Bitcoin as a Battery(nickgrossman.xyz) |
Bitcoin as a Battery(nickgrossman.xyz) |
Thermodynamics and its higher order effects have profound effects on our modern world. We've been fooled into thinking otherwise, but new forms of money are clearing the fog. This is very exciting.
Usually in "Proof of Burn" you "burn" some cryptocoin sending it to an invalid address, and the blockchain has a proof that they are unrecoverable. (It was popular before someone notice that with an ICO you can have your cake and eat it too.)
In "Proof of Work" you "burn" a few barrels or petrol to produce electricity and then make some hash with the electricity, so if you find the correct hash it is a probabilistic proof that you burned the petrol. (You can cheat with other source of energy, like solar or wind, but they also have a cost.)
The energy isn’t still present in the Bitcoin.
This article goes into great depths to explain all the fallacies when it comes to energy and bitcoin: https://www.ofnumbers.com/2021/02/14/bitcoin-and-other-pow-c.... tl;dr is that bitcoin is just wasting energy and no amount of text will help improve that situation. It should be outright forbidden.
And the HN thread: https://news.ycombinator.com/item?id=26611342
Then, if it has to be forked why not start from scratch with something better? I imagine/hope many people are working on better crypto protocols at the moment.
Good luck getting real institutional money getting into PoS based systems though, PoW took 10 years to get accepted as a secure store of value for the tresuries.
PoW is going away quickly, but Bitcoin is not going to move, the "difficulty" is by design at least in the current concept of it as a storage of value.
Edit: By the way, it is possible (or will be in the future) to run staking pools on Cardano on Raspberry Pis, and get the same benefits as bigger hardware. Currently it needs 4~8gb of ram afaik, but pis are getting faster every release, next one might be good.
The point the article appears to make is that bitcoin mining is much more elastic in its energy use and is therefore uniquely fit to fill some niche energy markets.
That’s completely different from and quite a far cry from being a “battery”.
Bitcoin is not a battery. Its fiat currency that uses a lot of energy to perform a fraction of the transactions that would be needed for it to be used for normal day to day transactions (filling up your gas tank, buying a coffee, etc).
If anything, I'd say Bitcoin is the exact opposite of a battery, it's an energy sink. I say that because its fiat money. With the example used of aluminum, you've taken energy and made a durable good/commodity. You don't need to have faith in aluminum that it exists, it just there. Drop it on your foot and you'll have proof. With Bitcoin, it will just take a lack of faith and the whole thing becomes worthless.
Bitcoin is interesting, it might become a reserve/hedge investment like diamonds or gold. But let's not put it in the halls of the Duracell bunny.
Some people who have been exposed to curves like the one at https://en.wikipedia.org/wiki/File:Global_Carbon_Emissions.s... (which shows that almost all extra CO2 comes from after 1950, and *around 50% of all anthropogenic CO2 in the atmosphere dates from the past 20 years!) seemingly fall into a kind of cognitive dissonance and react with "surely this isn't true" (climate deniers); others rationalize that the most frivolous wasters of fossil energy are actually beneficial for mankind and the planet.
> One of my favorite things about crypto is that, every so often, your conception of what it is changes.
Yup. Money is weird.
Measurement of value, accounting of debts, commodity to be collected.
David Graeber's book Debt has a pretty good survey of our evolving, manyform, paradoxical thinking towards money and related metaphors.
As for crypto currency, I mostly agree with Mark Cuban's conclusion they're collectibles. Ergo, they're useful for escrow use cases, like exfiltrating money and swapping assets.
I'll believe crypto currencies are proper money once a government accepts them as payment for taxes.
Zug in Switzerland accepts crypto for taxes.
https://www.nasdaq.com/articles/switzerlands-crypto-valley-h...
I like bitcoin (the idea, not the burning of the planet, even though it's only a temporary hack to bootstrap the whole thing). And hey, maybe it will encourage building nuclear mining farms, that will give their owners free bitcoin, and then we can use the nuclear plants.
The only defense I can stomach for Bitcoin's unfathomable energy consumption is that it might be only temporary. Is it worth it? So far, not that much, but I think developed-countries under-estimate the value of bitcoin, since they have more stable economies, and thus currencies, and enjoy freedom of moving their money, and data privacy...
This builds the supply chain and labor force that are needed to perform a full clean energy transition. I don't have a strong opinion on cryptocurrency, but I have a strong opinion on energy supply chains.
Plug: I'm building https://cryptoclean.energy/ with this exact thesis. Check it out to get a renewable energy system for your mining rig.
What this means has nothing to do with energy, and everything to do with cost savings on bitcoin mining by intentionally increasing electricity load on a system based on electricity variation of renewables.
You can do that IF your goal is to get more bitcoin. But you're not storing energy by doing so. Electrically speaking, you are only a cost on the system.
It is a sink.
I saw no method of storing and re-releasing the energy
Only a method of immediately consuming the energy into something potentially useful and transportable. IT is not like transporting your BTC will allow you to extract new energy at its destination, the way that transporting charged batteries or gasoline would.
So it has utility, but not nearly as much as he's advertising in the headline.
"A putative store of value" != "a store of energy".
Gah. Crypto and the people hyping it need to be quiet or at least be honest about what is going on.
We are draining energy really quickly so we can make sure someone isn't double spending the imaginary money...
What a horrible article.
Welcome to reality. https://breedlove22.medium.com/masters-and-slaves-of-money-2...
(Also it's newer and more upvoted but for some reason no longer on the front page?)
That's also why hackers may be the first to figure out the catastrophic failure of cryptocurrency, or perhaps ALL cryptocurrency as a class, or the exploit to disrupt the disruptor and render cryptocurrency a useless dead end. It's founded on assumptions both explicit and implicit. One of the implicit ones is that capitalism will continue to be the force that checkmates any argument against crypto: get enough capital into it and the capital will seek to protect itself, honestly or dishonestly, peacefully or violently, with no consideration for any other concern.
Hackers are capable of thinking through that scenario and asking whether, by contrast, something like bitcoin might be the exploit that destroys capitalism by increasing its efficiencies until they're untenable.
There is no way to make aluminum other than putting huge amounts of energy. Aluminum has value to everyone in some way, not just those invested in it. There are plenty of ways to do digital transactions, or even to do proof-of-work cryptocurrency (if you feel that's necessary), besides using Bitcoin. With aluminum you can even reverse the process and use it as an actual battery. With Bitcoin you can't. The energy is burned forever.
I really do think cryptocurrency and block-chain technology is cool. But the level of hype and double-think is getting insane.
Unfortunately, this same architecture gave birth to both artificial intelligence because of the way it mimics DNA, and a black hole. The inevitable faith of a configuration of matter permeating all spacetime is the end of the universe.
Thank you bitcoin, the worst ecological disaster, like, ever!
At least we got AI and a Blackhole.
(meanwhile, my comment will be flagged in 3... 2... 1...)
I agree with this, the amount of hype makes it hard to find the true innovations in the space, because most of it is honestly shit.
> There are plenty of ways to do digital transactions
Yes, but Bitcoin was not initially made to just "do digital transactions". It was made to be able to do digital transactions without any trusted 3rd party. The distinction is important, because that's why Proof of Work exists and is energy intensive in the first place.
Now a couple of years into blockchain technology, we have some alternatives that _might_ work as well as Proof of Work (Proof of Stake for example) but we've yet to see if it actually can work on the scale that Bitcoin operates in. Time will tell.
Which is what makes it even more absurd that people are claiming that adding centralized layers on top of Bitcoin is a valid solution to the cost and speed of transactions.
They're devoted to Bitcoin itself above any of the reasons why the technology was built in the first place. But if people don't actually care about having distributed payments, and if they're perfectly willing to buy into payment processors that are only using Bitcoin as a store-of-value in the backend, then Proof of Work doesn't matter.
Proof of Work/Stake only matter if Bitcoin is actually being used as a trustless and anonymous payment system for regular transactions, which is ironically the task that (among most other cryptocurrencies on the market) it's perhaps least suited for technologically.
I'm not saying there's no innovation here. I am saying that I don't see any evidence that Bitcoin's largest proponents care about that innovation. I don't see any evidence that any of this matters beyond giving them an excuse to hype a speculative asset. If they did care, they would have abandoned Bitcoin and moved to basically any other coin -- anything at all that did Proof of Stake to reduce transaction fees and environmental costs, or that fixed its price to the dollar, or that had better privacy.
I firmly believe at this point that the technology of Bitcoin matters to the majority of its investors about as much as the technology of Beanie Babies mattered to its investors. That's not to say the technology isn't interesting or that it can't be used in useful ways, but most of the time that people talk about Bitcoin's success, they're not talking about technology.
1. Those who wrote the encryption and understand the math (very small %).
2. Those who write the software powering the blockchain (small %)
3. Those who write the wallet software you use to use the blockchain (small %)
4. Those who build the software you use on the same platform you use your wallet.
5. The operating system you use implementing all of the above.
6. The hardware you use implementing all of the above.
Yeah, tons of no trust....
Proof of Stake as a theory and concept is probably almost 10 years old at this point. And as an actual real-money-in-production blockchain Proof of Stake will actually be 10 years old in the next couple of years or so.
I wish I could confidently remember specific names and dates here, but on bitcointalk I remember SunnyKing coding and launching a real in production a PoS coin almost 10 years ago now...I want to say it was something like "NuCoin" but I could be off on the name there. I do speicifically remember he made Primecoin which was an alternative PoW function based on discovering the world's highest prime numbers(kind of cool, which is why I remember it I guess) after he was done with his initial PoS coin. He(SunnyKing) was also endlessly trolled and mocked due to the theoretical threat PoS posed to those invested in Bitcoin and other PoW coins like Litecoin at the time.
There was also a larger PoS coin called NXT from that era(again, almost 10 years ago, 2013 maybe?) that I suppose never really caught on, perhaps it was technically flawed?
There were lots of legitimate criticisms of PoS regarding whether or not it was a truly viable decentralized consensus mechanism. And I don't claim to after the answer to whether or not it is, or was sufficiently viable. But historically there was also lots of trolling and suppression from people trying to protect their investments.
It apparently may be finally getting its time, given PoS as a technology seems to have only recently become a mainstream topic of interest, despite how old the tech and theories themselves are. Perhaps that's just because the problems were only recently solved?
But regardless, I find it funny how much play PoS gets these days now that mainstream media is reporting on how PoW mining as a whole is using more power than many nation states, as if there was any other path for PoW to scale given its fundamental design.
Assuming bitcoin stays valuable, does it make sense to use bitcoin mining to augment some power projects? Like using otherwise wasted energy to mine or to mine in places where it might not be easy to transmit the electricity?
If you dislike Bitcoin, obviously any kilowatt used by it is 'pure waste'.
If there was any way to stream porn using less electricity, we would consume less electricity for that. If there was any way to make those billboards consume less electricity, we consume less electricity.
As soon as there is a new way to do bitcoin related operations using less electricity (eg: ASICS), the security of the network decreases. And everyone moves to the new model, in order to go back to consuming a lot of electricity, in order to restore trust in the network.
On a macro scale, Bitcoin has to consume lots of electricity, any possible improvement in that area needs to be wiped out by just people going back to consuming more electricity, otherwise the model fails. The whole bitcoin trust model revolves around people being ready to waste a ton energy for it. That's not the case of porn, or billboards: the energy consumption is just a side effect and not a requirement, they have value outside of the consumed electricity. Bitcoin entire value is only dependent on how much people are willing to invest in it, which roughly translates on how much electricity is wasted.
Now 1. a bad billboard doesn't make bad btc better. Neither does everything else you mentioned.
2. there is a margin of difference on how much enjoyment and entertainment something like porn makes vs. btc does.
If we would need to cut down on a lot of things to reduce co2, i would argue that btc would be much much further up the list then porn.
> [...] despite being one of the most fiat currencies by definition [...]
FIAT currencies are by design inflationary to enhance spending. Bitcoin is deflationary _by design_. Since there's no bank or state backing Bitcoin, the only way that bitcoin makes sense was/is deflation. This quality makes BTC an asset and that's what it is, a digital asset. As a currency BTC has already failed.
What is your working definition for fiat currency?
Mine is:
"Fiat money is a government-issued currency that is not backed by a commodity such as gold."
Government doesn't issue bitcoins. Stopped reading after that as you seem uneducated on the subject.
A sound monetary system has more value than anything else on this planet. There's a lot of information out there, but here's one article to illustrate my point: https://breedlove22.medium.com/masters-and-slaves-of-money-2...
> The energy is burned forever.
Wrong. I can use it to pay someone to do work, for example. "Work" in both societal and physical senses. That means the energy is not lost in a bitcoin.
That moves the definition of battery far away from normal usage. That means anything of monetary value is a battery, whether it’s cryptocurrency, a $20 bill, or a piece of gold.
Paying someone to do work has the actual energy come from another source, such gasoline or food.
Building renewable energy sources in the middle of nowhere to power a bitcoin farm is just completely nonsensical and does noting to help with the shift to renewables.
The comparison with aluminum production is also quite weak, since aluminum has an intrinsic economic value, whereas cryptocurrencies don't. Most of the arguments given in the article boil down to a variant of the broken window fallacy, where economic value is falsely attributed to a useless waste of resources.
Bitcoin transactions require the solution of a completely useless and expensive to compute mathematical computation. THIS IS BY DESIGN, TO MAKE IT SCARCE.
In the short term, we are facing a critical shortage of computer chips because bitcoin miners are buying critical infrastructure and using them to do absolutely useless math to speculate on an obvious bubble.
In the long term, we absolutely need to solve global warming, and the only way we will do so is if we figure out a way to decouple carbon emissions from productivity on a global scale. Bitcoin makes this task much harder - by its very definition, bitcoin literally scales with energy consumption. Energy prices and bitcoin prices (plus fixed costs due to mining equipment) will always be in some sort of equilibrium. Second - we need those chips that are currently calculating completely useless hashes to actually be put to use in productive sectors.
IF your attitude is some variant of - fuck you, I don't care about the world, I just want to get rich profiting from this bubble - fine, I can't convince you to care about the rest of humanity. But please - be clear eyed about this: there is not a single credible global warming scholar that believes Bitcoin will help. Not one. The only people who try to push forward incredibly shoddy thinkpieces about how Bitcoin/NFTs will help global warming are obviously Bitcoin speculators or paid shills.
b) if you choose today to put yours on ETH instead of a chain that is today not PoW, you don't get to play the "but soon(TM)" card IMHO
While correlating crypto with something random every week (Easter bunnies next Sunday?) can be marginally interesting, this instance makes no sense. We can't extract electricity from aluminum or Satoshis, we can buy it though, but that's outside of the battery scope.
If a new energy source becomes available, so 10x as much energy as before gets put into aluminum smelting, you end up with 10x as much aluminum.
Bitcoin "mining" does not work that way. The computations are an artificial hurdle erected to hit a predetermined level of scarcity/difficulty. If 10x as much energy as before gets put into bitcoin "mining", difficulty levels will adjust, and you end up with exactly the same amount of bitcoin as before.
The difference between bitcoin and aluminum is that bitcoin values the energy not qua energy, but purely for its wasted cost, so if energy becomes cheaper overall (or hash computation becomes more efficient), you have to use more of it to create the same value for bitcoin, if it becomes more expensive, you can create the same value using less energy.
That's why I find it silly to say that bitcoin stores "energy". It stores sunk cost.
US money supply has not grown at anywhere near 10x recently: https://fred.stlouisfed.org/series/MZM
Tether supply has grown roughly 10x since January 2020, though, but that's on a blockchain, so surely everything is on the up and up: https://coinmarketcap.com/currencies/tether/
Why are we not yet fully running on renewables? Why don't we have trillions of dollars pouring into solar panels and wind turbines and pumped storage hydroelectricity and battery storage?
The answer is there's not enough demand for excess electricity to create and keep excess electricity. I read about new pumped storage hydroelectricity installation closed due to lack of demand. There are too few ways to turn excess electricity into money. If we are going to have fully renewable energy in the future, we need to produce way more energy than we need so when conditions are bad for power generation we still have enough. And for that we need incentives. We are struggling to create artificial, law based incentives on global scale.
Cryptos are currently the best way we have to organically create those incentives. There were already instances of crypto miners selling energy they contracted, back to the grid, when price of energy briefly exceeded the gain they could have by burning that energy to mine.
When prices of crypto rise again in few years and hardware hashrate plateaus we may reach a point when miners will be building/buying new windmill and solar panel installations on mass scale, because their costs will be dominated by the energy costs and the cheapest energy will be excess energy renewables produce.
We don't lack resources to reach the green future, we lack incentives, and if we are lucky meteoric rise of price of crypto can provide those.
EDIT: And the post is flagged into oblivion. I'm no longer happy because interesting observation got silenced. Well I guess see you all in few years.
EDIT2: .... and now it's unflagged. :-) A hot topic.
Batteries are batteries, fair enough.
Load shifting "are batteries" because you're not using the electricity now, but later. So it's equivalent to storing it now and using later. Fine
Aluminium smelting "are batteries" because you're shifting the location. It's like putting a battery in a ship, charging it then shipping it somewhere else (as long as it doesn't get stuck ;) )
Bitcoin mining is... ? You mined your coin now, using electricity, cool. Then to use it you need to spend more electricity. 812.74 kWh per transaction to be exact https://digiconomist.net/bitcoin-energy-consumption/
This is ridiculous. This is not a battery.
> if we think of Bitcoin as a battery, what can we do with it? The key properties of Bitcoin’s battery are: 1) always on and permissionless (no need to find customers, just plug and go)
I think it is a very wasteful transformation of the power put in. You can get it to be always on and "permissionless" without burning this much energy: check out [Bitcoin Cash, Dash, ZCash](https://www.crypto51.app/) and other, cheaper-to-mine (still proof-of-work) currencies.
The actual benefit you get is security via out-costing: "you have to burn up this many resources to double-spend".
Because of the simplicity of this out-costing, lots of people trust it, because they can understand it (even though it's wasteful).
> and 2) naturally seeking low-cost electricity: it will always buy when the price is right.
Just because electricity is cheap in some places doesn't mean we should bid it up pointlessly.
----
I would love to see a PoS scheme that I could understand enough to trust. But they are much harder to create, and until then, I keep my money in PoW ones, in spite of the cost of transacting.
I don't see a single coherent argument against in this comment section, just incredulity trying to defend itself. Real dynamics at play here.
We're still a ways off from realizing what's going on but I'm happy to see others articulating what the code can only describe.
From a purely financial point of view I suspect maintaining a bitcoin mining operation in remote areas is harder and requires more frequent upgrades than if you were doing a more traditional manufacturing process.
* the mining rig itself. If there's a way to ship manufacturing product from the location, there must be a way to bring this in too. Pound for pound and liter by liter, this can't take more space or infrastructure to bring than aluminum or any other physical product I can think of.
* cooling. same as above.
* electricity. If you can manufacture aluminum, you have enough.
* small amount of on-site workers to perform critical repairs
Things you don't need:
* large custom-built machines.
* many trained/untrained workers to take care of the machines
* infrastructure that can consistently ship tons of material to and from a remote location all year round (mining rig upgrades consume much less mass/volume and can be batched to avoid shipping during rough climate seasons)
Yes it does. It stores what is called "monetary energy", and monetary energy belongs in the same class as kinetic, elastic, and chemical energies.
One of the key differences between bitcoin and other monetary assets is that bitcoin is absolutely scarce (the first absolutely scare monetary asset in human history), so its energy cannot leak via inflation.
Why is waste a good thing if it's renewable? It's the argument I see brought up almost every time. It feels like people are conflating renewable with a infinite energy source.
To the authors latter point, Aluminum isn't just 'like' an energy battery - it IS in fact a very energy dense battery. Aluminum alloys are used to liberate large amounts of Hydrogen at the point of use, which can be used in fuel cells. This is currently used as an air independant energy source for some underwater vehicles. The oxidized byproduct (which is about 8X less dense than the Al3 alloy itself) can be re-smelted to "recharge" the Al3+ battery. Apple actually developed a very low-Carbon aluminum smelting process, so the total cycle is very clean as long as renewable energy is used in the smelting process.
I sympathise with the need to break off governments and giant like Visa and MasterCard. But we need to be better than them before transitioning.
Btc is pure speculation and fomo
If you think about it, both of those describe the same economic transaction — just from opposing vantage points (what is "charging" to one party in a transaction, is "discharging" to the other).
Relatedly, consider Switzerland's pumped hydro at Linthal. It'd be hard to dispute calling that plant a "battery" (works on gravity+water); but also consider the economic role it plays: it's an energy price arbitrage facility.
During the night, when grid prices get low, the plant "buys" the energy "for" water volume in the high lake. During the local day, the plant "sells" the water volume back, "for" literal electricity fed back into the grid at a higher price.
... Why have the water?
Bitcoin consumes vast amounts of energy, far more than "traditional" payment systems (per transaction), and denying that reality helps nothing. Bitcoin is an energy-wasting system. Fix that problem if you want to see wider adoption; don't just pretend there is no problem.
Stop the supply of money, it goes away.
In a sense, the aluminum coming from Iceland is like a battery. What is a battery? A way of shifting both the location and the time-of-use of energy.
And indeed, energy-backed currency seems to be a staple of science fiction - things like "energy credits". Cryptocurrency gets us halfway there, in the sense that you can transform energy into it, but the reverse ain't really feasible.
Perhaps as (actual) batteries and supercapacitors and such continue to miniaturize we'll see something closer to a true energy credit, with financial transactions taking place through the transfer of stored energy - be it directly (people maintaining batteries as wallets) or indirectly (people exchanging currency entitling the holder to some amount of energy).
Specifically, more security for the next block, only. Once that block is mined, the process starts all over again for the next block.
The energy usage reset button is pressed as soon as each block is mined. No energy is "stored".
In that sense, Bill Gatess "Reinvented Toilet" does kinda the same. People pee and poop, sewage is processed and is converted to clean water and can produce energy [0]. Thus PaaB(!?)
[0]: https://www.elitereaders.com/waterless-toilet-system-generat...
I find it strange that even people at a prominent firm like Union Square Ventures are perpetuating such misconceptions.
Building renewable energy sources in the middle of nowhere to power nothing also appears nonsensical at first glance, yet it actually happens to the point that energy prices can go negative.
For one, some forms of renewable energy are highly volatile and can not just be made to match demand under any circumstance. Hence there is a need for batteries to store this otherwise worthless energy. Today, these batteries just don't exist, wind farms are ideally backed up by gas plants, whose output can be regulated to even out wind volatility. In other cases, wind is backed up by coal or nuclear plants which can not be regulated as well, hence more of that wind energy goes to waste.
Secondly, especially in the case of China, these renewable energy projects are meant to raise the domestic product and production capacity numbers, with little regard to actual demand. The electricity grid to deliver all that energy to actual consumers is an afterthought.
In due time, these problems shall be solved. Better ways to store volatile renewable energy will emerge, better transmission infrastructure will arise. Bitcoin could be a stepping stone to solve the hen-egg part of that problem.
It seems to inspired or in the spirit of ‘The Ministry for the Future’ by Kim Stanley Robinson.
“ It’s called Carbon Coin in the book, a Bitcoin-like currency that the Ministry gives out for carbon sequestration — that is, any project that sucks CO2 out of the air, whether it’s carbon capture or farmers rewilding their fields — at a rate of one coin to one ton. Oil companies get coins if they stop being oil companies, basically, leaving their assets in the ground for a century or so. Coins can then be bought and sold on currency exchanges like any other.”
The only argument I can see is that the sheer resource hunger will force our hand in using renewable energy. Of course, I am not saying this is a good argument at all.
There is no such thing as virtual energy. And the other forms of payment we use are a million times more energy effective.
What bothers me is that newsletters as this one who I believe are widely read serve this up as a good idea.
https://www.exponentialview.co/p/ev-315
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This is actually a weird game theory problem because there are a lot a miners with expensive hardware that would be worthless if such a change happened. You could fork it, but you'd have to attract miners after burning them (possible if commodity GPUs were viable, again), and you'd have to convince people that the new tokens are also valuable, and this isn't just Bitcoin Cash II.
Bitcoin has odd, long-term systemic risks based around miners.
I'm happy to let BTC win if it means that global warming is halted. But if worldwide net zero emissions is a prerequisite for BTC being considered non-wasteful then that's a tall order.
"Distributed" sounds nice, but it isn't really that valuable in the end.
It's not "required", it's only that high because it has so much success. Bitcoin would be working with only one miner running, the first blocks were minted on a private computer.
Miners have, in the past, resisted improvements to the network that would reduce their profits so this all seems pretty unlikely as well.
> In reality, this couldn’t be further from the truth. Bitcoin is actually one of the greatest financial incentives to transition the world to clean energy.
without bothering to explain why any one point they highlight would beget any one outcome claimed by the post. In fact, there are some backwards incentives that are missed. An example would be their claim with regards to Great American Mining: rather than using mining as an incentive to pay for capturing lost methane, what's to stop producers from diverting existing gas production towards mining right now, putting demand pressure on existing supplies and driving up gas production (and leaks, etc.) rather than just capturing and processing leaked gas?
There's nothing. There's no incentive for existing gas facilities to fix their leaks when they can just pipe their existing output into bitcoin, drive up demand for gas, and therefore justify more drilling (and more inevitable leaks that they won't have any incentive to fix).
> Bitcoin isn’t bad for the environment. In fact, Bitcoin is very, very good for the environment. The University of Cambridge reported at over 75% of miners use renewable energy and now there are solutions to turn methane emissions into mining as well.
This doesn't mean anything. Or worse, it means 25% of a phantom industry makes use of dirty power, So whatever Bitcoin imposes on the world in power usage (130 Terawatt-hours of energy - https://techcrunch.com/2021/03/21/the-debate-about-cryptocur...), 25% of that, or about 0.15% of global power production, leverages dirty fuels. If all mining ceased tomorrow, we'd benefit substantially from dirty power usage coming down and more clean energy supply being directed back into productive work.
Thanks for hearing my rant.
The article states that Bitcoin uses a lot of energy and as miners want to maximize profit, they want cheap energy. This is good for renewables as that is cheaper than other forms of energy generation.
Doesn't everyone want cheap energy, like factories or heavy industry? Are Bitcoin miners really more eager to push for clean energy than other industries?
The whole arguments sounds like "we need to use up more energy so there's more incentive to produce additional, clean energy".
wish I could downvote.
This reminds me of another interesting point I recently saw raised regarding WWII. WWII is often credited with ending the Great Depression, but in reality was primarily helpful insofar as it made it politically viable for the US government to inject a massive stimulus into the economy far eclipsing the New Deal (and other governments to do likewise).
Tying that to the broken window fallacy, it seems the ultimate conclusion is that wartime economic policy without the actual war would have been a better way to achieve the desired result.
Of course the reality may not be so simple from a US perspective when we consider that all the broken windows were outside our borders, the national focus and urgency imposed by the war, and that removing the war from history would have dramatic unpredictable effects on our world today. Nevertheless, the idea seems convincing enough to me in abstract that starting a new war purely for perceived economic benefits would be an inefficient alternative to simple progressive economic policy on an equivalent scale.
Well, Britain transferred all its money to the US for arms, so that would help the US economy. (Churchill spent the last year of the war concerned with how to pay for it.) Also, there were wage and price controls to control speculation (and inflation.)
Granted, it could still provide value beyond hot water: if you happened to own a considerable amount of bitcoin, your net worth would benefit from a greenwashing strawman giving bitcoin some more press attention.
Viewing aluminum as a battery isn't even valid, unless people start oxidizing it for energy. It's more like economic value added. Bitcoin is only a "battery" in the sense that it could be turned off on-demand to free up power generation capacity.
It's like if gold began to sink into the ground the moment you stopped mining it, and you had to keep mining and smelting it at a ever-more furious rate to keep it above ground.
You can regain the energy where it’s needed by using Bitcoin to purchase it
That's not how batteries work.
It's not because you'll need it later. It's because you can sell it later.
If there's no way to monetize excess energy (because we lack storage), people won't invest into making excess energy. And since renewables produce a lot of excess energy it makes them less desirable than they should be.
Analogy to broken window fallacy is totally warranted. But please notice that what broken windows do is extend capacity of glaziers. And if windows are broken cyclically then at times when there's not much demand for window repair additional glazier capacity will be used in other ways like for building glass skyscrapers (I'm stretching analogy, I know).
Renewable energy is not a scarce resource, so it's unlike the glass from the fallacy. And work put into creating too much renewable energy is work well spent given horrible state of our power network and our over-reliance on polluting energy generation methods.
The fallacy in broken windows fallacy is that additional money earned by glazier will somehow benefit the economy, and that's not the case. What might possibly benefit the economy would be oversupply of glaziers, which could make some very beneficial enterprises economical.
It's like with education. We know education is of a huge value to society. But we don't have in the economy a good way to funnel more money into education, especially to the places where it's most needed.
If you figure out a way of pouring money into training new teachers and paying them, so you have oversupply of teachers on the surface of it you are wasting resources, but additional teacher capacity even if it's often underutilized or used to 'spin the wheels' will benefit society.
Economy is prone to getting stuck into local optima and sometimes you need countereconomical nudge to get out of it to be free to travel to better optimum. I hope crypto can be such nudge for renewable energy production by sort of filling the gap of lacking storage capacity technologies.
It's not because you'll need it later. It's because you can sell it later.
I agree with what you're saying though.
Now excuse me while I go feed little Duracell. Good girl!
Edit:as for crypto you're completely correct. If one set out to invent the most inefficient energy use possible in computing the result would be crypto proof of work that grows all the time.
While you could call it (generously) a form of embedded energy, it fundamentally can not turned back into a form of energy directly, making the comparison very silly.
As others have mentioned, Aluminum can actually be turned into a battery to get the energy back. Bitcoin only if you traded it for energy....(still not a battery)
Crypto is a weird kind of battery, where you can put in energy, take out money, and when you need energy later, buy energy for that money.
Analogy doesn't make sense at all if you skip the money part.
You are talking nonsense here. Money is just an abstraction of energy and resources used by a human organization. Remove the money and the organization can still function. Remove energy and resources and the organization can't function.
The less energy we use the better for now, given that part of that energy will be "dirty".
And storage capacity technologies we can create are oscillating around break even point economically.
There's no gold rush to place energy storage system everywhere and it's not obviously economically profitable.
However variable load such as crypto mining provides similar incentives as energy storage. And there is a crypto gold rush.
It's already being done to some very small degree by few companies that locate their ML server farms in places where energy is cheap and renewable.
I hope this application will some day compete with crypto for computing power and energy and win but I don't think it will be popularized and commoditized soon enough to bring money into green energy.
I hopefully await headlines "ML training now uses as much energy as Australia".
If you could create crypto based on ML training it would be so cool.
Crypto mining is a business; they may find it beneficial to mine during both peak and off-peak hours, and they're unlikely to care whether the electricity is coming from wind or coal, so long as it's cheap enough to turn a profit.
So as a side effect, yeah, it may make building new renewable sources more feasible, but it's a big shotgun and there's a lot of collateral damage.
As such, I don't see that Bitcoin Cash, Dash or ZCash would be fundamentally more efficient if these factors were to rival Bitcoin, even if parameters such as block size were to change. For the longest time, Ethereum transactions were far cheaper than Bitcoin transactions, but today they rival Bitcoin.
Currently Bitcoin limiting the block size to 1MB is artificially lowering supply.
Recently, Bitcoin Cash has surpassed Bitcoin in transactions per day: https://bitinfocharts.com/comparison/transactions-btc-bch.ht...
Their blocks are larger, so there is more room for transactions, so miners are not so well rewarded, so they can afford to waste less electricity in total.
Of course, this reduced waste implies reduced security (instead of securing >$700k/h, it's "only" $8.5k/h - https://www.crypto51.app/).
Moreover, the energy consumed per transaction to produce the PoW to earn the transaction fee decreases when the transaction fee decreases.
So for both of these reasons, a cryptocurrency like Bitcoin Cash, that can process thousands of times more transactions than Bitcoin, has the potential to be orders of magnitude more energy efficient.
Just like governments mint currency from bullion, miners mint bitcoin from electricity.
While I think it's weird to consume so much energy to create something so ephemeral, I'm still unclear about the externalities, eg negative ecological impact, driving electricity prices up. Is all this effort worthwhile? Maybe? It feels like a tulip bulb craze, south sea bubble. But I've been so wrong so many times, I question my own certainty.
1. The true believers like labor theory of property a lot, and see having a mining rig as an extension of that(falliciously or no - there are plenty of critiques of labor theory of property itself). A bitcoin represents the "same amount" of effort relative to its value at a given moment in time.
2. As a lower margin use of energy premised on maintaining consensus, it has qualities that resemble perfect competition(in the economist's sense of that phrase) but actually go BEYOND perfect competition. While you can own a large part of the distribution or mining power, if you try to monopolize Bitcoin as a rentier you just end up forking it, as has been demonstrated by various events over the years. If people don't like your particular imposition of scarcity, they pull the rug in short order.
The second part is rather more important than the first, IMHO. Mining's meting out of energy usage as credit and the resulting price deflation is a way to get people on board with consensus and start engaging in speculative action, but there's a sense among the people interested in other cryptocurrency that that's just a starting point, and the development of distributed consensus tech itself is what makes this a "railroad" and not a "tulip".
"No rentiers" is really a pretty earthshaking concept, to the point where most of the people in the space can't see that light and look at the shadow puppets instead. But it does not seem to be refuted by anything I've encountered. While onramps and offramps to crypto are mostly controllable, this is still a huge upset to our models of what markets are or could be.
You can judge that there exist such people by the fact that the bottom of crashes (at the maximum fear), do not continue until zero.
I suspect cryptocurrency fills a need for hard money - not like fiat, that loses purchasing power at the whim of unelected central or commercial bankers.
Of course, there's lots of volatility, but I suspect that's normal for an asset class this new. Do you research, discount its future value to you, try to come up with true and relevant inflation rates, and only buy when the market is in a fear cycle.
About the externalities, they are the same as with any other human endeavour. Government should help internalize environmental costs.
Remember, their goal is to make money. As we’ve seen over and over again, there’s a strong financial interest in doing whatever is needed to make their holdings profitable and most will say anything short of legally actionable misrepresentations.
Cleaner energy sources are a necessity, but simply reducing consumption will always have the best impact on sustainability.
Hydrogen production is another possible use in addition to aluminum.
Renewable energy like that provided by Iceland is a relatively rare and precious resource
Oh well, on my timeline I hung out with Thoth.
Speaking of "burnt gigawatts", if our society is still using coal to produce energy, are you blaming also Bitcoin for this? Too easy, sorry.
So yes, it's arithmetically a total waste.
Bitcoin may be a lot of thing, but it isn't a fiat currency.
"A novelty of the 20th century was the issue of fiat currencies by governments. ("Fiat" means not backed by any reserve commodity, as the gold- and silver-based currencies of previous centuries were)." [1]
Next Tuesday? Sometime this summer? Next year? A decade from now? 2070?
Everybody knows there are problems with producing too much CO2. However, nearly everyone’s hoping (but not saying) that the bill doesn’t come fully due until they’re dead. And by “fully due” I mean “directly effects their day-to-day life in a truly drastic way.”
There's a reasonable case that this gained force _last_ summer, i.e. in 2020
source: https://www.bbc.co.uk/news/world-us-canada-56288038
But yeah, it takes a few decades for the bill to come fully due from a "decline in birth rate".
According to Adi Shamir[1] 98% of bitcoins belonged to 2% of portfolios in 2012. So... The government is "bad" because you can actually express your opinion in monetary policy, you know who's who, etc. and BTC (or any other crypto) is good because you have absolutely no idea who the 2% is? I'm not following...
Regarding the gov and BTC. The government will tax BTC the same will tax any other asset, so in reality, the gov doesn't care. You can choose to hide profits from BTC and you'd choose to hide profits from any other financial activity. I don't really see the US Gov fighting bitcoin, if anything the gov tries to put BTC into perspective.
If you are anti-gov because "gov is bad (by default)" I get the feeling but has little to do with BTC.
And why?
Because our current finance market is regulated and we don't need bitcoin to free it.
Its not technology which is putting all those restrictions and systems onto the finance market therefore a technology like btc doesn't solve anything.
Companies for example are not allowed to do trade with North Korea by law. So if everyone starts to use btc to do exactly that, guess who will step in and regulate it?
I'm always lost on why people think btc will fix any issues we currently have. There is a reason why people invest in Euros and Dollars ('hard' currencies) and gold.
We'll continue to bridge the gap between monetary -> electrical energy. A bitcoin is a store of monetary energy, and the bitcoin network is readily available. We're building solutions on top of the network to more quickly and easily convert that monetary energy to electrical energy.
It's somewhat analogous as converting readily available wind (kinetic energy) to electrical energy. There is a large gap between the two forms of energy, but we're continuing to close it.
A battery stores PRODUCED ENERGY and gives out the SAME PRODUCED ENERGY with loss.
You might not care but the problem is ENERGY which would not be needed to be PRODUCED to save co2 and our planet.
And you can play around with the idea how Bitcoin can be useful on supporting this stuff but honestly? No one needs btc for sustainable energy investment. No one.
And about this excess energy garbage: Either its so much excess energy that the system ooptimizes itself and reduces the co2 output by shutting down or prices are so different than someone is building a REAL Battery to make money out of this. Bitcoin would just put that energy segment onto the global market by some arbitrary decoupled btc value.
b) Not sure what your point is. Global climate change is by definition a long-term problem, and yet you're fretting about a couple of years. Right. This sounds more like a personal disagreement with Ethereum than a genuine interest in supporting green cryptos.
Because it makes 0 financial sense to do so. The market demand for gas waaaayy out competes bitcoins demand for gas.
That's purely artificial, it's unnecessary, this has been discussed to death. PoW is useless work. You aren't doing useful work you are randomly double SHA2ing energy back out into space just to play the lottery... oh look I found a nonce which hashes to less than the magic number, who cares, this has no material value, it's not functionally useful, it's contrived.
PoW is not fundamental to blockchain or crypto currencies.
In a world that’s already struggling with this, it makes no sense at all.
Yes. Given enough time, Bitcoin will gentrify the power grid.
If you have no way of selling it it doesn't matter how much it is needed.
So you will set up energy storage company only if you know you'll be able to sell energy you store later at high enough price.
Form the point of view of the economy it doesn't matter what will happen to energy. And economy is not just direct effect of physical causes. It's separate system that to some degree is synced with physical world. But not all that much. Much of our wealth is locked up into capital that is being gambled to get more capital without any connection to physical world. And when those connections occasionally crop up it might even be dangerous like in the case of global food prices recently when investors figured out a new game using food prices for them to gamble. You probably think that crypto is one such dangerous connection, but I believe it might be a beneficial one.
Crypto is not an electrical battery. It's economical battery. It turns energy, potentially any amount of it, into value. Even the worthless energy, that is produced when conditions are excessively good for energy production.
The beneficial effect of crypto is that it is variable load that can turn any amount of nearly worthless localized energy into globally transferable value.
You can use the value later to purchase energy (and energy generation equipment) anywhere else.
As such it incentivises building energy sources that might generate a lot of excess energy on peak production, like windmills or solar panels, or that are too remote to transfer their excess energy to places where it could be utilized.
Most of my interest is around authenticity. Provenance, verifiability, identity, and so forth.
Ian Goodfellow articulated my own hunches, beliefs about this: Detecting fraud, fakes, lies is a non-starter. Authenticity has to be out of band. So sign your works, and then record it on some trusted blockchain.
Ian Goodfellow: Generative Adversarial Networks (GANs) | Lex Fridman Podcast #19 [2019] https://youtu.be/Z6rxFNMGdn0?t=3329
Goodfellow is the first person I've read (or heard) that espouses this pretty basic, obvious position. There's apparently still a giant cohort who utterly reject authenticity. Even as opt-in. Because something something Freedom Speeches™.
I intend to learn about the consensus stuff. Like you seem to already grok. That's clearly a necessary enabler for authenticity use cases.
You don’t need that either. Stacking concrete blocks can work as a battery: https://www.youtube.com/watch?v=mmrwdTGZxGk
In a perfect world, yes. We would use less electricity if we realize we could. Unfortunately it doesn't work like that in the real world. In reality it has to make economic sense, as capitalism is "the way of life" in the western world (and many other places), otherwise it won't be thought of. We're slowly changing this.
Bitcoin is capitalism modernized, fully on the internet and on our computers. Since computers and the internet tends to multiply everything, we now have capitalism as a protocol, intensified like never before. Since being environment friendly is not a benefit for the participant in the network, it won't be a consideration.
A big fault in the protocol, and hard to see how it can be solved in Proof of Work. Luckily there are some people working on alternatives but we have yet to see if they actually work in practice on the same scale as Bitcoin.
In contrast, fiat value is held because an authoritative party says value is held, e.g. Chucky Cheese tokens, or the USD. Fiat requires this authority, as in its definition: “An arbitrary order or decree.”
There are no authoritative parties declaring that Bitcoin has value, rather the market is arriving at that conclusion through decentralized operation, just as has occurred for thousands of years with gold, shells, etc.
[1] https://nakamotoinstitute.org/shelling-out/
[2] To say that a store of wealth also has uses as jewelry is redundant, IMO - storing and displaying wealth are age-old desires.
If Chucky cheese tokens are money at all, they are “representative money” because they can be readily exchanged for various commodities by the issuer (the prizes and games).
A central authorities decree is not required for money to be fiat, it just simply can’t have intrinsic uses like commodity money or be directly redeemable for commodities like representative money. It has value purely because we have confidence it will have value in the future - and historically the most reliable way to do that is by government decree, but it could also be by a mass consensus that a particular crypto coin will still be used in the future.
Hard money advocates have been arguing this point recently, and IMO it can only be settled by the market and observation. Only if the latter is true, does Bitcoin have a valid claim to become money.
Also its about hash power not number of miners, that's completely irrelevant. 100 or 1000 miners that means nothing.
and is the tree I am cutting a battery too?
wouldn't it be easier (and more sustainable) then to plant trees than mine bitcoins?
Because I can buy fiat currency with BTC, BTC is a fiat currency!
>>>Response to Dan added here due to rate limit.
> waste power
Infinite energy in the universe and everything mankind has achieved has been in large part due to energy consumption. The idea that we should now stop that trend is antihuman/antihuman-progress at its core.
Let the individual/market decide the best uses for energy... not your money = not your choice.
BTW off-planet mining using the sun/stars is a great idea for the future and doesn't require them to be blacked out.
What GP is saying is that switching to renewables doesn't make all of the negative externalities of wasting power go away.
You shouldn't extrapolate out on that to some grand view of the world that says we should never use technology. It just means we shouldn't waste power, and we shouldn't use "solar" as an excuse to waste power.
[0]: After all, Dyson spheres are powered by renewable energy.
> not a battery
What's a better way to losslessly and securely store human labor/time for future use? Almost everything else (fiat, gold, silver, real estate, etc...) that exists is debased/debasable, deteriorates, or loses value.
The above arguments completely hinge on energy being "wasted". Lossless labor/time storage isn't "waste" to market participants seeing a need for it and putting their hard earned money behind it.
Bitcoin basically turns one of the hardest to counterfeit things in the universe, energy, into money.
How else can you achieve lossless storage without a trustless secured environment (the bitcoin network)? Any multi-decade/multi-century solution that market participants should focus on instead?
Money is a separate system that often but not always flows hand in hand with the flow of energy and resources.
> Remove the money and the organization can still function.
Not every organisation. Remove money from the stock market and you have barely anything left. Large portion of money circulates in organisations that have very little to do with energy or resources.
It is an exception when money doesn't flow hand in hand with energy and/or resources not a rule as you are implying
> Not every organisation.
You are moving the goalpost here. Your claim wasn't that few organizations don't run on energy and resources. Your claim was that no organization runs on energy and resources.
> Remove money from the stock market and you have barely anything left. Large portion of money circulates in organisations that have very little to do with energy or resources.
Stock market is an organization which has everything to do with energy and resources. Money is just used as an abstraction of those. Remove energy and resources of companies whose stock is being traded and you have nothing left.
Considering that your claim was that human organizations run on money and not on energy and resources I'm sure you won't have a problem naming a few of those organization. Just pleas don't name those where money is just an abstraction of energy/resources because those organization do actually run on energy and resources.
People stop mining gold only because it’s valueless.
People stop mining bitcoin because it’s valueless.
Suppose that Bitcoin Cash were to increase in price ten-fold, then logically it would make economic sense to burn ten times as much energy to mine it, no matter how many transactions are processed.
Also, it is not clear that having more or fewer miners on the network drives prices - it seems more likely that more miners reduce transaction/confirmation times, improving service levels and increasing value (to the extent that actual transactions drive value or price).
Of course it is. If it costs a miner $10k in electricity, rent etc to mine 1 BTC, they will need to sell at least $10k worth of BTC to cover their cost. If they stop mining, they will have less pressure to sell.
Miners hold over 2mm BTC so hard to see how their actions have no direct impact on price.
My point, is that when electricity costs approach zero, more people will mine which will impact prices.
That would actually be a bad thing: the real value in proof of work is that it doesn't have any extra value to the miner, which stops miners from gaining a huge edge over other possible future miners. What's behind all the controversy is that proof of work has to be totally useless work, that's what makes it valuable for the blockchain :)
Am I wrong thinking that any problem with hard to find, but easily verifiable solution, should be ok? It would be nice if it had easily adjustable difficulty to scale it with processing power of the miners.
But it seems that the cost of electricity can drive down prices, not only up.
You said that price of electricity 'backstops' prices, and that miner spending $10K on electricity will need to sell that much BTC. Seems more like an inverse relationship. They need to sell $10K whether the price is $100/BTC or $100K/BTC, so lower BTC value makes more selling. Similarly, higher elec costs increase ready supply of BTC on sale, more supply lower prices.
On the other side, lower elec costs, mean more hoarding by miners, reducing sell-side pressure/supply
This would seem to make elec costs inversely related to BTC dollar value, not supporting it - so an effect, but in the other direction?
To be fair, a large part of the ecosystem doesn't actually deal with Bitcoin at all. The total market capitalization of cryptocurrencies seems to reach up to 1.5T USD at this point. Bitcoin is 1T USD of that, with the rest of the ecosystem quickly catching up[1]
It's really hard to generalize that everyone in any given ecosystem are the same way or act with the same interest. Yes, most people in the oil industry probably don't care about the environment either, but I'm sure there are many in the oil industry who actually care about the environment as well. Same goes for cryptocurrencies.
- [1] "Percentage of Total Market Capitalization (Dominance)" graph - https://coinmarketcap.com/charts/
I don't necessarily want to generalize about all cryptocurrencies or all crypto-enthusiasts -- there is genuinely interesting technology here. But I find it increasingly hard not to generalize about the subset that shows up in these discussions arguing that Bitcoin is the future.
I agree that many cryptocurrencies are not suited for this... but some are, and of those, Cardano is proof-of-stake from launch, has ~50 billion USD market cap, 20s to 1 minute confirmations (up to 10 for complete irreversibility, but one confirmation is really reliable already), an amazing community, relatively low fees (about $0.20 USD right now but hopefully decreasing in the future), ability to support 1 million transactions/s without fee increasing, and extremely high decentralization.
I agree that many cryptocurrencies aren't suited to real use at scale as a transaction layer, but I think the hype about the power of this when done right is very fair.
I agree that there are other parts of the full crypto ecosystem that are leveraging blockchain more effectively. I don't know how optimistic I am about them overall, but at the very least on the technology side of things they certainly have a lot more potential to turn into real payment systems than Bitcoin does, and I don't mean to disparage the people working on them.
Who's claiming this? The Lightning Network is gaining popularity as a decentralized Layer 2 solution, for example.
You mean like Cash App and PayPal?
We can't act like a 12 year old invention should arrive with drop in decentralized replacements for every component of the legacy financial system...this is all being built from scratch as we criticize its shortcomings.
https://blog.haschek.at/2021/how-i-heat-my-home-by-mining.ht...
Unless there are some industrial processes that might use this mild heat. Maybe poultry production? Some green houses in cold climates?
The only way that btc mining can truly claim to have no impact on global emissions is if it uses zero-emission energy that otherwise couldn't be used in some other productive way. And that, almost by definition, limits the use of the waste heat.
Look, yes, Bitcoin is deflationary, but it's still subject to market pressures. It's not technologically guaranteed to be worth anything 200 years from now.
Besides that...
> securely store human labor/time for future use?
It's not secure storage if you can't retrieve it[0]. What do you mean by "lossless"? You permanently lose all of the energy when you convert it into Bitcoin. You can not get that power/energy back, it is gone. What you hope is that the value of Bitcoin will allow you to trade your coins for somebody else's energy. But guaranteed scarcity is not the same thing as lossless storage, otherwise we would store all of our Youtube videos on collectable Beanie Babies.
Bitcoin's value is based on social consensus, not because it can be converted back into electricity. You're not storing anything, you are using a scarce resource to guarantee that it will be difficult to create more Bitcoin in the future, thereby creating a deflationary currency.
> Any multi-decade/multi-century solution that market participants should focus on instead?
All of them? Most currencies have been around for multiple centuries. The US dollar has been around for multiple centuries, and the US dollar is young.
Yes, the value of the US dollar can fluctuate, but, and I can not stress this enough, so can Bitcoin's value. There is no magical technology that makes Bitcoin worth anything, it's worth what people are willing to trade for it.
----
Maybe a thought experiment will help here.
If you think that Bitcoin is genuinely storing energy in a lossless format independent of market pressure, then I should be able to create a new Bitcoin using the exact same technology because it's Open Source, and it should also be just as valuable, right? I just need enough people to join in on mining that it's difficult to commit fraud, and now my secondary coin should be just as good as Bitcoin at storing value, because it's using the same technology, the same distributed governance model, and the same electricity to power it.
Heck, I don't even need to create a new coin, I can fork the current chain; that's what Bitcoin Cash did. So let's say I fork Bitcoin's chain, and all of the exchanges that currently take Bitcoin also start taking my new coin so it's similarly decentralized.
Have I just doubled the amount of electricity in the world? No, of course not. Because the value of both coins will be based on social consensus, not because they are a perfect digitized storage medium for electricity.
----
Another thought experiment on retrieval.
Let's say tomorrow, the apocalypse hits. The US government collapses, the dollar is worthless, all governments are overthrown. Government-issued currency is only fit to burn. Gold isn't even worth its weight in food. Only Bitcoin remains.
Now, bear in mind that the Internet does not exist anymore, because the US government and a bunch of centralized, US-dollar funded corporations were maintaining it, and they're all gone. But you would like to convert your Bitcoin back into electricity, because it's a lossless store of electricity/effort.
How do you do that? How do you even trade your bitcoin when there is no network for you to connect to? A truly lossless store of electricity should be able to handle that situation, right?
Owning 1000 satoshis/21M BTC is guaranteed to be worth 1000 satoshis/21M BTC 100 years from now, it can not be debased.
Every fiat currency (USD, GBP, CAD, AUD, etc..) has a denominator (aka max supply) that increases. Almost every fiat currency dies a horrible death in less than a century due to this inflation. 1 British pound sterling used to buy 12 ounces of silver but is now worth 0.5% of its original value and dropping. This is not lossless time/labor storage, the denominator is increasing rapidly as central banks respond to the crisis of the day.
How does a beanie baby look after 100 years without maintenance, no deterioration? How easy is it to counterfeit a beanie baby? The problem with your approach to criticizing BTC is you believe you can isolate the properties first. All the properties I mentioned and more work together in a synergistic fashion to create a lossless time/labor energy storage network.
>I should be able to create a new Bitcoin using the exact same technology because it's Open Source, and it should also be just as valuable, right?
This would be true if we ignored one of the primary laws of money, "hardest money wins". There can literally only be one hardest money, and capital will flow into it precisely because it is the hardest and acts as the best store of value. This is where looking at BTC as technology first leads you astray, it is in fact money first. Money will flow into one rather than the other BTC fork and the one with the highest hash rate will secure value better. The network with the highest hash rate will also have a huge incentive to expedite the death of the softer/less-secure money/network through 51% attacks and more... then consume its value.
Silver was the hardest money in the world until people realized gold was more scarce and harder to mine...silver turned into a shitcoin not long after that moment. Anyone that continued to hold silver after that point suffered a tremendous loss of value... hardest money wins in action. Bitcoin is now doing this to gold and every store of value on the planet thanks to better design.
>How do you even trade your bitcoin when there is no network for you to connect to?
This is P2P money first, just because it has now scaled to 10M+ users doesn't mean it can't run like it originally did, with 1 miner and 1 node. It can scale all the way back down to the size of whatever is required in your doomsday scenario. It will still be the hardest money in the universe in that scenario since all networks will be equally affected by the blackswan, so the people that do continue using it will appreciate its lossless storage and retrieval of human labor/time energy. We already have the blockstream satellite for transactions (Puerto Ricans were using BTC while banks were closed due to no electricity after the recent hurricane) and over the next decade nodes and miners will be put in space (probably by SpaceX and other large holders pushing for multi planetary human existence)... the network hasn't gone down in 12 years and after space nodes/miners are in place, the network will never go down unless an extinction level event occurs in our solar system. It is so well designed, it is already a space money solution.
I took another run at this because the longer you take to understand these concepts the poorer you will be. This may be among the most important information you could ever receive at this moment in history but requires knowledge in ~5 disciplines to fully appreciate... ~200 years ago I would've been doing something similar by telling you to convert your silver to gold before the price plummeted into a death spiral.
That's your definition of lossless storage? Literally any limited-run asset fits into that category. It doesn't mean that your 21M BTC 100 years from now is going to be worth anything, because limited-run assets are not inherently valuable.
It certainly doesn't mean that Bitcoin is a store of electricity because, again, you can not get that electricity back once it is lost. You are hoping that other people who didn't put their electricity into Bitcoin will trade you some for an asset. That is not the same thing as retrieval.
> Almost every fiat currency dies a horrible death in less than a century due to this inflation
No? That's just very blatantly not true, to the point where I don't understand how you made that error. The US dollar is multiple centuries old. The EURO is multiple centuries old. The most common currencies today across the world are multiple centuries old.
It would be a massive stretch to try and argue that all of them have horribly died, given that I can 99.99% guarantee that right now your job is paying you in one of those currencies.
> This is P2P money first, just because it has now scaled to 10M+ users doesn't mean it can't run like it originally did, with 1 miner and 1 node.
I don't mean to be confrontational about this, but do you understand the technology behind how blockchains work? The whole point of the blockchain is to prevent double-spending. If you're waiting months to reach consensus in a P2P network, that's months before you can be sure that a transaction went through securely.
If you have 1 miner and 1 node, and if lots of people across an environment are building this setup, you have effectively mass-forked the blockchain already. You've lost the ability to prevent double-spending. The only reason Bitcoin is secure is because everyone uses the same chain and is connected to the same network. Fracturing that chain is forking. That's what forking is.
This is also why Bitcoin is having difficulty scaling, because the whole point of a blockchain is that you need network consensus and network consensus takes a lot of time/energy. The reason you can't double-spend is because your hardware is slower and less powerful than the overall Bitcoin network. A single-pool network destroys that principle.
This is also why people are worried about the environmental costs. You seem to be looking at mining as something separate from the transaction process. It's not, mining is how transactions on Bitcoin get written onto the chain. That energy cost doesn't go away, it's an intrinsic part of how transactions get confirmed and secured. The principle is that the more people you have mining, the harder it is to commit fraud. A 1-person pool is not secure.
> This would be true if we ignored one of the primary laws of money, "hardest money wins". There can literally only be one hardest money, and capital will flow into it precisely because it is the hardest and acts as the best store of value.
So in other words, it's exactly like I said and the value of Bitcoin is based on social consensus that Bitcoin has value, not on an inherent immutable property of Bitcoin itself.
You don't know that 200 years from now a better store of value won't come around, and if that happens, your own principle of "hardest money wins" will guarantee that your Bitcoin is worthless, because the newer, better store of value will be the "harder money".
> I took another run at this because the longer you take to understand these concepts the poorer you will be.
No offense, but I think this is part of the reason why people compare Bitcoin to a pyramid scheme. I do understand the tech of Bitcoin and the economic theory about it. I've been hanging around this circle and listing to the talks and proponents since early 2013-2014. I've dug into the algorithms that make this work and listened to the economic theories that early proponents were using to justify their experiment. What that experience has given me is an understanding that this process isn't magic.
So you use words like "space money solution" which means nothing for a network that requires real-time consensus to confirm transactions. You're saying that the network literally can't go down, which displays a wild misunderstanding of how mining actually works and why it's important to the technology. You seem to be under the impression that Bitcoin is magical just because it's complicated. But as someone who has genuinely been in this space for a long time and genuinely spent a bunch of time learning how the technology works, most of the magical properties you think exist... don't.
You're buying into a technology that you don't understand, based on wildly flawed economic ideas like "deflationary assets can't go down in value", an idea that can easily be proven false just by looking at the history of literally any other deflationary asset. Never mind the fact that silver and gold are also deflationary assets in the long term; apparently they don't count because they physically degrade, a process that hard drives are magically immune from. Never mind the fact that you yourself seem to understand that silver dropped in value when gold took over; apparently that can't possibly happen with Bitcoin because it would be impossible for anyone to iterate on the technology. We should all just buy into this idea because you said the words "space money".
Again, as soon as you manage to develop a way to mine bitcoin more efficiently, the difficulty of mining will automatically go up to make sure you are still wasting just as much energy.
Even when it will be enough when renewables work at 100% it won't be enough if they give 8% of their max output because it's not that windy today.
We should have at least 10 times the capacity in renewables than we actually need to have plenty on bad days (and nights).
> The only way that btc mining can truly claim to have no impact on global emissions is if it uses zero-emission energy that otherwise couldn't be used in some other productive way.
I agree, and that won't happen until we go 100% renewables, but we can't do that without a storage, and we don't have storage, but we can go 1000% renewables instead because that's the technology we have and already it is the cheapest way of making energy. And I think next crypto boom could put us on trajectory to achieve that by utilizing every bit of energy we'll overproduce and by being a mechanism to funnel money from the pockets of Wallstreet into renewable energy production investments.
But, for those without power due to a blackout, you can’t simply spend money and instantly turn the lights back on. You can either have already spent money to have backup power, or you have a problem. It’s like breathing, if your drowning spending money to be able to breath in 2 hours is useless you need air now.
Which is why electric grid operators need infrastructure not money to avoid causing blackouts.
Fiat currencies aren't backed by commodities... the modern fiat dollars we have used since 1970 are very different from what existed before that point in history. It can be and should be considered a separate currency.
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You seem to not know the history of money/fiat currencies and make a lot of assumptions about things that are not based in reality.
Being in this space since 2013-2014 doesn't mean you have a good grasp of the tech or the economics. Many people that arrived at the btc maximalist position in the last 6-12 months have more of a basic understanding of these topics, I can tell from your responses.
Unfortunately this is growing too long for me to respond to and I gave it a good go, so I will let the market teach you the rest of this lesson (warning - the market is a harsh teacher). I would have to give you a course in monetary/economic history to adequately do this topic justice and this is not the format that is best suited to do it in.
Good luck holding on to fiat as a store of value.
Sounds like a catch phrase from an "alternative" news site or a thing a member of a religious cult would say.