A question of ethics

[TheTribesman]

I'm going to get burnt for this:

I've been looking into all of these new cryptocurrencies. I whole-heartedly agree with the concept of the economic model and the revolutionary aspect, when you consider QE (Quantative Easing) and the devaluation of paper money. Currency is merely a promise in this day and age. Nothing else really. Money is no longer backed by a physical entity residing in a bank vault. Those days are long gone so one currency is just as good as the next (as long as it has some form of use/circulation). I also look forward to digital trading. Can't wait to buy a toaster (a flying one please) for .000001 of whatever cryptocurrency wins the race.

There's just one thing that sits uneasily with me.

Does anyone else think there's something askew in the amount of planetary resources being used to create these new currencies? Rows of graphics cards burning up planetary resources to create currency. It's not what I expected to find when I started looking.

I should probably keep that thought to myself (everyone seems so excited) but I wonder what other people's thoughts are on that.
 

[1713876095]

1713876095

[beetcoin]

graphics cards are not used for bitcoin anymore.

and how much energy/natural resources does it take to print out paper money? how much does it cost to make a penny? every year, the U.S. mints 5 billion pennies.. at the cost of .0097 cents to mint one. that means the U.S. spends almost $50 million to mint pennies alone.

banks: how much does it cost to pay for electricity for your banking system?

[odolvlobo]

Bitcoin is better for the environment in general because it is more efficient than other payment systems. In addition, mining will become more efficient as the block reward drops since the revenue from mining (block reward plus transaction fees) limits the amount of money and resources spent on mining.

[bee7]

Taking to account that bitcoin mining burns out approximately 2W per Gh using modern hardware to mine we can estimate that the whole network consumes about 240MW a day. I don't think that the street lighting of a single 5mln city requires less energy.

[sochee]

Yes, they may be "burning up planetary resources" - but you need to look at the big picture. First of all, not using electricity in this day and age is impossible, so you can't complain that some new technology uses too much planetary resources - you need to go to the source of electricity and complain that we are burning coal/etc. instead of using wind and solar. I think you would have a lot less to contemplate if all bitcoin farms were powered using solar panels and turbines. Secondly, the amount of electricity used for bitcoin pales in comparison to the waste from other sources which have far less pleasant effects on the world than bitcoin.

[SquashJ]

While it's true that printing money and manufacturing coins takes a lot of resources, some have criticized Bitcoin for consuming resources unnecessarily.

[sochee]

Cryptographic proof-of-work systems must use strong algorithms to ensure trust. How could Bitcoin be improved to not use resources "unnecessarily"?

[bee7]

While it's true that printing money and manufacturing coins takes a lot of resources, some have criticized Bitcoin for consuming resources unnecessarily.

According to the ATM Industry Association there are about 2.5 million ATMs installed in the World presently. Let's think that the most time each ATM consumes 100W (definitely not less than 100W as it is not a simple motherboard with just a CPU installed). This means all ATMs are consuming 6000MW a day at least. Most time they are doing nothing but waiting for a customer. Is it a waste of the resources or useful spending?

[beetcoin]

While it's true that printing money and manufacturing coins takes a lot of resources, some have criticized Bitcoin for consuming resources unnecessarily.

that doesn't make sense to me. it takes energy to make the bitcoin system to work, and it takes energy to make the fiat system work. what do you mean by unnecessarily?

[Facepalmed]

IMO I don't think of it as unethical or immoral. Say you have a 5GH/s Jalapeno ASIC from BFL. Said ASIC can easily be powered by a 30-watt solar panel on one's roof, thereby consuming no electricity produced by the combustion of fossil fuels or other unrenewable resources. If you think the minerals and energy that went into producing said ASIC are wasted, they are not. An ATM machine, let alone a massive banking corporation's office buildings, computers, chairs, even the toilets are composed of far more metal than ever will be used in miners. Bitcoin and other cryptos are based on a system that could easily be turned into an eco-friendly system, and it's already halfway there as the clients do not require huge transaction servers. Bitcoin wallets are held on the user's desktops, laptops and smartphones, which are most often turned off or put to sleep when not in use. Why would it be immoral to use a device such as a PC's graphic card for the production of cryptos (obsolete now) when it would have just been used for playing games anyways? The purchases of such GPUs in the massive quantities that they were purchased in helped to fuel chip makers such as AMD and their efforts to design newer, smaller and faster chips than those that came before.

Back onto the topic of power use... I live in an area where power production is predominantly hydroelectric and wind generation. As long as the wind blows, rain falls, and water flows downhill, there will be natural power to juice up my miners. I think this is far more awesome than anything that could dare be considered unethical.

[Csehoi]

While it's true that printing money and manufacturing coins takes a lot of resources, some have criticized Bitcoin for consuming resources unnecessarily.

that doesn't make sense to me. it takes energy to make the bitcoin system to work, and it takes energy to make the fiat system work. what do you mean by unnecessarily?

Right now, almost all mining are done by ASICs.
In the past, people used their GPUs to do the mining, which could have been used to help scientific researches just as Folding@home and Einstein@Home.

[tripppn]

While it's true that printing money and manufacturing coins takes a lot of resources, some have criticized Bitcoin for consuming resources unnecessarily.

According to the ATM Industry Association there are about 2.5 million ATMs installed in the World presently. Let's think that the most time each ATM consumes 100W (definitely not less than 100W as it is not a simple motherboard with just a CPU installed). This means all ATMs are consuming 6000MW a day at least. Most time they are doing nothing but waiting for a customer. Is it a waste of the resources or useful spending?

I have never thought of it that way before.  I have considered that we are burning a lot of energy mining btc but when really compared to what power the banking system uses it's really not as bad as I thought.

[DannyHamilton]

Newbies always seem to assume that the purpose of mining is to "create new bitcoins", and that the energy spent mining is being spent for that creation.

Please understand that even when all of the bitcoins have been "created", and there a 0 new bitcoins being put into circulation, mining will continue.

Mining is a misleading term, and that seems to confuse people.  What the "miners" are actually doing is securing a global payment network.  They are processing millions of dollars worth of transactions per day and are being rewarded with a small payment in exchange for that service.  That payment consists of the sum of the transaction fees of all transactions processed as well as a subsidy of newly minted bitcoins.  That subsidy shrinks over time until eventually it disappears completely.  Meanwhile as bitcoin becomes more popular, the value of the transaction fees slowly grows.  Eventually the value of the transaction fees will swamp the value of the subsidy.  Perhaps at that time we can stop calling it "mining" and start calling it what it really is, "transaction processing".

So, the energy being used is not being used for the creation of new bitcoins.  It is being used for the security of a global payment network.  As such, I suspect you'll find that it uses much less energy than most any other global payment network that currently exists.

[cardcomm]

Newbies always seem to assume that the purpose of mining is to "create new bitcoins", and that the energy spent mining is being spent for that creation.

Please understand that even when all of the bitcoins have been "created", and there a 0 new bitcoins being put into circulation, mining will continue.

Mining is a misleading term, and that seems to confuse people.  What the "miners" are actually doing is securing a global payment network.  They are processing millions of dollars worth of transactions per day and are being rewarded with a small payment in exchange for that service.  That payment consists of the sum of the transaction fees of all transactions processed as well as a subsidy of newly minted bitcoins.  That subsidy shrinks over time until eventually it disappears completely.  Meanwhile as bitcoin becomes more popular, the value o the transaction fees slowly grows.  Eventually the value of the transaction fees will swamp the value of the subsidy.  Perhaps at that time we can stop calling it "mining" and start calling it what it really is, "transaction processing".

So, the energy being spent used is not being used for the creation of new bitcoins.  It is being used for the security of a global payment network.  As such, I suspect you'll find that it uses much less energy than most any other global payment network that currently exists.

Very well said. This is a subtle yet critically important aspect of "mining" that people tend to ignore. Even over in the hardware sub forums... lol

[TheTribesman]

Mining is a misleading term, and that seems to confuse people.  What the "miners" are actually doing is securing a global payment network.  They are processing millions of dollars worth of transactions per day and are being rewarded with a small payment in exchange for that service.  That payment consists of the sum of the transaction fees of all transactions processed as well as a subsidy of newly minted bitcoins.  That subsidy shrinks over time until eventually it disappears completely.  Meanwhile as bitcoin becomes more popular, the value of the transaction fees slowly grows.  Eventually the value of the transaction fees will swamp the value of the subsidy.  Perhaps at that time we can stop calling it "mining" and start calling it what it really is, "transaction processing".

Thanks for all the comments guys! Interesting reading!

I think the statement quoted above goes some way to altering my perception of cryptocurrencies (thanks DannyHamilton). So, rather than 'mining', it's actually 'transaction processing' that's going on here. In effect then, if the 'crypteconomy' replaces current banking practices, then the energy used in transaction processing may actually be reduced in the long term? For the present, as the crypteconomy emerges we are really observing an overlap of the old and new technologies and hence an increase in energy usage?

Once the old banking methods are gone (HURRAH!), then hopefully we'll actually have an overall reduction in the energy used to maintain financial transaction processing.

Is it reasonable to assume this? (without actually doing the sums necessary to confirm such a conclusion).