.

[BurtW]

Yes, and at equilibrium, the energy spent by the network has exactly the value of the minted coins.
Proof of Work = (literally) Proof of Energy Spent
There is no such thing as "efficient" mining hardware.

I would disagree with your statement about there being no such thing as "efficient" mining hardware. I would define efficient miners as machines that use less electricity per GHs then the network does as a whole.

Of course, mining hardware can become more efficient.  The point is that does not matter with respect to the total power and/or energy consumption of the Bitcoin network.  Look at the math above where I proved this to you.  

https://bitcointalk.org/index.php?topic=520977.msg7687843#msg7687843

Also, if that is too much to read then re-read this until you understand it:

Your theory doesn't match the facts. People just keep adding more mining hardware until the electricity consumption is as much as they can stand. The diff rises and they get less BTC than they were getting with the lower efficiency setup.

See yet?

[1714009918]

1714009918

[1714009918]

1714009918

[InwardContour]

Yes, and at equilibrium, the energy spent by the network has exactly the value of the minted coins.
Proof of Work = (literally) Proof of Energy Spent
There is no such thing as "efficient" mining hardware.

I would disagree with your statement about there being no such thing as "efficient" mining hardware. I would define efficient miners as machines that use less electricity per GHs then the network does as a whole.

Of course, mining hardware can become more efficient.  The point is that does not matter with respect to the total power and/or energy consumption of the Bitcoin network.  Look at the math above where I proved this to you.  

https://bitcointalk.org/index.php?topic=520977.msg7687843#msg7687843

Also, if that is too much to read then re-read this until you understand it:

Your theory doesn't match the facts. People just keep adding more mining hardware until the electricity consumption is as much as they can stand. The diff rises and they get less BTC than they were getting with the lower efficiency setup.

See yet?

In theory, you could add a little bit of additional mining capacity (that is very efficient in terms of electric usage) to the network that would increase the difficulty a small amount, but that small amount would make it so a lot of less efficient miners no longer mine enough to earn a profit after electric costs so they are taken offline, and then subsequently replaced with more efficient miners with equal hashpower but with less overall electric consumption.   

[DannyElfman]

Technology stills evolving, more efficient mining hardware will appears, adding that not only Bitcoin has energy consumption problems, the rest of the world needs now alternative clean forms of energy that i believe are being researched so hard right now...

Besides, current prices are too low, some things would be different if Bitcoin goes to the thousand again...

The problem would be worse if the bitcoin price rises, as mega farms could afford more energy to waste.

Other payment methods use electricity as well. It is just that it is not as transparent as to how much electricity visa for example uses to process their payments. Visa must power their office buildings, computers for employees, computers that process transactions, banks that send money to/from visa (their employees, offices, and computers), printers that print customer statements, call centers to resolve disputes.

[ernie-]

Technology stills evolving, more efficient mining hardware will appears, adding that not only Bitcoin has energy consumption problems, the rest of the world needs now alternative clean forms of energy that i believe are being researched so hard right now...

Besides, current prices are too low, some things would be different if Bitcoin goes to the thousand again...

The problem would be worse if the bitcoin price rises, as mega farms could afford more energy to waste.

Other payment methods use electricity as well. It is just that it is not as transparent as to how much electricity visa for example uses to process their payments. Visa must power their office buildings, computers for employees, computers that process transactions, banks that send money to/from visa (their employees, offices, and computers), printers that print customer statements, call centers to resolve disputes.

Don't confuse mining crypto with payment networks, the two are not the same. Fiat doesn't need mining energy.

[smoothie]

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

[halfawake]

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

For now, perhaps.  But how big would this energy consumption be if the bitcoin network were as big as a traditional major finanical company like, say, Visa?  We should strive to do better than fiat is doing, not merely being not as bad as the traditional system.

[ernie-]

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

For now, perhaps.  But how big would this energy consumption be if the bitcoin network were as big as a traditional major finanical company like, say, Visa?  We should strive to do better than fiat is doing, not merely being not as bad as the traditional system.

Visa doesn't mine coins, their network has nothing to do with the creation of money, the banks do that for them. Your comparison is flawed.

[halfawake]

The amount of energy used for the Bitcoin Network is tiny compared to the amount of money to print, mint, guard, secure, etc for say fiat currency.

For now, perhaps.  But how big would this energy consumption be if the bitcoin network were as big as a traditional major finanical company like, say, Visa?  We should strive to do better than fiat is doing, not merely being not as bad as the traditional system.

Visa don't mine coins, their network has nothing to do with the creation of money, the banks do that for them. Your comparison is flawed.

If not them, then who would you compare bitcoin to?  I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc. 

I picked a major player in the traditional financial system to choose to compare.  But if you want to say that it's a flawed comparison, then you're missing the point here.  The point is if you're going to make a comparison, you have to compare bitcoin to something.  And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do.  So...what would you compare bitcoin with?  If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do. 

[ernie-]

If not them, then who would you compare bitcoin to?  I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc.  

I picked a major player in the traditional financial system to choose to compare.  But if you want to say that it's a flawed comparison, then you're missing the point here.  The point is if you're going to make a comparison, you have to compare bitcoin to something.  And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do.  So...what would you compare bitcoin with?  If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do.  

The comparison flawed, it's like trying to compare cars to roads, it just doesn't make sense. The Visa style payment gateways sit on top of the currencies. Visa could easily add Bitcoin as one of the supported currencies. Visa chooses to use fiat atm, but I can see it adding some crypto in the future, and it's infrastructure or energy consumption will hardly need to change as it wont be mining the crypto.

[Febo]

I sometimes think Satoshi was pushed by Energy lobby's.

[DannyElfman]

If not them, then who would you compare bitcoin to?  I grant you that it's not a perfect comparison, but there is no one to one comparison between bitcoin and the traditional financial world: the bitcoin network / ledger / mining combined creates new coins, processes transactions, handles transaction fees, etc.  

I picked a major player in the traditional financial system to choose to compare.  But if you want to say that it's a flawed comparison, then you're missing the point here.  The point is if you're going to make a comparison, you have to compare bitcoin to something.  And bitcoin does what credit card companies (like Visa) do, it does what Banks do in creating money, it handles transaction fees, which traditionally would be something credit card companies do.  So...what would you compare bitcoin with?  If you want a true one to one comparison, you're shit out of luck, because there isn't any one to one comparison since the bitcoin network does what several different players of the traditional financial system do.  

The comparison flawed, it's like trying to compare cars to roads, it just doesn't make sense. The Visa style payment gateways sit on top of the currencies. Visa could easily add Bitcoin as one of the supported currencies. Visa chooses to use fiat atm, but I can see it adding some crypto in the future, and it's infrastructure or energy consumption will hardly need to change as it wont be mining the crypto.

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

[halfawake]

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

They might, if we ever get to the point (many years into the future) where fiat becomes obsolete.  The advantage of credit cards is, at least in part, for people living paycheck to paycheck, they can spend money that they don't have yet and pay the bill later when they've been paid.  But I agree with your overall point, it does seem rather counter-intuitive that someone would use both a credit card and bitcoins at the same time.  Debit cards would make more sense, though.

[shrekster]

I have to imagine energy consumption is through the roof.

[BurtW]

That is an interesting point with respect to the dream of having 1 BTC = $100,000 (or pick your favorite high number).

Using my previously derived formula for the power consumption:

P = (6(50/2^e) + f)(x)(1 - g)/c [kW]

where:

x = exchange rate [USD/BTC]
e = era [0..32] (we are currently in era 1)
f = average fees per hour [BTC/hour]
c = cost of energy [USD/kWh]
g = average gross profit margin [unitless ratio]

we can look at the power consumption in each era assuming a price of $100,000 per BTC.

In order to make it simple I will make the following assumptions:

x = $100,000 per BTC
f = fees per hour will keep the coinbase above 6 BTC/hour (1 BTC/block) in all eras
c = $0.10 per kWh
g = 0.1 miner gross profit margin

Code:

    Original target      Subsidy    Est Fees   Power
Era   starting year    BTC/block    BTC/hour      GW
--- ---------------  -----------  ----------  ------
  0            2009  50.00000000  0.00000000  270.00
  1            2013  25.00000000  0.00000000  135.00
  2            2017  12.50000000  0.00000000   67.50
  3            2021   6.25000000  0.00000000   33.75
  4            2025   3.12500000  0.00000000   16.88
  5            2029   1.56250000  0.00000000    8.44
  6            2033   0.78125000  1.31250000    5.40
  7            2037   0.39062500  3.65625000    5.40
  8            2041   0.19531250  4.82812500    5.40
  9            2045   0.09765625  5.41406250    5.40

[BurtW]

Here is my entire spreadsheet, I was too lazy to format it last night:

Code:

    Original target      Subsidy    Est Fees   Power
Era   starting year    BTC/block    BTC/hour      GW
--- ---------------  -----------  ----------  ------
  0            2009  50.00000000  0.00000000  270.00
  1            2013  25.00000000  0.00000000  135.00
  2            2017  12.50000000  0.00000000   67.50
  3            2021   6.25000000  0.00000000   33.75
  4            2025   3.12500000  0.00000000   16.88
  5            2029   1.56250000  0.00000000    8.44
  6            2033   0.78125000  1.31250000    5.40
  7            2037   0.39062500  3.65625000    5.40
  8            2041   0.19531250  4.82812500    5.40
  9            2045   0.09765625  5.41406250    5.40

[halfawake]

We may "bet" that the environment will be significantly more energy efficient than today. It is still a bet.
The quantity of electricity used by the blockchain is not a bet ; it is directly proportional to the price of one bitcoin.

Not really.  It's more proportional to the number of miners because the electrical use is pretty much all from mining.  Of course, greed being what it is, the higher the price of bitcoin goes, the more people are likely to mine, so in a correlational sense, you're probably right, but it's definitely not cause and effect.

[halfawake]

We may "bet" that the environment will be significantly more energy efficient than today. It is still a bet.
The quantity of electricity used by the blockchain is not a bet ; it is directly proportional to the price of one bitcoin.

Not really.  It's more proportional to the number of miners because the electrical use is pretty much all from mining.  Of course, greed being what it is, the higher the price of bitcoin goes, the more people are likely to mine, so in a correlational sense, you're probably right, but it's definitely not cause and effect.

Read more.

I personally think you have some flaws in your analysis.  One of them is the fairly mythical concept of the rational person.  One example of this is sunk costs, you're right that a rational minor should ignore the cost of the mining rig.  I do my best (and probably a fairly good job) of applying the concept of sunk costs to my own life.  But a lot of people don't, even people who should know better.  So I suspect that a lot of miners continue to mine even if it's unprofitable with their miner from an electricity standpoint simply because they've seen the huge runup in price and hope that this trend will continue over time.

Granted, you did point out these caveats in your own reply to your post.  I just feel that they should be more prominently in the actual analysis because I strongly suspect that a lot of miners are speculating on an increase in price so they continue to mine, whether or not it's profitable.  I can understand the idea, I'm speculating too, but I did it just by buying bitcoins rather than spending money on mining gear.  Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

[STT]

I did it just by buying bitcoins rather than spending money on mining gear.  Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

I think comparative advantage is applicable to that one.   It might be expensive and pointless to some but some parts of the world have much lower electricity costs.  This can be seen in aluminium processing which favours local low electric costs but many parts of the world this business is not profitable afaik.

Bitcoin has the advantage of being highly transportable work so more then anything this rules applies.    It would make sense for those stuck with old bad equipment to maybe sell it in bulk to the low cost parts of the world.

Anyhow I think moores law will reduce electric cost over time until the network consumes no more then a LED readout on any device.  On average of course and I get that difficulty must keep rising and so people assume higher electric cost but I dont think its about electric it'll be about technology cost and in the end R&D and maybe silcon production will be the networks processing cost more then other factors

[halfawake]

I did it just by buying bitcoins rather than spending money on mining gear.  Mostly because as much as I've been tempted from time to time, I really think at this point, mining is a bit of a zero sum game by now.

I think comparative advantage is applicable to that one.   It might be expensive and pointless to some but some parts of the world have much lower electricity costs.  This can be seen in aluminium processing which favours local low electric costs but many parts of the world this business is not profitable afaik.

Bitcoin has the advantage of being highly transportable work so more then anything this rules applies.    It would make sense for those stuck with old bad equipment to maybe sell it in bulk to the low cost parts of the world.

Anyhow I think moores law will reduce electric cost over time until the network consumes no more then a LED readout on any device.  On average of course and I get that difficulty must keep rising and so people assume higher electric cost but I dont think its about electric it'll be about technology cost and in the end R&D and maybe silcon production will be the networks processing cost more then other factors

You're quite right that electricity is cheaper in some places in than others.  I only hope for the environment's sake that the bitcoin miners are gravitating towards places like Iceland which has plentiful renewable power rather than places that are cheap simply because the electricity is subsidized.  I don't buy your comment about Moore's law though, bitcoin mining is an arms race for getting the best gear the fastest.  While that gear may become more efficient eventually, I'd be incredibly surprised if it ever uses that little power. 

In any case, Moore's law typically applies to processor speed, not power usage.  Also, the other reason I don't buy it is that Moore's law is treated by some like it's an immutable thing that's set in stone.  It's not, scientists very close to reaching the physical limits of how much they can cram into one chip.  So I'd be surprised if Moore's law continues into the future very long like it has in the past thirty years.

[DannyElfman]

I really don't see credit card processors using crypto currencies ever. Bitcoin was designed to make it cheaper then using something like a credit card. If someone were to use a credit card to transact with bitcoin then they would lose the advantages of using bitcoin in the first place.

They might, if we ever get to the point (many years into the future) where fiat becomes obsolete.  The advantage of credit cards is, at least in part, for people living paycheck to paycheck, they can spend money that they don't have yet and pay the bill later when they've been paid.  But I agree with your overall point, it does seem rather counter-intuitive that someone would use both a credit card and bitcoins at the same time.  Debit cards would make more sense, though.

Debit cards would make even less sense then credit cards as they have the same costs as credit cards but would not have your counter point as above.

I doubt that any crypto would ever be so widely used that fiat would become obsolete as it is near impossible to garnish bitcoin from someone. Today for example if you were to spend $5,000 with your credit card, then simply don't pay your credit card bill despite having the ability to do so and have say $10,000 in your bank account then the credit card company can get a judgment against you and the court can order your bank to give the credit card company the $5,000 that you owe out of your account via a garnishment. This would simply not be possible with bitcoin.