How is this a fail? David Andolfatto is pointing out that bitcoin miners serve a more socially-useful purpose than gold miners: bitcoin miners process transactions and secure the ledger (in addition to finding new bitcoins), while gold miners just find new gold. In other words, the resources spent mining bitcoin are a necessary evil while the resources spent mining gold aren't (because we don't
need gold miners to find new gold in order for the "gold ledger" to remain secure and for gold to be useful as a medium of exchange).
Gold mining is necessary as well. Without an ongoing completive effort at mining, there is no way to know that gold is really as scarce as we think it is.
That's an interesting perspective, Smooth. With commodity money like gold, resources are consumed mining for more of it; indeed, it is the production that results from these efforts that signals the scarcity of the commodity to the market. Bitcoin is fundamentally different because its supply is defined
a priori at the protocol level; no resources need to be consumed to verify scarcity.
I think I twisted the argument Andolfatto was making, and sort of made it wrong in the process. But it is still true, at least when viewed through a certain lens, that gold mining is more wasteful than bitcoin mining.
Consider the discussion earlier in this thread about extracting gold from the oceans. If a breakthrough were to occur that enabled low-cost recovery of a portion of the millions of tons of dissolved gold, it would significantly depress gold's market price
and distort the memory function of the "gold ledger" (the % of the total gold supply held by each individual would be distorted by this event).
It would also result in a huge amount of resources being directed at extracting gold from the ocean. From the perspective of the economy as a whole, these resources would be wasted (it would have been better for the economy in aggregate had the ocean contained no additional gold). In fact, the waste would be amplified due to the economic distortions caused by the subsequent (and unexpected) inflation. But from the perspective of the individual sea-gold miner, it is in his best interest to consume resources to extract the gold...and so resources will be consumed nonetheless.
Gold is a "barbarous relic" partly because of this misalignment of incentives regarding gold mining and the unpredictability of new supply. With a system like bitcoin, the incentives of the miners are more strongly aligned with the incentives of the economic majority. If a miner tries to produce more bitcoins than permitted, his blocks are simply ignored by the network.
TL/DR: A monetary system based on bitcoin would be more efficient than one based on gold.
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