It only recently occurred to me how potentially dangerous PoW coins are.  That's of course bitcoin, but the whole lot of PoW coin have a similar danger to them.  This includes a whole lot of top-20 coins.  I've always found the waste of PoW silly, but I only recently realized how dangerous this is.  I scattered this opinion in a few other posts, but I would like to start a dedicated thread for it.

So there will be some repetition. What if bitcoin wasn't a currency or an investment tool, but rather a waste maximizer, that only USES aspects of investment, gambling, speculation and so on, in order for it to maximize waste production ?  Imagine that Satoshi was an entity that wanted to "destroy humanity by waste", but doesn't have bombs, virusses or anything else.   He would like to make a device that makes humanity self-destroy, simply with a laptop.  How could he do it ?  What if he invented a "paperclip maximizer" that turns humanity, by leveraging personal greed, into a big rat race to stop doing useful things, and turns all efforts into making waste ?  Something that will only end when there's exhaustion of resources to continue to produce useless proof of work. When humanity will have wasted all of its resources on proof of waste, and there's no more of it.

Bitcoin, being a proof-of-work engine that uses a game of speculative tokens to inspire people to waste more and more resources on doing useless calculations to make less and less of more and more expensive tokens, is right now at least consuming 2 GW (if all hashes are done with the latest antminer S9 class waste-machines). But difficulty hasn't reached equilibrium with the new prices and the new tech yet. We know that mining at this moment is hugely profitable the time it takes for difficulty to catch up with the market. There's about a factor of 5 to be won. So we can take it that bitcoin at current market cap in equilibrium wastes 10 GW and a lot of hardware. That's the power consumption of a country like Belgium. One has to admit that the machine to produce useless waste calculations has done a good job in 9 years time. It is the sole piece of free amateur software that has been able, purely by itself, to inspire people by their greed to waste 10 GW, with as sole return, the right to transact some tokens while wasting even more to a greater fool. Obviously, this thing cannot be stopped any more, as long as it can go up.

Current market cap is less than 1/200 of all of fiat if bitcoin were a currency (it isn't) ; but most importantly, it is 1/10000 of the entire speculative assets market cap in finance (estimated at about $2 quadrillion). Suppose that 1% of all speculative assets are invested in bitcoin in the longer term, or suppose that bitcoin takes a major part of the fiat market. In both of these cases we can hence expect yet another factor x100 in market cap. And hence in electricity use. At that point, bitcoin will use 1TW of electricity: 1/3 of earth's electricity production. It will then also have absorbed grossly all of hardware production on our planet. Most of our economy will be oriented towards producing proof of work: the biggest pile of useless calculations in the world, unstoppably driven by the motor of finance and greed - a decentralized, unstoppable paper clip maximizer. Once it runs out of resources to maximize proof of work, it will be done. And we, with it.

But until then, there's no stopping of it. No big capital will be able to resist. No investment can afford not to be part of it. The harder silly governments will try to stop it, the stronger it will become.

I'm very bullish on bitcoin. This thing will go up to destroy humanity entirely. Unstoppable. Everything will be converted in bitcoin mining. No other form of investment will be able to compete. This is the Armageddon machine that will make many of us rich for a very short period. And then we will find out that we can't eat Antminer hardware.

Why could the economy not continue to produce, say, Beanie Babies ?  Economically, you cannot make Beanie Babies with an expected ROI of, say, 5%, if there's an opportunity to have a return of 500% by buying a device that consumes electricity and spits out money. (as must be grossly the case right now for a short period, the time difficulty adapts and competition increases) As long as the market value of the mining rewards is way higher than the cost in electricity and hardware by a significant factor, EVERY sensible investor will only want to finance your activity if you will be using his funds for mining. Any industrial capital will leave Beanie Babies factories, but also farmers, plumbers, supermarkets, and all the rest, if there's a much higher ROI possible by buying devices that consume electricity and spit out money. Or in MAKING these devices (because of course, the high demand for these devices will make them expensive too). So any investor will turn his TV factory into a mining device factory ; any chip maker will push aside anything else but mining chips. Simply because the ROI of these things is so much higher, and so much guaranteed, than anything else, that it would be pure financial idiocy to take another decision, and defend it before share holders.

If there is a large-scale investment opportunity that brings much higher ROI than anything else in the economy, essentially all activity stops to reorient towards that activity and its supporting environment. This is what you can see on a much smaller and much more local scale in gold rushes. Everything but the bare minimum of survival is oriented towards digging gold. In NORMAL economic circumstances, such huge economic ROI are the result of a very high NEED. So it is useful to re-orient the economy towards the relief of that need. The market responds to an important need. However, in this case, the economy is making WASTE. There's simply a HUGE speculative demand for waste. No need is relieved by this economic re-orientation. Usually, these phenomena are too short to damage the world economy, because the potential gains quickly die out. But this thing has the potential to generate such a huge demand for waste, that it can turn a large fraction of our economic potential into a huge machine that makes waste. The paper clip maximizer. In our case, the proof of work maximizer.

If we are talking about "machines that consume electricity and spit out more money than they consume electricity" on a planetary scale, all economic activity will get oriented that way. One has no choice in that rat race. The rat race will end, when the ROI of bitcoin mining will fall to levels comparable to other economic activity. At the expected "end value" level of bitcoin, the only way for that ROI to fall so low, is when it consumes 1/3 of the world's electricity and most hardware. So before the whole economy will have done that, the attraction by high ROI for bitcoin mining will be irresistible for most investors. What dumb-ass is going to make Beanie Babies (or hamburgers), if he can plug in a device that makes him more money ?

One may say: there are the halvings that will save us.  The halvings make this waste maximizer seem less dangerous. But in reality, that's not what is happening. At the last halving in 2016, hash rate only blinked slightly and went up again. Note also that fees are becoming a significant part of the block reward. It is not clear whether the halving will give rise to increased speculative expectations of price rise (in which case it is even worse), or will lower difficulty.  The halvings may have in fact an amplifying effect. Historical data indicates that halvings never decrease hashrate:

https://blockchain.info/cha...

Look at it in log scale... and think that the end point is now "a small country like Denmark". Does that curve look like it will not gain another factor of 100 or so ? We did a factor of 10 in 1.5 years...

Remember that 1/3 of world's electricity consumption is for "1% of all investment". If there's an expected price rise, that might be more. This can double at the halvings.

Usually, in the free market, greed is a good thing, because it stimulates people to produce VALUE.  Bitcoin's inventor is, to my knowledge, the only guy who found a way to turn this into a stimulation to produce entirely useless waste (heat and calculation results that couldn't be less interesting).  Bitcoin is the most powerful computer in the world, to spit out the most uninteresting calculations ever, namely funny hash function pre-images.  So, was bitcoin simply a device for destruction of humanity's economy on world scale ?  We are only a factor of about 100 from global disaster at this moment.  Since mid-2016, bitcoin's hash rate increased already 10-fold.  Is another factor of 100 really excluded ?

Simply numbers facts and charts.  It is entirely independent of technology.  Only of market cap as a function of time, and the average price of electricity.  Satoshi said somewhere that "bitcoin, 20 years from now, will have or a very high market cap, or none at all".  Maybe he sat down and started calculating.  And found out what he did.

It is sufficient to project bitcoin's (or even PoW crypto's) market cap to the 20 trillion level (fiat style money supply), and to assume that the block reward + fees is of the order of 20 BTC.  That makes $20 million per block every 10 minutes or every 600 seconds, or $120 million per hour.  If that's spent on electricity at a price of $0.1 per KWhr, you are even at 1200 million KWhr per hour, or 1.2 TW.  You see that we're in the right ballpark.  If that's NOT spent on electricity, then mining bitcoin is a lucrative activity no other economic endeavour can compete with, and you have "machines that consume electricity and spit out free money".  So it will be irresistible to install more and more of these machines that make free money, until most of that is spend on electricity.

If you realize that the total potential market cap of bitcoin is the derivatives market, estimated 100 times bigger ($2 quadrillion) you see the danger of this thing.


No, I'm not serious thinking that Satoshi PLANNED this, but this is what he did.  It is a gedanken experiment to imagine WANTING to destroy humanity, to see how one would do it, and to compare it to what Satoshi did, most probably wanting to make a decentralized money.  But *in fact* he did the same thing as that evil genie would do.

I was prompted to this idea by another thread: https://bitcointalk.org/index.php?topic=2786690.0

My idea was that maybe Satoshi realized the horrific monster he created, and introduced the 1MB limit in some vain hope to limit its destructive potential.  

Of course, all this is hypothesis of what were the intentions.  However, we DO have a potential destructive system here right now, whether that was the goal or a terrible mistake.


Well, if there's one place that is PROTECTED from this craziness, it is a dictatorship such as China.  So I'd turn this around: any free country will be unable to resist.  Only severe communist-style dictatorships can avoid their economy to be disrupted by the craziness to "go all out for making waste".  And look: China IS cracking down on miners.  Essentially, if ever my horrible predictions come true, the only places in the world that will be unaffected will be communist dictatorships and poor countries that lack the basic infrastructure to even start doing this.

Most of the criticisms are well-founded. Bitcoin became doomed on December 9th, 2010 when Satoshi left. He left it in the hands of Gavin, but he left too. Now it's controlled by the greedy, psychopathic libertarians he mistakenly marketed too. Anarchists were preferable.

 Bitcoin is outdated and doesn't have a future with its current governance model. It can be updated but the Ayn Randians won't let it, because they believe greed is good. They server their own short-term interests. Meanwhile, Bitcoin has fallen behind technologically. We won't be having this discussing in a few months, Bitcoin won't be the market leader and won't be the center of attention.

LN is essentially an exchange. Bitcoin is held in community node wallets and moved around through none-blockchain transactions. It does not have blockchain security. Making BTC hackable at the node level. Plus, since nodes are like exchanges, they can be hacked and all BTC removed. LN is a negative for BTC, it may destroy it once and for all.

Ha, look:

https://bitcointalk.org/index.php?topic=2850192.0

Samsung is making mining chips.  All their efforts here are not going into making useful electronics.  It is getting traction already.

Mind you, that once there's enough economic interest in making mining equipment, the resistance to leaving the rat race will increase by these giants.  The paperclip maximizer has now the lobbying power of entities like Samsung.

At a certain point, the switching to PoS will even be entirely resisted by the market, whose interests are already too much focussed on making waste and waste making machines.  The tipping point is not very far, or already reached.

It's astounding to see how much electricity is being wasted in trying to sustain and develop something experimental like bitcoin. We've come to a point where we would put effort in building mining farms near arctic circle just to cut cost. And just as important as electricity, computing power is a precious resource that is being wasted as well. We are too focused on a single currency, too focused on a single use for blockchain technology when it can be used outside mere currencies.

No, we should stop using proof of waste (eh, work).  We should use a more intelligent way of finding consensus such as PoS.  But we're already caught up in the rat race.
The paperclip maximizer has locked us up already in its devastating endeavour.  This was to be seen from the start.  I have a hard time thinking Satoshi didn't do the above calculation at some point.

That doesn't matter.   That 1% will then consume 1 TW.  That's the point.  You are considering that not every Joe will install a miner in his basement.  True.  I'm saying that mining is HIGHLY profitable as long as it doesn't consume 1 TW.  (or 5 TW, or 3 TW, depends on the exact end value of bitcoin).  As long as it IS highly profitable to some, these will enter that market, even if that market is not open to Joe, and they will take Joe's electricity, until 1 TW is reached.

Mining is not risky if you consider that you can buy a machine that cranks out money for electricity.  Hell, now that there are bitcoin futures, you can even protect yourself against bitcoin's volatility.    You essentially have a machine that prints money.  Unless one consumes 1 TW.

Compare it to ivory.  Not everyone is in the ivory market.  Not all of us go and kill elephants.  But ivory is so expensive, that SOME will find it useful to go and kill an elephant.  Until none remains.   Bitcoin is a power and hardware hog.  It is a waste maximizer.  It doesn't mean that everybody is going to produce waste ; it means that all available resources will be absorbed to produce that waste.

Earth's electricity production is highly limited - look at all the discussions concerning trying to limit somewhat our consumption for climate change and so on.  If it were so easy to produce tons and tons of electricity without problems, people would do it.   Well, bitcoin is gonna eat a VERY BIG CHUNK of the limited amount of electricity we can produce, taking it away from other economic activities.  Hardware also.  

When a resource gets wasted to the point of being exhausted, that's what we call "environmental damage" yes.


Indeed.  It would make electricity a much more expensive thing, in a relatively short period.  With all economic consequences of that.


Indeed.  Grossly, what you are saying is that the way out is a severe economical depression. True.  But if bitcoin is seen as a "safe heaven for store of money during bad times" it will only make it worse.  Often, people flee in collectibles like gold during depressions.  If bitcoin is seen as such (and with the hypothesis of its success, for sure it is), this will only compound the problem.

There's not only electricity.  There's hardware too.  The amount of hardware needed to make so much miners will most probably eat up a good chunk of the hardware industry's scarce resources like rare metals and so on.  Indeed, to be able to install a capacity of silicon that consumes 1 TW, we must be installing much more hardware in a short time, than all the existing hardware right now (I don't think that today, 1/3 of electricity is consumed by silicon: a lot is used to heat, for electric motors and so on.  So, I didn't do the calculations, but the necessary hardware to be able to consume 1 TW of electricity must be HUGE as compared with all existing hardware right now.  That sector will be entirely disrupted too. This can also be "solved" by making hardware expensive.  Yes.

Just a rough idea: if you need to make hardware that will consume 1 TW, knowing a smart phone consumes 10 W or so, that's 100 billion smart phones to make (the hardware equivalent of 100 billion smart phones: 15 smartphones to make for every inhabitant of this world, but in waster hardware).  Or if we take a PC at 50 W, it is the equivalent in hardware of 20 billion PC to make: 3 PC for each inhabitant of this world.

Just to indicate the scale of the hardware waste, and the scale of the hardware production needed.  We would forego to have every inhabitant having 15 smart phones they won't have, simply because we need those resources to make waste-makers.


That is true.  But the system is such, that it will require in any case to spend $700 billion a year on making waste.  And in a dwindling economy because of the depression it causes, if bitcoin is seen as a safe heaven, this may represent a sizeable fraction of the economic output, in sensitive sectors of electricity and hardware.  During times of depression, people often go into collectibles like gold.  If bitcoin at that point has reached the status of digital gold (it must be, with such a market cap), people may flee into it, pushing up its market cap even further.

People don't starve during gold rushes.  They almost starve.  Gold usually doesn't crash during depressions either.


Well, apart from government intervention or bitcoin and its PoW buddies dying, there's not much that can be done about it.  And of course, I didn't mean to say that ALL of our activity will turn into mining, but you shouldn't underestimate the danger that resides in a machine that spits out money if you make waste.  Especially in times of depression.

Also, depressions are often the breading grounds for un-tasteful political upheaval.   You never know how your political system gets out of a severe depression.


Indeed.  I think the only thing that can save us without killing crypto, is that PoS coins (if ever ethereum manages to switch to it, it may be a candidate) kill most PoW coins in the market.  But here too, once PoW has a solid market in the waste business, pressures to keep them going become more and more important.  The bigger a business gets, the harder it is to kill it because the more means it has to fight for its survival.  And there is a good argument for PoW: it is the only method that can "prove" consensus in a *perfectly* trustless environment and indefinitely long offline periods.  All other methods need a certain fraction of on-line presence, and a confidence in forms of digital signature holders.  This is in practice not a problem, but for the truly religious, only PoW has an absolute form of trustless proof.  Even if it is madness.

Just imagine the waste of resources behind the Banking system. {It is ALL numbers in centralize servers, Right?} A lot of

people need to be reminded about that too, because millions of people are working for Banks and these people consume

massive amounts of electricity on a daily basis. {Computers / servers / ATMs / Vaults / Security systems / Air-conditioning

and Water Coolers and Kettles...etc. etc.} What if ALL of that was a waste of time and energy and some ENTITY can flip the

switch or punch a few keys and ALL of that can be erased.