Energy consumption will become an issue if bitcoin really breaks through

[cybersofts]

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.  

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[brenzi]

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 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 today?

[Argoo]

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.

[bryant.coleman]

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.

[odolvlobo]

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)..

[bryant.coleman]

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.

[serjent05]

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.

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?

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)..

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.

[odolvlobo]

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.

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.

[odolvlobo]

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).

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.

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.

[senin]

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.

[Febo]

Energy efficiency has no effect on the amount of energy used by miners.

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.

[educart]

I do not see anything wrong if mining becomes cheaper. Yes, the course will then go down. But let's face it, no bitcoins can provide you and your children with the opportunity to breathe clean air and not get sick due to severe climatic problems, which are only aggravated by the abundant consumption of non-renewable energy and the emission of waste from electric production.

In the best cases of the development of the plot, society will be able to ensure that mining is carried out at the expense of more environmental means. But this requires that more people learn about cryptocurrencies. The taklimakan platform is designed as a place for communication, exchange of trading experience, management of digital assets, the introduction of crypto in everyday life. If the community of cryptocurrency enthusiasts begins to expand rapidly, a greater number of specialists will appear who will be able to offer their ideas on how to improve the industry.

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

[bitbunnny]

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.  

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.

[fullhdpixel]

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.

[sapnu]

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.

[romero121]

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.  

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.

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.

[atjiat]

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.

[Zackgeno96]

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

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.

[supercanada1]

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

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.

[dioanna]

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.