BTC less efficient than Visa

[newMeat1]

Last week somebody was saying they thought bitcoin is the "most efficient" way to pay, so I crunched some numbers to find out. Summary: it is not.

Currently 262 Terahash/s=262E12 hash/s
Most efficient bitfury hardware gets 705E6 hash/J, or 1.42E-9 J/hash ==>Note I'm being as conservative as possible here, in BTC's favor

So total network power consumption is at least (1.42E-9 J/hash)*(262E12 hash/s)=372040 J/s = 372 kW. Like I said, this is the most efficient scenario, with little room to improve with new mining hardware in the future. A year ago it was far, far worse.

36944 bitcoins change hands/hour, on average.
(3600 seconds * 372040 J/s)/($100/btc*36944 btc/hour)=362 J/$ processed.

Now let's compare to Visa. Visa processes avg $6.7T/year= 6.7E12 $/y = 212456 $/second. If Visa consumed as much power as bitcoin, that would be (362 J/$)*(212456 $/s)= 76.9 MW of power.

Visa has 2 datacenters in N America, consuming about 25MW each. And that includes stuff like AC, that I didn't even consider for bitcoin. So Visa actually uses far less energy/$ than bitcoin. And bitcoin is getting less efficient every day as the hash rate grows.
http://usatoday30.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1

Discuss.

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[gbl08ma]

Visa is not a currency, just a means of payment / moving currency. Visa does not issue currency. Bitcoin is a currency which happens to implement the means for its issuing and moving between "accounts" (addresses).

[Birdy]

You need to compare Bitcoins with dollars, euros or other currencies.
Visa isn't a currency, it's just using them.

[MrVivaldi]

You are assuming that the coins never will be inside a Bitcoin bank in the future. A transaction can occur off chain.

[Chalkbot]

In addition to some of the other very valid points above, your comparisson seems to be focused solely on electricity usage and only considers the 2 Visa data centers in that evaluation and ignores the millions of always-on POS equipment required to actually transmit data to those centers.

Furthermore, in that same article you linked, it is estimated that *one* of these data centers costs "hundreds of millions of dollars" to build, and at 8 acres in size, I'm sure it's staffed by many employess, who probably demand some kind of salary for working there.

Then when you consider that all of this is just to provide Visa services, which is only one aspect of the financial system, you can *maybe* start to see how you are comparing apples to dwarf stars.

[elor70]

Visa is not a currency,you cant compare...

[pedrog]

And all the plastic used in credit/debit cards...

But you have a point there, for bitcoin to compete with VISA a huge percentage of transactions must be offchain.

[EmperorBob]

The amount of energy spent on mining right now isn't a property of the transaction system.
It's just what happens when the value of the mining subsidy is huge, and the total amount of transactions is small. That means almost all of the effort in bitcoin mining is the hashing, not the block validation.
You could increase bitcoin transactions by 10x (if it weren't for the block size limit) and probably not even increase total power consumption by 10%.

No one knows what the picture looks like even 6 months from now on that front.

[Carlton Banks]

Not a direct comparison at all: the energy is not being used only to process and verify transactions. Include the energy that the whole monetary system uses to maintain itself, and then we've got something to discuss.

[kokojie]

You are assuming that the coins never will be inside a Bitcoin bank in the future. A transaction can occur off chain.

So? it only makes energy wasted per transaction worse. Bitcoin mining is not environmentally sustainable. PPCoin's proof of stake mining is ultimately the way to go.

[honky1492]

What is the power consuption of all ATM ?

[crumbs]

Visa is not a currency, just a means of payment / moving currency. Visa does not issue currency. Bitcoin is a currency which happens to implement the means for its issuing and moving between "accounts" (addresses).

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

You are assuming that the coins never will be inside a Bitcoin bank in the future. A transaction can occur off chain.

You just described a cash transaction, requiring *zero* energy.

In addition to some of the other very valid points above, your comparisson seems to be focused solely on electricity usage and only considers the 2 Visa data centers in that evaluation and ignores the millions of always-on POS equipment required to actually transmit data to those centers.

The comparison is valid.  He's also not including the energy used by non-mining boxen & their monitors.  Try dealing inn bitcoin with just headless miners.
On a slightly sadder note, he's also not factoring the bitcoin POS devices 'coz ... there's only a handful of B&M business accepting bitcoin.  Or do you suppose large retailers will use their cashier's smartphones as bitcoin POS thingamajiggers?
 

Furthermore, in that same article you linked, it is estimated that *one* of these data centers costs "hundreds of millions of dollars" to build, and at 8 acres in size, I'm sure it's staffed by many employess, who probably demand some kind of salary for working there.

Bitcoin, with only a billion dollar market cap, has already spawned many multi-million dollar ASIC companies & commercial miners. And bitcoin is not serving a fraction of a fraction of a speck of transactions handled by Visa.  

Then when you consider that all of this is just to provide Visa services, which is only one aspect of the financial system, you can *maybe* start to see how you are comparing apples to dwarf stars.

How much bitcoin value is exchanged for goods and services daily?  And how much dollar value through Visa?  Let's not kid ourselves -- it doesn't work, we're not that stupid.

[crumbs]

What is the power consuption of all ATM ?

An irrelevant number -- there are no bitcoin atms.  Fiat worked just fine without them, they're just a convenience. Think ATMs are a waste of energy?  Don't use them, live like it's 1970.

[Birdy]

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

False, quite some energy and other ressources are required for minting/printing and distribution.

[crumbs]

Not a direct comparison at all: the energy is not being used only to process and verify transactions. Include the energy that the whole monetary system uses to maintain itself, and then we've got something to discuss.

The whole monetary system serves *the whole world.*  Bitcoin network serves a fraction of a percent of the whole world.  You, who are a part of that fraction, *still use the fiat system.*  Ridiculous.

[crumbs]

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

False, quite some energy and other ressources are required for minting/printing and distribution.

Childish pedantry.  How much energy do you think is used to print a hundred dollar bill?  You think the FED is doing J/$ calculations before they fire up their printing presses?
Hint:  BTC miners *do*

[wearepoor]

You are assuming that the coins never will be inside a Bitcoin bank in the future. A transaction can occur off chain.

You just described a cash transaction, requiring *zero* energy.

cash costs energy. You have to make paper and print it with pretty costly anti fraud parts, or metal for small denominations. And do it over and over becuse it have its lifetime

[mearylll]

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

False, quite some energy and other ressources are required for minting/printing and distribution.

Childish pedantry.  How much energy do you think is used to print a hundred dollar bill?  You think the FED is doing J/$ calculations before they fire up their printing presses?
Hint:  BTC miners *do*

These will be pretty costy and you have to renew it. Think about it this way: if exact copy of 100 would cost only dollar, wouldnt this be profitable business for many?

[Birdy]

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

False, quite some energy and other ressources are required for minting/printing and distribution.

Childish pedantry.  How much energy do you think is used to print a hundred dollar bill?  You think the FED is doing J/$ calculations before they fire up their printing presses?
Hint:  BTC miners *do*

[Probably they would be better off doing some calculations, in several countries the smallest coins are more expensive to produce than their face value.]

Do you really think printing them is all you need?
E.g. You need to distribute them, offer the possibility to replace old banknotes after their life span and you need very high security in every single step.
It doesn't end there, just think about all the cash transports from companies to banks. Okey, that's fuel and working time instead of electricity, but those are valuable ressources, too.

[crumbs]

Visa's underlying currency (fiat) uses *zero* energy (paper notes).

False, quite some energy and other ressources are required for minting/printing and distribution.

Childish pedantry.  How much energy do you think is used to print a hundred dollar bill?  You think the FED is doing J/$ calculations before they fire up their printing presses?
Hint:  BTC miners *do*

These will be pretty costy and you have to renew it. Think about it this way: if exact copy of 100 would cost only dollar, wouldnt this be profitable business for many?

An extremely profitable business.  Bitcoin miners will continue mining until it costs .99 BTC to mine one, until they waste as much energy as the value of the bitcoin they mine.  Hilarious, no?