Over 2 percent of the US’s electricity generation now goes to bitcoin
Over 2 percent of the US’s electricity generation now goes to bitcoin
Over 2 percent of the US’s electricity generation now goes to bitcoin::US government tracking the energy implications of booming bitcoin mining in US.
The economics of Bitcoin mining are a bit weird in that it impossible to make it more energy efficient.
The system auto adjusts the computational complexity of mining bitcoin so that it always costs a little less than one bitcoin to mine a bitcoin, and at scale the only variable expense is electricity so as the price of bitcoin goes up, so does the amount of money that must be spent on electricity.
Current 6.25 Bitcoin are mined every 10 minutes. So globally about $2 million must be spent on electricity every hour.
In a little over 2 months the block reward cuts in half to only 3.125 bitcoin every 10 minutes. That will have the side effect of reducing the money spent on electricity for mining bitcoin so long as the price of bitcoin remains the same.
"The System" is not really that intelligent. The statement that "It will always cost a little less than one Bitcoin to mine a Bitcoin" is only correct because the incentives in the system steer everyone toward that. There's no direct link between the two. Bitcoin Miners are intently aware of how much energy they consume, and if the price of Bitcoin dips below what they are paying for electricity, they likely will shut down their rigs, because no one wants to mine at a loss.
The real issue with Bitcoin is that the algorithm used to find more Bitcoins is kind of basic in terms of its difficulty mechanism. It was the first one ever used for cryptocurrency. It was originally envisioned that owners could mine more bitcoin with spare cycles on their CPU, but since it was first designed, people have come up with custom mining chips that can mine faster and much more power efficiently. But paradoxically, this has made things worse, because the bitcoin mining difficulty simply scaled up to account for all that. So now the only way to mine Bitcoin is to have this custom hardware -- it's too hard to do any other way -- and you need so much of it that you are just as power hungry as before.
There are other algorithms that don't have these same problems. They have been designed to use other computing resources (like gobs of memory) that are much harder to concentrate on custom chips, making it much more expensive (monetarily and spatially as well as computationally) to simply spam more of them. Ethereum uses a totally different model now that doesn't rely directly on power consumption at all.
OG Bitcoiners seem to think that the massive power consumption is a net benefit, because it is spent in making the overall network more secure, and less likely to be attacked. So they will never try to change their block algorithm, even though other projects are just as secure with less power consumed. And if that opinion holds, the only way to eliminate this source of power consumption would be to crash the price, and cause the Bitcoin miners to have to mine at a huge loss to continue.
Instead of using an independent RNG to determine the next block producer Bitcoin miners are essentially flipping coins and whoever manages to flip like 78 tails in a row gets to create the next block. How crazy is that?
What's even more astonishing is that when someone creates a new Crypto wallet, it creates an obscenely long random number as a seed, and just starts using it. As long as the number is sufficiently random, the chance that someone else has generated the same random number is so small as to be functionally zero. So you don't have to ask for anyone's permission first before using Crypto. You only have to ask the Universe for some of its entropy, and off you go.
It's the same math of large numbers that leads us to conclude that every time we shuffle a deck of cards, the result is a deck that nobody in the history of the Universe has ever seen before. 52! is an insanely large number, which is on the order of 10^67 .
https://quantumbase.com/how-unique-is-a-random-shuffle/
The math behind Crypto is sound, and ensures that everyone's wallets stay secure. Noone but their owners can move funds out of their wallets, and once a transaction is sufficiently confirmed, it can't be undone. The only real threat to this is Quantum Computing, which might be used someday to Crack the relationship between public and private keys which is unassailable now. We'll see whether the people who run these Crypto networks are able to change their algorithms to be Quantum resistant in rhe future.
Oh yeah, Quantum computing won't ruin crypto. Cardano already has plans to transition to quantum resistant crypto primitives. We just need to wait for some standards to form around which algorithms should be used in the future instead of current ones. I'm not worried about quantum computers at all.
Oh, I have confidence that we can develop quantum-resistant crypto. My concern is in the governance of all the projects. Cardano seems to be in good shape, but it put some thought into how to make decisions that have at least some community involvement. But the market is driven by BTC mainly, and they have some issues in how they run themselves.
BTC's protocol has gotten steady, incremental improvements for 15 years without a single hour of downtime. Lightning was deployed a few years ago and continues to grow each year and get easier to use and deploy. Migration to quantum-resistant algorithms is in the interest of all parties who use the system including miners, banks, hedge funds, developers, users, etc. It's a very easy problem compared to other questions they faced around blocksize, taproot, etc.
I lost hope in Bitcoin because of this. It doesn't seem like it can evolve and develop. And holders don't have a say, just miners and devs. I like Cardano because it's actually trying and cares. It will transition to a full on-chain governance this year most likely.
Quantum computing is not a threat at all tbh. Computers that can crack public key encryption are "20 years away" and require some fundemental shifts in our ability to control physics. And that's the lab production version, not one available on the open market.
Quantum-resistant algorithms already exist and continue to be refined. Things will get migrated long before they become a realistic threat.
the massive power consumption is a net benefit, because it is spent in making the overall network more secure
I really have trouble understanding this argument. Joining a mining pool secures nothing.
The whole point of mining is to arrange transactions into blocks, and then generate a cryptographic hash of the block that meets some difficulty criteria. It costs some small amount of computing to do that. But an astonishingly large number of hashes won't meet that difficulty criteria, which is why miners have to try a gazillion times to find one that works.
However, once a block has a valid hash, it is added to the chain. Then, the hash of that valid block must be used in the next block, which will be equally hard to find.
By "security", what is really meant is "How can I be sure that a transaction can't be undone once it is committed"? And it's because all these blocks are stacked on top of each other, and cryptographically related. Once a transaction appears in a block, and a few blocks get mined on top of it, it becomes prohibitively difficult to un-do it, because someone would have to put in the computing power to re-authenticate a string of blocks, all while the rest of the network is adding blocks to the valid chain at a faster rate.
The security of this whole arrangement has so far been working good as well.
In order for someone to try and perform a 51% attack, they'll need to either compromise a large swathe of existing miners (e.g if the government seized control) or create/acquire hardware totaling more than 100% of the existing network today plus growth while you attempt to build more than 100% and then maintain growth over the rest of the network.
As the network grows that becomes exceedingly more difficult to perform.
I have really high hopes for something like proof of work stake, but it's not without it's own problems either, and with Ethereum, it's the first massive scale test, so it's not as battle tested as proof of work yet, although it's been used in smaller projects so there has been some testing. With more money on the line though, comes more will to try and break it, or use an exploit you may have held back beforehand.
One interesting difference with POW/POS is that if a miner/entity does somehow perform an attack, they keep the hardware and can continue to try. With POS, they should get slashed in which case the money is gone. But with POW you have the barrier of actually acquiring the correct amount of hardware, meanwhile in POS, you just need the money so there's no manufacturing/lead time and will be easier to achieve by state actors.
Bitcoin has literally 2 pools who have more then half of the block production. Also not all PoS systems have locking and slashing btw.
Pools that people could leave if something suspicious was happening.
Very different than an individual entity.
Well... Cardano has like 30 different pools that add up to 50+% of the block production.
If something sus was happening with one or more of those - people can just leave them.
Same thing but 30 is better than 2.
Definitely agree, 2 isn't ideal, and there's some level of trust happening there because of it.
There's been pushes over the years to get people to split apart more, and I'm pretty sure there was a significant split due to this at least once in the past.
It's gotta be either something like reliability, ui/ux, ease of setup, otherwise all I can come up with is a larger pool pays out smaller amounts more consistently and people prefer that?
We in Cardano have a "saturation" limit per pool. So if you have more than like 70M ADA, you don't get rewards for anything above that. This encourages people with a lot of ADA (either theirs or delegated to them) to run multiple pools. We call them multi pool operators. Cardano community has a really strong sentiment against delegating to multi pools. And if you are wondering if that figure I mentioned earlier (30 pools to reach 50+%) is just a few entities with many pools. No - this is actually 30 individual MPOs (multi pool operators).
That's a pretty cool solution to the problem.
That's a pretty cool way to address the problem. I originally wrote solution, but that's not really a solution since it could theoretically just be multi pools, but by putting a barrier in place like that to discourage it, it should lessen the problem.
My main issue with Bitcoin isn't even the POW vs POS angle, it's the fact that the core devs see no problem with their current POW algorithm, which is not designed to put any bounds at all on energy consumption. But I also think they should have increased the block size, and you can see where that discussion went.
I sometimes have a weird vibe like someone somehow crippled Bitcoin by making it not able to evolve and develop. I mean... If I wanted it gone and couldn't just destroy it, I would cripple it. Idk, just feels sus.
Anything that makes bitcoin more valuable is a financial benefit to all people holding bitcoin. Anyone who has a brilliant idea is financially better off by making their own coin.
Miners, who have money tied up in bitcoin-specific hardware, have a vested interest in maintaining the POW system or else their capital loses value.
There are probably exchanges short on bitcoin that stand to profit from a decreasing price.
So yeah. Someone crippled bitcoin. That someone is Satoshi.
Right... I don't get what you're saying. I like Cardano better anyways, it is using a provably secure Nakamoto based PoS, has a more decentralized block production, will transition to a fully on-chain governance this year most likely and genesis keys will be burned AKA it will finally be decentralized in all aspects. It's based UTXO like Bitcoin but with SCs (which are not insecure like EVM and Solidity). It will also have L2s and sidechains, Hydra (like LN with SCs). And on top of that we have a plan to scale L1 without compromising on security or decentralization (Input endorsers). Also Mithril will allow light nodes and wallets with full node security. I could go on and on. Best case scenario - Cardano becomes the main blockchain of the world, worst case - it coexists with Bitcoin.
Fuck the core devs is really all i have to add to that without going into it...
Luckily things like Ethereum and others were born due to them.
I have really high hopes for something like proof of work
I just realized I wrote the above, but if it wasn't clear, I meant proof of stake.
the power reqs keep the plebes out.
I remain convinced that crypto is just tech bros trying to redo the early days of the stock market so they end up rich instead
not a bad assessment.
I think what needs to be considered here is what we consider a waste of electricity. Efficiency calculations are dependent on waste, So I personally think electric cars are a waste of resources, they consume electricity to run and consume non renewable resources to produce just to move a maximum of 1-5* people per journey. Whereas an electric which still uses this resources can move over 10x that amount per journey, and trains over 30x that amount per journey.
So to me that's energy inefficiency at the consumer point.
Now let's look at energy generation and transfer. At the moment, alot of energy production is a for profit business, Company A builds a solar farm, Company B builds a Coal power plant and Company C (This would be overseen by the government, not a private company) builds a nuclear reactor. All 3 of these companies produce various amounts of electricity with different efficiencies, but all must be sold at the same price. It might only cost £0.01/KwH on the solar farm to produce, but must be sold for £0.33/KwH, the coal would be £0.27/KwH and nuclear would be £0.45/KwH.
You have 3 generation methods, each with strengths and weaknesses all being forced to sell for the same price. Normally in a capitalist system you see "Competition" (not really) on the market. Company A would say "We're cheap, but can only guarantee 97% uptime due XYZ issues", most homes would be fine with me this. Company B + C "We're not as cheap but we can offer 99.9% uptime" This looks great for companies needing that security in uptime.
I've gone on a tangent and can't be bothered finishing this post maybe someone else will.
