Transaction cost in kWh

[amaclin]

1) Block size changing (amount of transactions per block increasing)

This value does not matter. Transaction rate changes very slow.
OK, what should happen to increase number of transaction twice? Do you see another China or India on our planet?
The transaction cost is too high for decentralized systems and they lose at start.
The only thing they can do - be a ponzi.

2) Asics being used for heating thus 99.9% of energy being converting into needed product and mining for BTC merely being a product that subsidizes the energy bill

ASICs used for heating are not doing PoW.

You do understand that ASIC's are very cheap to manufacture once designed and tested and that we are just going through a transitional period
where the 10+ ASIC fabs are recouping initial capital investment costs right?

Sorry, I do not get it.
Bitcoin users community can not pay forever for miners who converts electricity to heat.
Sooner or later you should remember about physics.

[amaclin]

but customers do not pay $5-$20 per transaction. think of it like gold.

They will pay. Later. Soon.

Thinking about gold is also thinking about "cost of keeping" (I do not know right English words how to explain)
You should have a safe and a guard to keep your gold piece.
Do not ever forget that someone always pays expenses.

[inBitweTrust]

This value does not matter. Transaction rate changes very slow.
OK, what should happen to increase number of transaction twice? Do you see another China or India on our planet?
The transaction cost is too high for decentralized systems and they lose at start

 The costs are extremely low compared to other secure payment infrastructures but, yes, the cost per transaction is being subsidized by new investors at the moment.
The cost per transaction ultimately is determined by this formula:

(Labor+ASIC investment+Electricity) / total transactions per block = cost per transactions

The Size of the block can be changed with a few lines of code that would dramatically lower the "cost per transactions" if transaction volume spiked.

ASICs used for heating are not doing PoW.
Sorry, I do not get it.

Yes, you don't understand. ASIC's doing PoW mining are 99.9% efficient at converting electricity to Heat so any appliance that needs to heat something that uses ASIC's as the heating element
are essentially subsidizing the electrical costs or benefiting the users electric bill and environment. Future applications for ASIC's PoW miners include hot water heaters, space heaters, home heaters, dehydrators , ect....

You really need to do a bit more research into the problems and solutions to PoW:

https://blog.ethereum.org/2014/06/19/mining/

One potential solution involves "doing nothing" because the laws of thermodynamics and economics will automatically solve the cost issue, centralization dilemma, and environmental concerns.

[amaclin]

Potentially, but as outlined by Vitalik Buterin:
https://blog.ethereum.org/2014/06/19/mining/
There are many solutions to your proposed dilemma that can be adopted in the future. The right course of action may be doing nothing as
the laws of thermodynamics and economics will converge to automatically solve the cost issue, centralization dilemma, and environmental concerns.

My point of view that "cost issue" will be solved at "zero point" (no transactions, no value, no safety)

[inBitweTrust]

My point of view that "cost issue" will be solved at "zero point" (no transactions, no value, no safety)

Your opinion is clear. Can you coherently express why you think that is a more likely probability rather than the one of the many solutions expressed below?
https://blog.ethereum.org/2014/06/19/mining/

Bitcoin has reached a critical mass. We aren't going to let it die. We are going to make sure it succeeds and will reach consensus on the needed changes to make it happen
when they are needed.

[amaclin]

Yes, you don't understand. ASIC's doing PoW mining are 99.9% efficient at converting electricity to Heat so any appliance that needs to heat something that uses ASIC's as the heating element

Sorry, you are wrong. Either a device is PoW-device or device is heating/blowing/whatever-another-useful-thing-doing device.
There is no safety at all when the network consists from such multi-purpose devices.

If you pay nothing for security - you gain nothing.

[inBitweTrust]

Yes, you don't understand. ASIC's doing PoW mining are 99.9% efficient at converting electricity to Heat so any appliance that needs to heat something that uses ASIC's as the heating element

Sorry, you are wrong. Either a device is PoW-device or device is heating/blowing/whatever-another-useful-thing-doing device.
There is no safety at all when the network consists from such multi-purpose devices.

If you pay nothing for security - you gain nothing.

Explain why it can't be both or are you just trolling?

[amaclin]

Your opinion is clear. Can you coherently express why you think that is a more likely probability rather than the one of the many solutions expressed below? https://blog.ethereum.org/2014/06/19/mining/

Give me some time please. Seems to me that I have read this document. I have to read it more carefully

Bitcoin has reached a critical mass. We aren't going to let it die.

There is very simple test for everything (except biology).
If "this thing" takes less energy than "that thing" it is progressive and revolutionary.
Otherwise it is not.

Bitcoin (and all other decentarlized cryptos) either takes too much energy comparing to centralized systems
or provide less security.

We are going to make sure it succeeds

Sorry, Perpetum mobile is not real in our universe. Only temporary ponzis.

[franky1]

blah blah

many assumptions..
firstly you keep assuming that if i had 1btc and i sold it to someone. i or the other person i sell it to is losing out on $5-$20 in transaction costs. as my last post says no one buying or selling bitcoin loses $5-$20. miners are given fresh bitcoin (adding to circulation) to compensate costs. its not coming out of peoples hoards.

the other assumption is that gold cant be double spent.. i guess you missed out on 'fractional reserve' in history class.

more assumptions are that you are basing the electric cost of transaction vs spending habits. in actual effect if you imagine a retail shop that does $5k of business a day, the manager has to spend all day in the shop, at the end of the day he hands funds to a bank security firm who drives that deposit to  bank. and then a bank teller counts it and enters the figure into the shop owners bank account.

so lets do some rough maths.
lets say its a small 7-11 store, average transaction is $10
500 transactions (1 tx every 2 minutes seems reasonable for an average 7-11)
manager / shop cashiers wage (minimum wage $7.50 for 16 hour day shift=$120)
bank costs (bank teller $7.50 + 2van drivers 1 hour round trip $9 an hour=$18 + fuel vehicle=$20=~$50)
so thats $170.. even before we work out the cost of the computer system that protects people bank accounts. even before we include the electric for the bank, even before we work out the vehicle purchase and maintenance, even before we work out the banks lease and all other costs to confirm a bank note payment to account.

http://en.wikipedia.org/wiki/Wire_transfer#Regulation_and_price
the costs of 'admin and transport of bank notes ranged from $12-$45 per transaction, but more recently banks are not charging customers because they are printing money behind the scenes to cover costs.

the difference between a bank and bitcoin is banks can print as much as they like to cover costs. but bitcoin and gold are more fixed/rare/limited in how much is added to circulation to cover costs. the end user does not see the costs!!!!

again the end user does not see the costs.
but while banks add more funds into circulation at no limit.. (inflation)
bitcoin is fixed so if 25bitcoin represented 282tx's last year (at  a tx price of $5.71/tx=$64 a bitcoin)
bitcoin is fixed so if 25bitcoin represents 486tx's this year (at a tx price of $17/tx=$330) (my maths)
bitcoin is fixed so if 25bitcoin represents 486tx's this year (at a tx price of $20/tx=$388) (blockchain.info's maths)

then that is deflationary,..
again customers do not see the fee's taken out of their pockets. but the 'mint' (new circulation) pays the fee's.

[inBitweTrust]

Bitcoin (and all other decentarlized cryptos) either takes too much energy comparing to centralized systems
or provide less security

Bitcoin uses far less resources than Fiat to secure its network and process transactions. You are just making things up and spewing FUD.

Give me some time please. Seems to me that I have read this document. I have to read it more carefully

Yes, take all the time in the world. Please research these topics before you make yourself look foolish.

...

You bring up many great points and Bitcoin is clearly more efficient than Fiat when you crunch the numbers but Bitcoin is merely one crpyto -currency amongst other crpyto -currencies and
we also need to address competitors with PoS and DPoS schemes when they complain about the wasted costs, centralization of mining, and environmental concerns .

This may naturally be solved by market forces by ASIC's becoming decentralized and cheap utilities , but if not than we will need to make changes to Bitcoin. Luckily, there are many solutions and the community has enough incentives to make these changes if or when they are needed.

[Borisz]

2) Asics being used for heating thus 99.9% of energy being converting into needed product and mining for BTC merely being a product that subsidizes the energy bill

You do understand that ASIC's are very cheap to manufacture once designed and tested and that we are just going through a transitional period
where the 10+ ASIC fabs are recouping initial capital investment costs right?

I just looked up a random ASIC, it consumes 1350W and costs 2500$. If you would buy an electric heater, you could get one for 50$. ASICS produce heat, but are not made for heating. I get that its a "win-win" on paper.
Not only expensive, but the PCB inside can release some nasty stuff, so it is not advised to use it as heating. There is another thread discussing uses of old ASICs, most common being a doorstop in your house.

Regarding the tx "fee" of ~85 kWh/tx, its the miners (or the network if you like) who pay it. They are "wasting" 90% of the electricity to solve a puzzle with a computer and that is Bitcoin. They are compensated for the wasted electricity with the payout of 25BTC/block and hence still make a profit.

It's not the Bitcoin user who pays this fee in any way. Its a resource used by the miners to create a product.

[inBitweTrust]

I just looked up a random ASIC, it consumes 1350W and costs 2500$. If you would buy an electric heater, you could get one for 50$. ASICS produce heat, but are not made for heating. ...but the PCB inside can release some nasty stuff, so it is not advised to use it as heating.

The reason ASICs cost so much is because of the upfront designing, tape-out, and testing costs and because they can get away with it because bitcoins are so valuable. The actual costs of making ASIC's are very cheap after the design if completed(few dollars per wafer dependent upon the quantity).

There is nothing wrong with using PCB's in heating if the right materials are used.

Economics will force either ASIC manufacturers themselves to start introducing these products or we will crowdfund the operation directly to force them to start and compete with these products.

[amaclin]

It's not the Bitcoin user who pays this fee in any way. Its a resource used by the miners to create a product.

Miner should sell his "product" to a new bitcoin user (or old of course).
So the user pays for product which was created by miner.
And the cost is 80 kWh per one transaction.

Should we ask Vitalik Buterin to visit this thread and tell us about thermodynamics?

[inBitweTrust]

Should we ask Vitalik Buterin to visit this thread and tell us about thermodynamics?

Why does he need to repost on a topic that he has studied and commented upon already?
Please read the problems and solutions discussed in the link and than refute any specifics he is wrong about.

We are waiting for specific refutations and not blanket assertions and opinions.

One solution involves no changes because it involves the economics driving the prices down:

In the future, however, development will be much slower; ultimately we can expect a convergence to Moore’s law, with hashpower doubling every two years, and even Moore’s law itself seems to be slowing. In such a world, electricity costs may come back as the primary choke point. But how much does electricity cost? In a centralized warehouse, quite a lot, and the square-cube law guarantees that in a centralized environment even more energy than at home would need to be spent on cooling because all of the miners are in one place and most of them are too deep inside the factory to have exposure to cool fresh air. In a home, however, if the outside temperature is less than about 20′C, the cost of electricity is zero; all electricity spent by the miner necessarily eventually turns into “waste” heat, which then heats the home and substitutes for electricity that would be spent by a central heater. This is the only argument for why ASIC decentralization may work: rather than decentralization happening because everyone has a certain quantity of unused, and thereby free, units of computational time on their laptop, decentralization happens because many people have a certain quantity of demand for heating in their homes.

The economics of mining is already being driven to use cheaper and more green sources of power :

http://www.coindesk.com/digitalbtcs-icelandic-mining-centre-powered-100-renewable-energy/

A likely scenario in the future is not only will the electricity be free but the equipment be heavily subsidized. Competition will drive these prices down where you cannot afford to pay for cooling, asic costs, and electricity in mining PoW when others are efficiently creating heat as a needed product and the equipment is amortized with block rewards and transaction fees.

There are other solutions as well if the above economics and incentives fail to work which require re-writing some lines of code. If we need to we can create a hybrid PoR/PoW or a hybrid Pos/PoW as a last resort. There is too much vested interest in Bitcoin, it isn't going away, we will make it work  and can make it work because it is a open source project that is evolving and growing.

Others who jump ship out of fear or greed will likely come back to Bitcoin in due time at much higher prices.

[kokojie]

Every holder of Bitcoin is paying, by having their coins depreciate 10% each year, perpetually, due to the cost of PoW mining. Though we have been lucky so far, since the inflow of capital far outpaces this depreciation in the past. But at some point, the inflow of capital will be unable to keep up, and we will see the depreciation,  we are possibly seeing it right now.

You are confusing inflation with price appreciation, and your claim is based entirely on a timeframe that you selected to fit your bias.

Just as easily, you could say that Bitcoin price has appreciated by greater than 4x per year and be equally correct.

There is inflation in the money supply of Bitcoin, which was and is known (since it wasn't heavily pre-mined like other coins), math-based, predictable, and FALLING over time. Because industrial miners are profit-focused, they are selling virtually immediately to lock-in current price to pay the bills, rather than speculating about future value. This causes somewhere between 0 and 3600 BTC to be sold daily onto the market, creating natural downward pressure on price.

What I have stated is NOT a claim, it is a FACT that Bitcoin eco-system pays roughly $500 million in PoW mining expense this year, which means $500 million is transferred from the Bitcoin eco-system, to ASIC hardware vendor and electric company. This is a FACT, and since it's a fact, therefore it will be true even when Bitcoin has no inflation (ie. when coin supply run out, the PoW expense will still exist). Therefore, YOU are the one that is confusing inflation with this perpetual PoW expense. I have no problem with Bitcoin inflation, at all.

[inBitweTrust]

This is a FACT, and since it's a fact, therefore it will be true even when Bitcoin has no inflation (ie. when coin supply run out, the PoW expense will still exist). Therefore, YOU are the one that is confusing inflation with this perpetual PoW expense. I have no problem with Bitcoin inflation, at all.

If heat is a product instead of something thrown away and ASIC costs are amortized with block rewards and transaction fees than what is the problem?

Are you suggesting future mass ASIC manufacturing/shipping costs will be higher than campaign political costs? Bitshares would be more interesting if Daniel stuck with TaPoS instead of settling on DPoS.
There are security and future political costs with campaigning and lobbying that will need to be considered when you introduce more human involvement into securing the blockchain.

I suppose there are limits with how many things we need to heat on earth though.... but this isn't a pressing dilemma.

[Borisz]

I just looked up a random ASIC, it consumes 1350W and costs 2500$. If you would buy an electric heater, you could get one for 50$. ASICS produce heat, but are not made for heating. ...but the PCB inside can release some nasty stuff, so it is not advised to use it as heating.

The reason ASICs cost so much is because of the upfront designing, tape-out, and testing costs and because they can get away with it because bitcoins are so valuable. The actual costs of making ASIC's are very cheap after the design if completed(few dollars per wafer dependent upon the quantity).

There is nothing wrong with using PCB's in heating if the right materials are used.

Economics will force either ASIC manufacturers themselves to start introducing these products or we will crowdfund the operation directly to force them to start and compete with these products.

I personally would only use it for heating with a heat exchanger, not the air directly that it is blowing out. No matter how safe they are claimed to be.

The price you pay for an ASIC is just like any other high tech equipment, the actual material might be cheap, but you pay for the technology and knowledge behind the device. And as you said, YOU have to pay for THEM for investing in million $ manufacturing equipment, personnel etc. and this price is distributed in the price of ASICs.

[inBitweTrust]

I personally would only use it for heating with a heat exchanger, not the air directly that it is blowing out. No matter how safe they are claimed to be.

The price you pay for an ASIC is just like any other high tech equipment, the actual material might be cheap, but you pay for the technology and knowledge behind the device. And as you said, YOU have to pay for THEM for investing in million $ manufacturing equipment, personnel etc. and this price is distributed in the price of ASICs.

Correct. The initial investment costs for 22nm ASIC dev and testing is at least 5-10 million which has to be amortize across the costs of the products. The question is merely one of scale. If the costs have to be amortized over a few thousand miners than those miners will be very expensive. What if those costs are amortized over mass consumer items though? Space heaters, water heaters, ect??? We are talking about millions of units. What if you could buy a hot water heater that actually paid some of your electrical bill with transaction fees and block rewards?

Think of the price of cell phones or computers initially and how cheap they are now. You can get a burner cellphone for 20 bucks! Netbooks are being sold for 230 and dropping!

[Borisz]

I personally would only use it for heating with a heat exchanger, not the air directly that it is blowing out. No matter how safe they are claimed to be.

The price you pay for an ASIC is just like any other high tech equipment, the actual material might be cheap, but you pay for the technology and knowledge behind the device. And as you said, YOU have to pay for THEM for investing in million $ manufacturing equipment, personnel etc. and this price is distributed in the price of ASICs.

Correct. The initial investment costs for 22nm ASIC dev and testing is at least 5-10 million which has to be amortize across the costs of the products. The question is merely one of scale. If the costs have to be amortized over a few thousand miners than those miners will be very expensive. What if those costs are amortized over mass consumer items though? Space heaters, water heaters, ect??? We are talking about millions of units. What if you could buy a hot water heater that actually paid some of your electrical bill with transaction fees and block rewards?

Think of the price of cell phones or computers initially and how cheap they are now. You can get a burner cellphone for 20 bucks! Netbooks are being sold for 230 and dropping!

Just like you are saying, everything is on the scale. the more you make, the cheaper the unit price. But the thing is, you need to move forward to technology and develop better and better ASICs which need more investment. Nevertheless, I'm sure they are not making a loss 

Making water-cooled ASICs and connecting it to e.g. floor heating would be an interesting idea...

[inBitweTrust]

Making water-cooled ASICs and connecting it to e.g. floor heating would be an interesting idea...

Excellent idea!