ASICMINER: Entering the Future of ASIC Mining by Inventing It

[Puppet]

Banks have datacenters that use up more energy than the Bitcoin network.

Banks offer services and volume that is just not comparable to the blockchain.
Paypal is a much more direct comparison, even though they do a lot more than just processing transactions, and I just showed its using a comparable amount of energy. Except PP handles $100 billion worth of payments each year for 130 million users and does tons of other things too. That makes it very much more energy efficient.

There was an article on Bloomberg that called Bitcoin a realworld threat to the environment, I read a rebuttal on one of the Bitcoin news sites (can't remember which) in which the author had calculated that the Bloomberg HQ building in New York used more energy than the entire Bitcoin network. It is really a red herring.

The entire bitcoin network doesnt really represent a whole lot yet does it? Not compared to PP or banks, heck not even compared to Bloomberg.
I wouldnt go as far as calling it a environmental threat, but its certainly not something to take pride in and if bitcoin ever becomes a mainstream currency, it would get fairly ugly.

[tinus42]

The entire bitcoin network doesnt really represent a whole lot yet does it? Not compared to PP or banks, heck not even compared to Bloomberg.
I wouldnt go as far as calling it a environmental threat, but its certainly not something to take pride in and if bitcoin ever becomes a mainstream currency, it would get fairly ugly.

I don't fear this will be a big issue by then, when Bitcoin becomes way more popular energy efficiency will become a more important factor and chips will have to become more energy efficient if the miners want to make a profit.

[Puppet]

I don't fear this will be a big issue by then, when Bitcoin becomes way more popular energy efficiency will become a more important factor and chips will have to become more energy efficient if the miners want to make a profit.

THats incorrect. It doesnt matter how energy efficient you make them, once these hardware prices have come down to something near marginal cost, electricity cost will be the overriding factor for miners, and the only real limit on network growth. More efficient chips would just result in almost proportionally lower mining cost per TH, which will  results in a proportionally higher network speed, and thus rendering the higher efficiency pointless. Have a look here:
https://bitcointalk.org/index.php?topic=295270.0

For a given BTC price and electricity cost, you can pretty much calculate how many megawatt bitcoin will consume. The only way to prevent that would be if hardware became more expensive somehow, so that the hardware investment would be a bigger brake. Not very likely with asics.

[tinus42]

I don't fear this will be a big issue by then, when Bitcoin becomes way more popular energy efficiency will become a more important factor and chips will have to become more energy efficient if the miners want to make a profit.

THats incorrect. It doesnt matter how energy efficient you make them, once these hardware prices have come down to something near marginal cost, electricity cost will be the overriding factor for miners, and the only real limit on network growth. More efficient chips would just result lower mining cost per TH, which will  results in a proportionally higher network speed, and thus rendering the higher efficiency pointless. Have a look here:
https://bitcointalk.org/index.php?topic=295270.0

For a given BTC price and electricity cost, you can pretty much calculate how many megawatt bitcoin will consume. The only way to prevent that would be if hardware became more expensive somehow, so that the hardware investment would be a bigger brake. Not very likely with asics.

If enough people take their miners offline because they don't make a profit difficulty will drop and then it will be (briefly) profitable to mine again. It then helps if you have the best energy efficiency. I guess when the limit is reached we will see cycles between high difficulty and low difficulty ad infinitum, until quantum computers come online and the arms race starts again.

[Strange Vlad]

There was an article on Bloomberg that called Bitcoin a realworld threat to the environment

LOL that's Bloomberg for you.

[Puppet]

If enough people take their miners offline because they don't make a profit difficulty will drop and then it will be (briefly) profitable to mine again. It then helps if you have the best energy efficiency. I guess when the limit is reached we will see cycles between high difficulty and low difficulty ad infinitum, until quantum computers come online and the arms race starts again.

For an individual miner, power efficiency will soon make all the difference in the world. But for the network as a whole, it makes next to no difference. It would make zero difference if the hardware were free or its cost could be amortized over an infinite time. In that case, total mining revenue of the network == electricity cost of the network. That makes it pretty darn simple to predict and completely independant of efficiency per GH. Instead cost per KWH will nicely predict network speed. See link above for a chart of that.

[tinus42]

There was an article on Bloomberg that called Bitcoin a realworld threat to the environment

LOL that's Bloomberg for you.

Here is a link to the Bloomberg article:

http://www.bloomberg.com/news/2013-04-12/virtual-bitcoin-mining-is-a-real-world-environmental-disaster.html

Can't find the rebuttal article about Bloomberg's HQ using more energy but it was very good.

[Vycid]

If enough people take their miners offline because they don't make a profit difficulty will drop and then it will be (briefly) profitable to mine again. It then helps if you have the best energy efficiency. I guess when the limit is reached we will see cycles between high difficulty and low difficulty ad infinitum, until quantum computers come online and the arms race starts again.

For an individual miner, power efficiency will soon make all the difference in the world. But for the network as a whole, it makes next to no difference. It would make zero difference if the hardware were free or its cost could be amortized over an infinite time. In that case, total mining revenue of the network == electricity cost of the network. That makes it pretty darn simple to predict and completely independant of efficiency per GH. Instead cost per KWH will nicely predict network speed. See link above for a chart of that.

Correct. And a high BTC/USD ratio means the total mining revenue (in USD) will be huge, and thus Bitcoin could suck down an absolutely disgusting amount of electricity.

We need reversible computing and we need it soon.

[Strange Vlad]

I don't fear this will be a big issue by then, when Bitcoin becomes way more popular energy efficiency will become a more important factor and chips will have to become more energy efficient if the miners want to make a profit.

THats incorrect. It doesnt matter how energy efficient you make them, once these hardware prices have come down to something near marginal cost, electricity cost will be the overriding factor for miners, and the only real limit on network growth. More efficient chips would just result in almost proportionally lower mining cost per TH, which will  results in a proportionally higher network speed, and thus rendering the higher efficiency pointless. Have a look here:
https://bitcointalk.org/index.php?topic=295270.0

For a given BTC price and electricity cost, you can pretty much calculate how many megawatt bitcoin will consume. The only way to prevent that would be if hardware became more expensive somehow, so that the hardware investment would be a bigger brake. Not very likely with asics.

The total energy consumption will be increased for a while, but it will be slowed down by growing power costs and shrinking rewards (no, the fees won't compensate for the block halvings). Even with current conditions, the potential maximum Bitcoin price (if market cap equals to that of USD in today's prices) is around $55,000, and that would (using that spreadsheet from a thread you linked) amount to only 60 Gigawatts. That's just a hair in today's global power consumption, and remember that in practice it'll be even lower than that.

In other news, you are a troll.

[tinus42]

Correct. And a high BTC/USD ratio means the total mining revenue (in USD) will be huge

Depends on what the USD will be worth. Ben Bernanke ceased tapering so QE will be back in full force. Sooner or later the dollar is going to tank bigtime.

[Vycid]

Correct. And a high BTC/USD ratio means the total mining revenue (in USD) will be huge

Depends on what the USD will be worth. Ben Bernanke ceased tapering so QE will be back in full force. Sooner or later the dollar is going to tank bigtime.

That trivially ignores the point. A more valuable bitcoin means more electricity can be bought with the bitcoins mined, and as profit margins tend toward zero almost all of the bitcoins mined WILL be spent on electricity.

[tinus42]

Correct. And a high BTC/USD ratio means the total mining revenue (in USD) will be huge

Depends on what the USD will be worth. Ben Bernanke ceased tapering so QE will be back in full force. Sooner or later the dollar is going to tank bigtime.

That trivially ignores the point. A more valuable bitcoin means more electricity can be bought with the bitcoins mined, and as profit margins tend toward zero almost all of the bitcoins mined WILL be spent on electricity.

But then everyone stops mining, difficulty drops and after a time it becomes profitable to mine again. Until everyone starts mining again and then the cycle repeats. There will be a limit to the amount of energy used. It won't rise "to the moon".

[Vycid]

I don't fear this will be a big issue by then, when Bitcoin becomes way more popular energy efficiency will become a more important factor and chips will have to become more energy efficient if the miners want to make a profit.

THats incorrect. It doesnt matter how energy efficient you make them, once these hardware prices have come down to something near marginal cost, electricity cost will be the overriding factor for miners, and the only real limit on network growth. More efficient chips would just result in almost proportionally lower mining cost per TH, which will  results in a proportionally higher network speed, and thus rendering the higher efficiency pointless. Have a look here:
https://bitcointalk.org/index.php?topic=295270.0

For a given BTC price and electricity cost, you can pretty much calculate how many megawatt bitcoin will consume. The only way to prevent that would be if hardware became more expensive somehow, so that the hardware investment would be a bigger brake. Not very likely with asics.

The total energy consumption will be increased for a while, but it will be slowed down by growing power costs and shrinking rewards (no, the fees won't compensate for the block halvings). Even with current conditions, the potential maximum Bitcoin price (if market cap equals to that of USD in today's prices) is around $55,000, and that would (using that spreadsheet from a thread you linked) amount to only 60 Gigawatts. That's just a hair in today's global power consumption, and remember that in practice it'll be even lower than that.

In other news, you are a troll.

M2 money supply = $10,789B
Bitcoin market cap = $1.576B

10786/1.576 ~ 6846x
Today's price ~ $120

6846 * $120 = $821,543

Assuming (incorrectly) that the only fiat that can be displaced is the US dollar.

Times 1.36M a year, divided by avg $0.10/kW (It'd be much cheaper if you put the bitcoin hardware at the powerplant to avoid transmission losses)

1.36M * 821543 / .1 =1.117 e13 kW-h per year

About 8766 hours a year

1.117 e13 / 8766 = 1274582135 kW = 1.274 TW

That is an ecological disaster. Not to mention dirty, nasty sources of electricity will be used in an attempt to bring down the cost per kW-h (which will result in an increase in the total watts needed for equilibrium).

[ElectricMucus]

FYI in 2006 worldwide nuclear power generation was 0.93 TW and hydroelectric was 1.00 TW.

[romerun]

what just happened to labcoin again

[supert]

what just happened to labcoin again

and activemining just imploded (board resigned and liquidated all shares).

[VolanicEruptor]

bought back in with 50 shares below 1.80.  nice to be back. 

[Vycid]

what just happened to labcoin again

and activemining just imploded (board resigned and liquidated all shares).

And NEOBEE is trying to pull off the biggest IPO in Bitcoin history. It'a a big week for Bitcoin securities.

In other news,  this is the ASICMiner thread.

[Puppet]

But then everyone stops mining, difficulty drops and after a time it becomes profitable to mine again. Until everyone starts mining again and then the cycle repeats. There will be a limit to the amount of energy used. It won't rise "to the moon".

Of course there is a limit. That limit is profitability:
Total mining reward == total electricity cost + hardware write off.

IOW,

total electricity use per hour ==  ~3600 BTC  / (Price Kw/H + hardware write off per hour).

Add any mining fees to that 3600 if you want, and divide by 2 for each  block reward halving.

In reality over time hardware write off will become a non factor, and average electricity cost in BTC will be the only variable  that will determine  the overall electricity use of the bitcoin network.
No cycles or moons involved unless both electricity and hardware would be free, in which case you get div/0 or infinity.

[SebastianJu]

Now where did I see a comparison that said that one major bank central office used probably more electricity than all the bitcoin mining in the world ...

That can't be true, I would be surprised

OK lets try a wild estimate

I use less than 1KW to do well over 100GH/s
So lets go with 1KW for 100GH/s
That's a way over-estimate for some of the high hashing devices and a way under-estimate for any of the old devices anyone is silly enough to keep mining with

The bitcoin network is ~1PH/s
So that's like 10,000KW

That seem too high for a big bank's main data centre head office?
If it is then say how about 10 of them? Certainly not too high for 10 of them.

All guesses, but certainly makes that argument above seem far from certain.

Since wind mills have a power production of 4 to 7.5MW nowadays that means 2 wind mills alone could run the whole bitcoins network power usage world wide. I think its a good comparision.