Resources are being utterly and completely wasted on mining Bitcoins

[rezin777]

I would agree the resources are being wasted.

Hmm... interesting.

Just throwing that out there without a full understanding of how this works.

Oh, now I see.

The work is essential to securing Bitcoin transactions, and thus Bitcoin itself. It has to be lots of easily verifiable busy work so that someone who wants to cheat the system has to match the entire system's strength worth of busy work to even attempt to break the system. Read up on it, interesting stuff.

[1714831359]

1714831359

[1714831359]

1714831359

[1714831359]

1714831359

[1714831359]

1714831359

[BubbleBoy]

The work is essential to securing Bitcoin transactions, and thus Bitcoin itself.

This argument has traction only if racing to solve useless hard problems ("waste") is shown to be essential in securing distributed currencies.

While I won't deny for a second that 'Satoshi' had a deep insight, his method is not by any means the only way to achieve Byzantine fault tolerance for the coin database. The literature contains extensive proofs for algorithms that can withstand up to one third traitor nodes without use of PKI, and unlimited traitors with PKI. These algorithms might not be practical from a communication overhead stand-point, but they don't lead to a wasteful arms race.
The second claim for the need of waste is to provide artificial scarcity. It's easy to envision a system where scarcity is generated by a central bank which digital signs monetary tokens; the challenge would then be to either distribute such a system in the absence of a central bank, again with Byzantine agreement on the number of minted tokens and their initial owners.

As it is, the waste should be accepted as a challenge of the current Bitcoin implementation, not embraced as the only imaginable solution.

the entire energy used in the bitcoin network could produce 339250 tons of steel.

3 hundred thousand tons of steel ?! For a toy internet currency that, aside from being a vehicle of speculation/investment, is only accepted by a few hundred tiny sites ?
Maybe some scale is required. A phrase from 'Satoshi' in the initial version of the FAQ:

When Bitcoins start having real exchange value, the competition for coin creation will drive the price of electricity needed for generating a coin close to the value of the coin

Let's assume Bitcoin becomes hugely successful and manages to displace the US dollar tomorrow. The total quantity of dollars that make up the monetary base (the most liquid money that bitcoin would replace) is on the order of 2 trillion, so if their value is substituted with  bitcoins, the 12 million bitcoins generated in the next 10 years (6 million -> 18 million) will be worth today about 1.3 trillion $. If we equate that value with the price of electricity as per the quote above we get 26 trillion KWh at current wholesale prices. That's more than the entire energy production of the world in a single year ! During the ten year period, minting bitcoins would require 70% of the electricity production of the United States !

While I agree Bitcoin will not replace the dollar, and it will certainly not do so tomorrow, using the correct scale shows just how bad a design is. A smaller Bitcoin is not less bad, just bad on a smaller scale, a local toxic spill as opposed to a full blown Exxon Valdez.

Mind you, I have ignored the hardware requirements which will likely dominate mining and that have more important impacts on the environment than the electricity consumption. In a real scenario, the electricity consumption will be lower, while the environmental impacts will be higher (manufacturing is more damaging than electricity production for a given revenue level; electricity can come from nuclear, hydro, etc. while copper can't be extracted without carving up some mountain).
I challenge anyone to reflect on how all this compares with the current financial sector, and prove how Bitcoin can be seen as an improvement.

[marcus_of_augustus]

The work is essential to securing Bitcoin transactions, and thus Bitcoin itself.

This argument has traction only if racing to solve useless hard problems ("waste") is shown to be essential in securing distributed currencies.

While I won't deny for a second that 'Satoshi' had a deep insight, his method is not by any means the only way to achieve Byzantine fault tolerance for the coin database. The literature contains extensive proofs for algorithms that can withstand up to one third traitor nodes without use of PKI, and unlimited traitors with PKI. These algorithms might not be practical from a communication overhead stand-point, but they don't lead to a wasteful arms race.
The second claim for the need of waste is to provide artificial scarcity. It's easy to envision a system where scarcity is generated by a central bank which digital signs monetary tokens; the challenge would then be to either distribute such a system in the absence of a central bank, again with Byzantine agreement on the number of minted tokens and their initial owners.

As it is, the waste should be accepted as a challenge of the current Bitcoin implementation, not embraced as the only imaginable solution.

the entire energy used in the bitcoin network could produce 339250 tons of steel.

3 hundred thousand tons of steel ?! For a toy internet currency that, aside from being a vehicle of speculation/investment, is only accepted by a few hundred tiny sites ?
Maybe some scale is required. A phrase from 'Satoshi' in the initial version of the FAQ:

When Bitcoins start having real exchange value, the competition for coin creation will drive the price of electricity needed for generating a coin close to the value of the coin

Let's assume Bitcoin becomes hugely successful and manages to displace the US dollar tomorrow. The total quantity of dollars that make up the monetary base (the most liquid money that bitcoin would replace) is on the order of 2 trillion, so if their value is substituted with  bitcoins, the 12 million bitcoins generated in the next 10 years (6 million -> 18 million) will be worth today about 1.3 trillion $. If we equate that value with the price of electricity as per the quote above we get 26 trillion KWh at current wholesale prices. That's more than the entire energy production of the world in a single year ! During the ten year period, minting bitcoins would require 70% of the electricity production of the United States !

While I agree Bitcoin will not replace the dollar, and it will certainly not do so tomorrow, using the correct scale shows just how bad a design is. A smaller Bitcoin is not less bad, just bad on a smaller scale, a local toxic spill as opposed to a full blown Exxon Valdez.

Mind you, I have ignored the hardware requirements which will likely dominate mining and that have more important impacts on the environment than the electricity consumption. In a real scenario, the electricity consumption will be lower, while the environmental impacts will be higher (manufacturing is more damaging than electricity production for a given revenue level; electricity can come from nuclear, hydro, etc. while copper can't be extracted without carving up some mountain).
I challenge anyone to reflect on how all this compares with the current financial sector, and prove how Bitcoin can be seen as an improvement.

Tosh. Your numbers are all to hell. Probably a troll. I can't be bothered anymore.

Edit: okay, couldn't resist, currently running at around 2.6 MWatt ... 1 big wind turbine, (measuring energy in weight of steel is sign of a quack). At high enough BTC value, capital cost will be less than energy cost and FPGA will take over ...

[MoonShadow]

@BubbleBoy

Your arguments don't even merit a response.  You don't even understand of what you are speaking.

[rezin777]

As it is, the waste should be accepted as a challenge of the current Bitcoin implementation, not embraced as the only imaginable solution.

Until there is a better solution, waste is relative. It's quite easy to suggest that the Bitcoin network is wasteful. Designing and implementing a less wasteful solution to achieve the same ends, on the other hand, probably isn't as easy. I'm not sure anyone was suggesting the current implementation is the only imaginable solution, but perhaps they were.

As it stands, the Bitcoin network is a working solution. I hope you don't mind if I use such a terribly wasteful solution while I wait for some bright fellow to implement a less wasteful solution?

[BubbleBoy]

I hope you don't mind if I use such a terribly wasteful solution while I wait for some bright fellow to implement a less wasteful solution?

Not in the least! I hope you do agree however there exist a minimal threshold that a technical solution must meet before we can agree it solves a problem. The Wrights kite, albeit a glorious technical achievement, was not good enough for passing the Atlantic - but who am I to stop you from spending your New Years Eve in Rio ? Happy new year 1904 !

[goatpig]

While I agree Bitcoin will not replace the dollar, and it will certainly not do so tomorrow, using the correct scale shows just how bad a design is. A smaller Bitcoin is not less bad, just bad on a smaller scale, a local toxic spill as opposed to a full blown Exxon Valdez.

First, you're omitting the colossal amount of waste engendered at every level of the debt based we are enjoying right now, due to the very nature of the this economic model.

Second, your point about maximum energy expenditure is irrelevant. As long as energy is available, mining will race to hashing power. If Bitcoin becomes so dominant that mining will suck the majority of the electricity produced in the world, then it'll turn into an energy race. Note too that worldwide electricity consumption is but a small portion of global energy expenditure. France is the country with the most nuclear power plants in the world and yet electricity is only 17% of its total energy expenditure. Also try to think about how that would change the portion of electricity within the total energy expenditure, while keeping in mind that electricity in most of the southern hemisphere can be produced 100% green.

Lastly, how do you propose a decentralized, p2p store of value achieves high enough levels of security to serve its purpose properly without the use of intensive and aggressive concepts such as proof of work? What do you think is more wasteful, to produce wealth and have it consistently weaseled out of your hands, or spend energy to maintain and protect a proper currency? Resources spent to protect wealth are just a fact of life, deal with it. And be happy that there are stores of value out there that won't lose in value on top of costing you to protect and store them.

[barbarousrelic]

France is the country with the most nuclear power plants in the world

That would be the United States. Unless you meant per capita

[goatpig]

France is the country with the most nuclear power plants in the world

That would be the United States. Unless you meant per capita

Oh yeah, my bad. France is top per capita, 2nd by count.

[BubbleBoy]

First, you're omitting the colossal amount of waste engendered at every level of the debt based we are enjoying right now, due to the very nature of the this economic model.

The economic model promoted by Bitcoin is a different issue than the costs of the technical implementation itself. Even if you are right in that changing the economic model will more than make up for the waste of Bitcoin itself, it still leaves open the question of whether a less wasteful 'Bitcoin-like' system is possible. I conjuncture that it is, although as rezin777 points out, creating it does not seems like a trivial task.

If Bitcoin becomes so dominant that mining will suck the majority of the electricity produced in the world, then it'll turn into an energy race. [... ]Also try to think about how that would change the portion of electricity within the total energy expenditure, while keeping in mind that electricity in most of the southern hemisphere can be produced 100% green.

A race for energy is ultimately a race against the environment. We know of no way to generate electricity without impacting the environment, the so called green electricity means for example huge wind-farms made of steel, aluminium, and copper that barely break-even in term of energy and resource costs to build them.
This is the main point of the 'waste' topic, what's being wasted is the limited potential of earth to sustain us. It's misleading to say electricity is negligible in the energy mix. Creating electricity is hard and polluting because of basic thermodynamics, and in no way can you compare the 1KW of burning gas with 1KW of electricity.

Resources spent to protect wealth are just a fact of life, deal with it.

Currency is a medium of exchange, not a store of value. As a medium of exchange, it should have the minimal costs possible, ideally free (while in limited supply). There's no concise evidence that maintaining the value of a currency in the general sense entails energy expenditures. Maybe distributed internet money are different, and then again maybe not.

[goatpig]

The economic model promoted by Bitcoin is a different issue than the costs of the technical implementation itself. Even if you are right in that changing the economic model will more than make up for the waste of Bitcoin itself, it still leaves open the question of whether a less wasteful 'Bitcoin-like' system is possible. I conjuncture that it is, although as rezin777 points out, creating it does not seems like a trivial task.

This economic model is deeply tied to Bitcoin, since the only guaranty that a currency won't be meddled with by the force controlling it is to decentralize it, and the only acceptable method for decentralization that I can wrap my mind around is 100% distributed, public data, which, by its very nature, requires higher means to secure it than centralized systems. It's like the difference between a population that is forbidden to own and wield weapons and an armed people. Naturally less resources will be spent buying guns and ammo in the former, but you're at the mercy of your government. On the other hand, an armed population can ensure it's own liberty, naturally at a higher cost, but you have to factor in all the wars your government won't get itself involved in thanks to that. I understand that you are not arguing about the need for freedom, rather, the point you are arguing is that there is no need for guns to ensure one's freedom, and that it's just fancy shit that a fist can replace for much cheaper. I'm arguing that your stance is unrealistic.

A race for energy is ultimately a race against the environment. We know of no way to generate electricity without impacting the environment, the so called green electricity means for example huge wind-farms made of steel, aluminium, and copper that barely break-even in term of energy and resource costs to build them.
This is the main point of the 'waste' topic, what's being wasted is the limited potential of earth to sustain us. It's misleading to say electricity is negligible in the energy mix. Creating electricity is hard and polluting because of basic thermodynamics, and in no way can you compare the 1KW of burning gas with 1KW of electricity.

First, metals can be recycled easily, rotten dinosaur carcasses, not so much. Second, I wasn't thinking about worthless photovoltaic cells that can't even repay their production costs, I was thinking of newer, more efficient methods with low upcost, such as CSP (http://en.wikipedia.org/wiki/Concentrated_solar_power). This is why I was speaking of southern hemisphere countries mainly. And yes, this technology is on its way to become as efficient as fossil fuels.

Currency is a medium of exchange, not a store of value. As a medium of exchange, it should have the minimal costs possible, ideally free (while in limited supply). There's no concise evidence that maintaining the value of a currency in the general sense entails energy expenditures. Maybe distributed internet money are different, and then again maybe not.

I thought it was beyond the need for discussion that a proper currency has to be a proper store of value to begin with. Unless you're willing to discuss it, of course