news as large mining farms declared their interest in moving to other countries (namely Bitmain exploring their chances in Canada).

But now, when Canadians (and others) are starting to frown upon taking on miners, how big of a problem can this become?

Related links:
Quebec: ‘We’re Not Interested’ In Bitcoin Mining Without ‘Added Value’ (https://cointelegraph.com/news/quebec-were-not-interested-in-bitcoin-mining-without-added-value)
Even With Energy Surplus, Canada Unable to Meet Electricity Demands of Bitcoin Miners (http://Even With Energy Surplus, Canada Unable to Meet Electricity Demands of Bitcoin Miners)
Iceland May Implement Bitcoin Mining Tax Due to Energy Consumption (https://www.newsbtc.com/2018/02/12/iceland-may-implement-bitcoin-mining-tax-energy-consumption/)

Is it time we have a serious discussion about energy consumption issues and possibility of changing PoW algo? Already proposed (https://medium.com/@CobraBitcoin/an-open-letter-to-the-bitcoin-community-to-change-the-proof-of-work-algorithm-12a6545c20d0) by Cøbra (Co-owner of bitcoin.org & bitcointalk.org), but for a different reasons.

I wouldn't mind if Bitcoin changed to PoS somehow. Don't know if it's technically possible but I wouldn't care. I don't have enough time and money to try Bitcoin mining and I don't have enough coins to make money in a PoS scenario.
I think the supply of power is still higher than the demand. Miners shouldn't cause any power shortages in Canada or anywhere else.

Afaik, miners still operate on a rather high profit margin, so increase in hash power (and energy usage) is expected. Samsung is entering the mining game (https://www.coindesk.com/samsung-is-now-building-bitcoin-mining-chips-report-says/), that tells you a lot.

And if the price of BTC keeps going up - so will the energy consumption.

Ethereum might move towards POS before bitcoin will start to make changes for POS.

If there will be only few bitcoin miners or the cost of mining get high because of legal restrictions and energy cap than it might help price to get pump. Talking about network stability, I think there are still many countries where plenty of hydroelectricity is available however cost per unit is high compared to china.

PoW is a resource that secures Bitcoin's network from some attacks, so if in the future it will become clear that there's a shortage of this resource, the Bitcoin community will have to change PoW. But other popular algorithms also have problems, CPU mining is at risk of botnets (imagine the government planting backdoors in Windows machines to use them to attack Bitcoin), ASIC resistance is only temporary as someone will eventually develop ASIC's if the coin is really popular like Bitcoin.
So, maybe it will happen, maybe not, but it's not an easy and clear solution like some people think.

High electricity costs + high btc price = low electricity cost + low btc price, just like this (++=+ and --=+). Hope you understand what I mean, demand on electricity will be absolutely the same, so it won't fix situation.
There are countries which sells electricity to other countries because they have much. If they use this power for mining, they can make better revenue but those countries will have to pay much, much higher price in electricity for seller countries or they will have a lack of electricity because of seller countries mining business.
And oh, If electricity price will rise because of miners, this will affect everyone who don't mines and does other job in life.

That proposal by Cobra was more for the centralization problem of mining than energy Usage. Its a concern as he points out that with such concentrated mining power, an entity like Jihan's Bitmain can cause major upheavals. Though, I think such a scenario is unlikely because they would also be damaging themselves.
The value of bitcoin comes from the securtiy provided by miner's POW. If they decide to shift that security then its a MAD scenario. Not much chance that it'll happen.

In my opinion, no PoW change is needed and the energy issue can, in fact, provide a corrective measure for centralization. The energy issues is beneficial in the long run. If the mining farms stop getting cheap energy so easily it will ensure that a top-end infrastructure like a 100+ ASIC mining farm will be much harder to setup. It will still not be as much of a problem for a home miner mining on, say, 1-5 ASICs.

We may well have a scenario where Bitmain will have to sell its hardware to individual home miners rather than to institutional buyers like they prefer right now. This, in a way, resolves the centralization issue mentioned by Cobra.

There are other benefits:
1. It will force innovations towards more efficient hardware.
2. Governments will have some incentive to allow mining if taxing is implemented as in the case of Iceland.
3. To ensure government interest, Mining companies will have to find ways to 'Share' their profits better. (As insisted by the Quebec authority). So trickle down effect.
4. The need for energy efficiency parameter for ASICs will force more competition in the Bitcoin ASIC manufacturing (Samsung entry) -->less centralization.

the "government" is not the one providing miners the electricity they need to now want to restrict it. the electric companies that have contracts with the miners and have their livelihood relying on them are providing them with electricity and they won't listen to their idiotic government demands when it comes to making money.
also the mining farms can simply split their farms into smaller capacity operations but multiple ones receiving the same amount of electricity in total but receiving the cap on each one if such rules goes into effect in China and if they are not just talk or FUD.

not it is not time for that because nothing about that is serious. it is not possible to change PoW and more importantly it is not possible to change it into anything that is not going to end up in the same situation with new ASICs and new farms.
any change will only be temporary. and PoS that some people mention is a total bullshit anyways so that is not an option either.

People seem bothered that bitcoin mining in Iceland uses as much electricity as household use, but they don't seem to mind that aluminum smelting in Iceland uses 15 times as much electricity as household use.

In terms of real consumption, this is still a bunch of hand-waving, probably based on speculation that hash rate will always just increase exponentially.

I think miners will continue to flow into jurisdictions where they can soak up excess capacity. And where governments perceive a problem, it's reasonable to expect some backlash, additional taxation, and so on. On the other hand, we might see partnerships where governments tolerate or subsidize mining to build their own cryptocurrency reserves.

Anyway, for miners, that's the cost of doing business. The beauty of proof-of-work is that the network adjusts difficulty to marginal miners shutting down due to increasing overheads.


How does this actually solve anything? Changing the PoW algo would guarantee a network split and would unfairly punish a lot of good actors in the space who are heavily invested in SHA256 mining. And over time, new ASICs would be developed and we would be back to square one.

What's the point? If you want decentralized consensus without the energy costs, you need to look elsewhere than Bitcoin. Proof-of-stake and proof-of-time are two interesting areas of study, but good luck convincing people that they measure up to proof-of-work.

Although the POS mechanism can be used to solve the problem of energy consumption in bitcoin.
But I'm still optimistic about the POW mechanism, because the POW mechanism can make bitcoin's holdings more decentralized.

Well, too be fair, there are not many options when it comes to smelting metals.  If there were a more energy efficient way to do it, industry would adapt. 

With ASIC mining, and the race to higher difficulty, we are using an insanely energy inefficient process to accomplish the same thing that could be accomplished with a couple of raspberry pi’s.  I mean, the primary purpose of mining is push along the BlockChain and process transactions.  It’s doesn’t have to require so much energy.

How is ASIC mining "energy inefficient?" Miners secure the network, preventing double spending and censorship. How can that be accomplished with a couple of Raspberry Pis?

Then a botnet could be used to easily 51% attack the network.


The purpose of mining is to prevent double spending and make third party trust unnecessary. The reason it works is incentivized competition to mine the block reward. That incentivizes a mining hardware arms race as long as would-be miners are speculatively bullish on BTC.

The only alternative I see is scrapping PoW entirely. ;)

That's impossible due to different prices of electricity and different climate. Running a farm somewhere in Africa wouldn't be efficient the same as running it somewhere in Central Europe. Countries have no problem with supplying miners. They are doing this under pressure from the banks who are trying to slow Bitcoin down.
If miners are buying and you can't supply them there are many things you as a leader of a country can do. One is increasing the price of electricity, another is building more plants or adding more generators to your existing ones.

Because that isn't sexy and it wouldn't sell many ads or newspapers. But when the headline reads about Bitcoin and all the hype and hoopla as of late then people want to read. Media is such a joke, and their reporting on Bitcoin exacerbates that problem.

I think that eventually miners will have to generate their own electricity.

States will always be worried about their local grid stability - be their electricity based on renewables or not. So the final solution is to run mining farms that are disconnected from the grid, powered by solar and wind energy. This already works on a small scale, even in countries without a beneficial weather/climate for renewables, but big mining enterprises still are not competitive with this model as they depend on hardware running 24/7 (or almost 24/7). So we'll have to wait until in countries/regions with good climate for solar/wind energy, the total costs of electricity production and storage will be less than the grid electricity cost in a "cheap electricity" country.

A PoW algorithm change doesn't change anything. The cost of Bitcoin's security is (unfortunately) not related to its decentralization - not even on its efficiency - but simply to the costs of running mining hardware. It's as simple as that: The more costly mining is, the more difficult it is to attack. And after a PoW change, "CPU/GPU farms" will surely emerge - huge datacenters dedicated to mining. It would have maybe some practical advantages - CPU's don't need a specialized industry and thus mining hardware could be re-used - but no energy-efficiency change at all.

The least said about the media the better but i think its even better if the miners take advantage of solar power  and power their miners with them especially in the middle east countries like UAE where the sunlight is seen almost all year around and it isn't far from china either and so they can easily move from china and set up the cryptocurrency hub in the UAE.

Those countries include Canada and Iceland, who turned out to be not very keen on miners. Local authorities have to take the risk of energy shortage into consideration.


I'm aware that Cobra's proposal wasn't related to energy waste issues, but there's no reason we couldn't solve 2 problems with one solution.

As for Jihan - sure, his future profits are heavily dependent on success of Bitcoin, but that's not enough to stop caring about decentralisation. There's always a risk he could get co-opted by MSS (Chinese counterpart of CIA).


How secure was the PoW when gHash pool exceeded 50% of hashpower at one point?
How less secure would PoS/PoW hybrid be?


It could in a way, ie. if countries with the cheapest energy allow mining but introduce cap on its energy usage. That would enforce geographical decentralisation. But the implications of miners having to ask for special permissions (licenses) to mine (which would likely include home-miners) don't sound very great.


Well, that would solve the problem. At the end of the day, it doesn't really matter if BTC mining consumes 99% of global energy, as long as it's not damaging to environment and as long as other industries/individuals don't have to compete for scarce electricity.


I think you're talking about alternative to SHA256 here, not about PoW alternative. CPU/GPU mining is still Proof of Work.

Bitcoin mining has become an obstacle to the masses that ain't fully introduced to the Bitcoin concept because of the false media representation of the news connected with the Bitcoin and also because the government attempts to stop the Bitcoin mining because of the inability to get involved and grab the control of the Bitcoin system. Aluminum smelting is tracked by the authorities and the income is benefiting the government vaults but something that is not very benefits able to the country is immediately presented falsely in the news.
Bitcoin mining will continue this way or another and electricity is just a small obstacle for the miners.
There are many solar panel systems which are adopted by the many miners because of the government greed for the income.
With this current situation of the bills growth, I think more miners will turn to the alternate replacements for the standard electricity.

Exactly. In densely populated countries or regions there could be political/social pressure on miners even if they use renewables and generate their own electricity. But anyway, the best solar/wind energy friendly climates usually exist in sparsely populated desert or steppe areas with low land costs, so I expect miners will automatically move there, driven by market forces.

You're right. I interpreted you and Cobra talking about a "PoW algorithm change", not about a change to an alternative to PoW, above all because of these words in the Medium article:

But a change to PoS is a different story. Some time ago I started a thread about that in the German forum. I'm still not convinced - neither to definitively discard PoS nor to support a change now. More investigation about the Nothing at stake problem is needed, in my opinion.

Same here, I'm still on the fence on which is better PoW or PoS. ETH seems to managed to mitigate Nothing at stake risk, but the solution requires use of smart contract so can't be used for Bitcoin.

I'm guessing that if change of PoW is ever going to happen, it will be a PoW/PoS hybrid. You get the best of 2 worlds. If announced in advance (say 2-3 years) then good actors (miners, manufacturers) don't get penalised, as they have enough time to plan their strategies etc. It's not a brilliant solution, as it doesn't solve the power consumption issue, only reduces incentive by 50%, but would make the network more robust and more resistant to government regulations (i.e. ban on mining).

The problem with going off grid is that mines are the most efficient in cold climate and such climate is not the best for solar panels. You get less exposure throughout the year and have to clear the snow. In warm areas panels are great but mining equipment not so much. A nice idea would be to buy some old, semi abandoned dam in suitable climate and use the power for mining. That's a huge project, but doable if one had a couple million USD to spend.

You don't necessarily need a dam for hydro-plants, and it doesn't have to be super expensive. If rumours about Bitmain's profits are true, then Jihan could easily afford to build his own, small hydro-plant. Check this one, it was built as a community project: http://www.stockport-hydro.co.uk/

There's also geothermal energy (available only in some regions), which is probably the best and cheapest energy source in cold-climate countries.

There are some regions suitable for solar energy and mining hardware. Probably the largest is the Altiplano/Atacama area in Argentina, Chile, Bolivia and Peru. It's a high plateau at about 2500-4000 meters of altitude, with a mean temperature of about 5-10 degrees Celsius, but an extremely high amount of sunshine hours (take La Quiaca (https://en.wikipedia.org/wiki/La_Quiaca#Climate) with its 3,400 sunshine hours as an example), and snow is very rare. In Mexico and Colombia, as well as in China, there are smaller regions with similar characteristics.

It is very likely that a large part of miners would move into these regions, if there are no political or legal obstacles.