My take on this is the following. Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do not. A few years ago Bitcoin didn't really register there, and it was okay to disregard. Now with so much energy/efforts spent there, one should ask oneselves, is it good allocation of resources? Is it good that so much cheap electricity is used for mining bitcoin? Can we think of a way of either taxing, or changing incentives, so that society benefits from this. I don't know what's the best way of changing the incentives, but it must be done in my opinion.
The problem with bitcoin, or the issue to be more honest because it is not really a problem, is that right now there is no "better" use for that electricity than bitcoin. That is the truth you must grapple with. Or as Google would say, the best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads. That that is true, that is your problem and everything else is noise. If you really want an environmental problem to tackle go fight the oil industry killing thousands of animals every day, destroying communities every day, destroying them literally.
But, if you insist you must "fix" something about the current crypto boom because somehow they do not adhere to your morality then you should look at everything else but bitcoin and ask yourself, why is the thing I consider moral not attractive to the market?, what can we do differently to make doing something else at least as profitable as mining bitcoin? If you just tax it or try to ban it they'll just move and you'll be a)poorer and b)left without a say.
> If you just tax it or try to ban it they'll just move
Which is exactly what the locals would want, is it not? I mean, if I live in a place with cheap power, I don't want some outsider to come, take advantantage of that fact, and use so much power until the prices approach average power prices.
Hydroelectric plants usually require flooding huge areas of beautiful nature. People accept that because it's better than burning coal. But if people are just going to use it for something that doesn't help the local community at all, why bother destroying the local scenery?
There's more to the economy than just money; local governments often subsidize local companies if they think it's good for the locals even if it would be more profitable to move production overseas.
We don't need to find a way to make the "moral" thing more profitable. We can just make laws that prohibit the "amoral" thing. If we would let the market decide everything, why bother electing a government in the first place?
Groups of new people moving the local area is exactly what you hope your cheap electrical prices will bring. They create some jobs or support local store,increase real estate values, attract more supporting businesses.
The not in my backyard crowd are common in San Franisco but everywhere else welcoming new people raises all boats.
No, it doesn't. Not when the new people are just interesting in exploiting local resources. They are not interested in becoming part of the local community.
> if I live in a place with cheap power, I don't want some outsider to come, take advantantage of that fact, and use so much power until the prices approach average power prices.
There is no way someone use so much power until the prices approach average power prices, without making other changes. Maybe they offer lots of job positions? Maybe they pay lots of local Taxes?
Yes. Money is not everything, but good people can use those money to do "moral" things.
> Why is the thing I consider moral not attractive to the market
Because markets are notoriously unable to price in externalities on their own.
I realize there is a temptation here to throw up your hands and say "well, all human activity emits carbon", especially if you are long bitcoin, but it's a false equivalency. Bitcoin is an energy consumption monster by design, and its difficulty adjustment mechanism neutralizes any attempt at making mining more efficient.
Also its limited market cap and halving schedule will probably eventually phase out the energy consumption. Provided people are not willing to pay hundreds or thousands of (current day) dollars for transactions.
Edit: And if they are willing to pay that much that should be a clear sign of the value provided by the network
Edit2: And wether this will also phase out Bitcoins security model will be very interesting to observe across the next 10-20 years (depending on when btc will hit its market cap threshold in real terms)
Because Bitcoin are fungible and cost the same to transfer across the world as across the room, mining would just move to the countries without a carbon tax.
I do think a carbon tax is a good idea, because in industries like transportation and energy it’s not as easy to just move production elsewhere, but it’s not really a solution here.
>is that right now there is no "better" use for that electricity than bitcoin.
You can't abstract away the fuel for energy production. I'm sure bitcoin miners would be fine with mining every last bit of coal on the planet and using it to run their rigs if they can do it cheaply (which they probably can as coal prices drop and renewables ramp up)
Majority of bitcoin mining is run on fossil fuel power.[0]
A better 'use' is keeping it in the ground.
Here's a byproduct of bitcoin mining, basically throwing a lifeline to dying coal plant: "Bitcoin miner Marathon signs for coal-fired electricity in Montana"[1]
“ If you really want an environmental problem to tackle go fight the oil industry killing thousands of animals every day, destroying communities every day, destroying them literally.”
It’s not one or the other. I’m critical of Bitcoin just like I’m critical of other things affecting the environment.
“If you just tax it or try to ban it they’ll just move”
Good. Let them move. Not everything is about acquiring as much money as physically possible. Getting more money out of people is not a tenable argument for whether something is appropriate or not.
Markets are wildly inefficient and do not account for everything. The areas that had low electricity prices were doing just fine for themselves before Bitcoin miners moved in, and will do just fine afterwards. Saying we should allow things because “money” is just sickening. At least come up with a better argument.
Well then, that it sickens you is such a better argument isn't it not? You should've told us earlier!
Look, we can admit the reality of the world we live in or we can pretend, but only if we admit the real world to ourselves we can even begin to contemplate finding some kind of solution to our problems. Trying to ban everything you don't like is what is really sickening because newsflash, people can think for themselves and don't need you to decide what's moral for them.
Money is important in society, deal with it. Money is useful in society, deal with it. Money, for better or worse, arguably controls society. Deal with it.
Living in reality is different than justifying it. Saying that Bitcoin miners using up electricity means there was no better use is not derived from reality- that’s your own personal viewpoint.
I don’t need to make any argument as I’m not the one presenting anything here. All I’m saying is that “money is good, therefore actions that net money are good”, is a terrible argument and we can do better than that.
> Trying to ban everything you don't like is what is really sickening
You could make the same argument about any law.
This isn't something we "don't like" - cryptocurrencies are tremendously destructive of the world's resources and their only use so far is crime - money laundering, tax evasion and buying or selling contraband.
We should be making these things illegal in just the same way we make money laundering and other things that damage society illegal.
> The best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads.
Ridiculous.
A counterargument from Warren Buffett:
> If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing.
The market isn't a God - it selects silly, suboptimal things all the time, especially in the short run. It often selects things which are very bad for the many and good for the few, it has no regard for negative externalities, it's often subject to irrational speculative bubbles.
I'm not sure regulation is the answer, but bitcoin absolutely can and should be criticised as a poor use of energy.
> is that right now there is no "better" use for that electricity than bitcoin [...] the best option for the collection of arguably the most brilliant minds that have ever walked this planet is to work for Google, trying to get people to click more on ads
That's more about the fact that it's not measured in terms of dollars and shareholder return.
Would it be beneficial to have this electricity being used for other things or have those engineers do other things than optimize an ad click factory? Probably, we could use this electricity to have cheaper power for lower income households, or those engineers could work on improving other things.
But the market doesn't necessarily pay for those things, and if the system is geared towards optimizing for more dollars, then the only one gets is more dollars with all the non-priced externalities dumped onto the society at large.
> is that right now there is no "better" use for that electricity than bitcoin.
I've never heard of a clearer statement that our society is broken. We are literally destroying our own biosphere by generating energy, nearly all from fossil fuels, and yet we can't find anything "better" to do with that power.
It's madness.
> what can we do differently to make doing something else at least as profitable as mining bitcoin?
Not destroying our ecosystem will _never_ be profitable. We should do it because we want our grandchildren to live, not to make a buck.
A society that values immediate gain over its grandchildren's safety is, as I said, profoundly broken.
We're willing to concede that the best minds of our generation should be in the business of manipulating others to click on ads, but god forbid if some try to liberate us from total control and tyranny placed on civilization.
I'm quite flattered that you think[1] that I am one of the best minds of our generation, but I would disagree with your assessment of what the most difficult projects at Google are.
Awesome response! I love that @ HN for every shortsighted person there is a longsighted one providing a non-mainstream view. What ratio do we have on other platforms or even in real life? 1 to 100?
Sorry, but the above argument is really a poor one.
Just because there’s “no better” use for that electricity (which I disagree), does not justify using it up on bitcoin mining. This is like saying it’s morally permissible to do A because if you don’t, someone else will.
Not to mention conflating “the best use of X people’s time” with “who is giving out the best compensation in a society where we need money”.
The mainstream view -is- positive of Bitcoin. Very few people are actually concerned with the environmental impact.
> The mainstream view -is- positive of Bitcoin. Very few people are actually concerned with the environmental impact.
You should ask yourself why that is. I think it's because Bitcoin is providing value to people. It has an extremely low barrier to entry. You don't need good credit to use it. You don't need to go to a bank. You don't need an id.
I don't think most people are actively using it yet, but they see the democratic nature of the "interface" to the crypto system and recognize that the power is shifted in their favor a bit more than the established monetary system. They know this because they've been abused by that system their entire lives.
I find a lot of upper middle class people struggle to see the value in Bitcoin because they can't empathize with people who can't use traditional banking.
For anyone in the US you do need an ID to use Bitcoin in any practical manner. Exchanges require it. Avoiding this requires jumping through multiple hoops, especially if you want to convert to cash.
People don’t think about the environmental consequences because most people don’t think about that anyways. We’re also on HN, where software companies use or rent computational power with zero regard to the environmental impact. And for Bitcoin owners it’s specifically in their financial interest not to think about how Bitcoin miners are using more electricity than actual countries.
All of that said, Bitcoin is a failed experiment. People aren’t using it as an actual currency, they’re hoarding it. Partly because of the model and mostly because trying to actually spend Bitcoin sucks badly.
Bitcoin is going to be replaced by a cryptocurrency that’s actually usable and competitive with existing payment networks. And hopefully one that doesn’t use such an electricity intensive model.
You can't just call use-cases you don't like a "fallacy". Like I said, the tech is still early, but there are decentralized exchanges where you don't need an ID to use them.
> People don’t think about the environmental consequences because most people don’t think about that anyways.
They don't think about that because:
A. They're not the cause of the environmental damage (check with the military and large industry there).
B. They're concerned about paying rent, buying food...
Money is at top of mind for most people.
> All of that said, Bitcoin is a failed experiment.
If this is failure to you, I hope Bitcoin keeps failing! By any metric you look at it, Bitcoin is reaching all time highs with exponential growth.
This comment perfectly encapsulates the logic of neoliberalism and inadvertently provides insight into how it is sending us full speed on an ecological collision course.
Show me a list of what you do in a day and I’ll find questionable, selfish uses of cheap energy that don’t benefit society. That’s not a game you want to play.
People making noise about Bitcoin energy consumption seem to have little idea how much energy anything else uses kinda like how Americans only compare everything to Hitler because WW2 is all we’re really taught in school.
People suddenly act like they care about how others choose to spend their energy when it comes to Bitcoin but not anything else, like the incredible amount of land and energy it took to bring that pound of meat to your table that you only eat because it pleases your tastebuds. Or the tech gadgets you own.
Seems convenient to only turn on the ol careface when it’s something you don’t happen to indulge in, yet it makes you blind to the inconsistency of your position. There are a lot of necks on the chopping block long before you get to Bitcoin mining when you start bringing up the metrics that you think damn Bitcoin mining, probably your entire way of life.
Fixing bad things in somewhat inconsistent order is absolutely a thing we want to, and need to, do.
Otherwise we'll be gridlocked by trying to be foolishly self consistent, and we won't be able to rein back developments that make things worse in new ways.
Folks, please stop with the ‘whataboutism’ argument. We are debating the morality of energy usage so comparative arguments are perfectly fine. You don’t hear every day articles about the huge nr of gaming PCs or gaming consoles sucking energy, but you do hear about bitcoin. I have absolutely no problem with taxing dirty energy or disincentivizing high energy consumption but do it for everything. It’s hypocritical otherwise.
Gaming PCs actually improve peoples' lives in a non-zero-sum fashion. I have yet to hear an argument for how bitcoin does the same.
>I have absolutely no problem with taxing dirty energy or disincentivizing high energy consumption but do it for everything. It’s hypocritical otherwise.
Nobody sane is arguing for conditional carbon pricing (although obviously some will say that carbon pricing should be accompanied by e.g. an explicit transport subsidy for poor people), the "argument" is that while we absolutely should do it, nobody is able to get it passed into law - so while it's the best solution, we can't wait for it and we need to focus on other solutions in the mean time.
While taxing carbon usage is a good idea, there is something fundamentally wrong with the idea of allocating so much resources, in servers, in power and in space, for what essentially doesn't improve people's lives.
That this craze receives so much attention and funding while we face very real existential challenges is maddening.
> While taxing carbon usage is a good idea, there is something fundamentally wrong with the idea of allocating so much resources, in servers, in power and in space, for what essentially doesn't improve people's lives.
There's something fundamentally wrong with the idea of deciding for people what might improve their lives and what isn't allowed to try, rather than letting them decide for themselves individually. People decide to allocate those resources, for something they consider worthwhile. Some of them think they'll get rich. Some of them think they're changing how the world does business or exchanges money. Perhaps some of them are right; perhaps none are right but a successor that learns from them will be; perhaps they'll solve a novel problem or perhaps they won't. The world needs room to experiment with interesting ideas.
> There's something fundamentally wrong with the idea of deciding for people what might improve their lives and what isn't allowed to try
I disagree, I don't think this at all an a priori wrong. It's helpful to consider the limit case.
If we lived in a world, for instance, where one person owned all of the food in the world and didn't want anyone else to eat it, it would be permissible for the other 7 billion people in the world to "decide for" that one that their food will be redistributed.
> deciding for people what might improve their lives
I don't believe I did this. What I do, though, is measure the actual positive impact this tech has now.
> The world needs room to experiment with interesting ideas.
Bitcoin is way past the experimental phase.
> rather than letting them decide for themselves individually.
We're talking about something that has systemic impacts. Once individual actions reach such a scale that others get impacted, it's normal for society to get involved and set rules.
So far, the prevalent stories have been about servicing people living in countries suffering from hyperinflation, which is just as easily done with a foreign currency.
Another common point is the promotion of smart contracts. It seems to me that these tools are still anecdotal, and don't really provide a significant competitive advantage compared to standard contracts. Besides, cryptos not using pow and incorporating good tooling are much better suited for that.
The decentralized nature of the ledger is another common selling point, but proponents don't really tie it to a material benefit.
Other impacts, usually not really promoted are its support to illegal activities such as digital racketeering, money laundering, etc. For instance, the financial aspect of ransomware is usually supported by this technology.
If you feel I have missed some impacts, feel free to point them out.
You've probably missed the most important one - diversification. A lot of people (rightly or wrongly) are concerned about the U.S. Dollar after what has transpired (and is still transpiring) with this pandemic. The Fed has unleashed it's full force and we simply don't know (although many are making their best predictions) what the future holds.
There's a reason companies and major asset holders are putting 1-10% of their portfolios into Btc, and I assure you it's not only speculation.
I understand that people may be interested in finding a safe asset to diversify into, but if there is no underlying asset to anchor btc to, it's purely a social consensus.
If at some point the economy gets better and people want to invest back into actual stuff, what happens to the late leavers?
We don't really need to. The damage it does is so incredibly massive that positive impact would have to be gigantic to offset it, and it is blindingly obvious no such massive impact exists.
> There's something fundamentally wrong with the idea of deciding for people what might improve their lives and what isn't allowed to try, rather than letting them decide for themselves individually
> there is something fundamentally wrong with the idea of allocating so much resources, in servers, in power and in space, for what essentially doesn't improve people's lives
The track record of “for the people’s good” juntas is poor. When they aren’t venally stripping the populace, they’re squashing any hint of innovative challenge to the incumbency.
I don't believe we have discussed before. Maybe interpreting my words as a call for the establishment of a junta isn't the best start in a constructive discussion. Do you start like that with anyone interested in ethics?
It improves people’s lives, just likely not yours. Just like I don’t benefit from caps on medical professionals, or police unions, or health insurance.
Vanishingly few things have substantial utility for the average person. But clearly BTC has utility for those participating in transacting and mining it, or they wouldn’t be doing it.
Time was Bitcoin proponents would talk about the future of money (investment).
Now everyone just wants to get rich at the expense if the poor fool who comes later (speculation). We're now at the mania stage of this bubble, where crazy things happen and ordinary people invest because of the distorted prices.
What is their utility beyond being a lottery ticket? That was my original question. Lotto winners have mixed outcomes, so I'm not sure that its clear if those lives were improved. We may come find out they weren't.
State governments have had a monopoly on lotteries for my entire lifetime, so if we've granted that crypto is nothing beyond a lottery ticket, then there is no issue with society regulating it to whatever degree we can agree on.
Society can regulate whatever it wants. Usually it can attempt to make some sort of justification but the justification can be fairly flimsy (as the marijuana regulations have proven). So sure, society can regulate crypto, as the US Gov already has attempted to do.
For the utility of decentralized currencies, it's best you get information from more than an Internet comment. Which sources have you used already?
It's not just a few lottery winners. Every single person who bought and held BTC for a reasonable amount of time has made money. BTC is an extremely valuable investment vehicle that has no equivalent.
If the owners of the miners are actually able to turn their coins into wealth that increases their lifestyle, then the mining did improve someone's life. Just because it affects a very small number of people isn't much different than most other "traditional" financial products in exsistence.
On net, was it welfare enhancing for our species though? If I make $1 off of emissions that cause external harm worth $2 distributed among the 7 billion people on this planet, I'm basically just laundering money through a loophole in what the law today considers to be harming someone else.
You just keep moving the goalposts by using the most extreme argument you can muster.
To be honest the sports industry uses tons of energy in lighting stadiums, streaming them, training players, it goes on and on. Entertainment could be done much more cheaply and effectively. I think society should outlaw sport - so many people are hurt in injuries, and the climate is just utterly demolished through all the energy waste. I can’t see a reason why society would allow sports. It’s ultimately beneficial to a very small amount of owners and their players (who are exploited!) that take all the cream off the top. Completely immoral honestly. The fact society wastes so much thought, effort, energy, focus, when we could instead be going to Mars or training STEM graduates is just criminal.
> You just keep moving the goalposts by using the most extreme argument you can muster.
The most extreme arguments I can muster? There are tons of industries that produce negative net value when accounting for externalities. $1 in profit for $2 in external harm is not at all that ridiculous.
> I think society should outlaw sport - so many people are hurt in injuries
My argument is that we should price carbon usage to account for externalities. I highly doubt sports turns out to be net unprofitable, even once accounting for those externalities.
Okay, lets say we agree that the sports industry causes externalities. The sports industry recognizes this and installs LEDs and other efficient electronics and cuts their energy consumption by 50%. If the sports industry and Bitcoin were equivalently bad the sports industry would immediately respond to the efficiency increase by doubling the number of stadiums and consume the same amount of energy in the end. Worse, they also had to construct new stadiums with concrete and therefore emitted CO2 during the construction process.
Bitcoin is not advertised as entertainment, though. And if it was, gambling industries are heavily regulated. If you argue that bitcoin is essentially a new entrant in gambling, would you support similar regulation? Otherwise, there is not much besides whataboutism here.
> If the owners of the miners are actually able to turn their coins into wealth that increases their lifestyle, then the mining did improve someone's life
Bitcoin is between high finance and casinos. Both are highly regulated.
It is wealth redistribution, though, not wealth creation. These people essentially take money from newcomers to the btc ecosystem, but btcs themselves are not tied to any tangible asset or value.
More importantly, creating new bitcoins is not tied to the creation of new counterparts. Essentially, when someone mines bitcoins, they are not involved in a productive act.
yes please, that would be the holistic approach. externalities like carbon need to be priced in. if it's in the price, then the market will adjust accordingly. a $4 [thing] will jump to $12, people will buy fewer until producers figure out ways to reduce externalities in order to bring the price down.
what's free will be overused. price it in to force efficiency and alternative seeking.
I agree, taxing carbon usage is the correct way to go about this. All the ways I can think of taxing Bitcoin directly wouldn't modify the right behaviors. It seems like the options would be:
* Tax Bitcoin holdings - this is already accomplished via capital gains taxes, and again, it isn't the holding or usage of Bitcoin that causes the energy usage. It's the fact that Bitcoin has value that causes usage.
Well for 1, that won't affect Bitcoin mining since it hasn't been profitable to mine on a GPU for years, and 2 that will just force mining overseas to locales that don't have this tax (possibly to locales that have less carbon efficient energy sources).
I think it is probably good to tax for Co2 production as a way of addressing global warming. I just don't think we should equate bitcoin production with other CO2 producers. I.e. I personally think that the CPU-cycles used for science on HPCs are much more valuable than the bitcoin mining (that's just my opinion though).
As you noted, this is just your opinion - are we going to have a person or group that decides what forms of Co2 usage are most "worthy", and adjust taxes accordingly? And let's say we do go down that path - one could certainly make the argument that Bitcoin usage from folks fleeing oppressive regimes are much more worthy than Co2 used to search for aliens or participating in far out HPC research.
Incentivizing stupid things (like taking on mortgage debt or over-coverage by employer health plan) is already the status quo of the tax code.
> Bitcoin usage from folks fleeing oppressive regimes
Have bitcoin people (I don't know what else to call the people who want to talk about it all the time) actually convinced themselves that this is a substantial share of bitcoin usage?
>Have bitcoin people (I don't know what else to call the people who want to talk about it all the time) actually convinced themselves that this is a substantial share of bitcoin usage?
It's not because this is literally Monero's value proposition. Why would anyone who wants to flee an oppressive regime publicly announce to their government that they bought Bitcoin in the oppressed country and sold it in a less oppressive country?
This is a terrible argument because the transaction fees on Bitcoin are high enough that anyone who wants to flee an oppressive regime would just buy any other cryptocurrency that isn't suffering from power consumption problems.
I think, yes, somebody should adjust taxes accordingly. The status quo with existing costs and taxes already effectively establishes some preferences for industries/goals, just implicitely. I think trying to explicitely express those preferences is better. (and it will never be 100% optimal that's for sure)
You tax carbon, country B now has an advantage over you.
You loose!
Now all your products are produced in country B, you've changed nothing and country B is probably using coal so you're worse off from your initial goal.
Why do people think "enforcement is impossible" is such a strong argument against taxes?
If your argument is that tariffs don't disincentivize behaviors because the government is just that bad at collecting taxes, you're not really in step with reality.
But you can't enforce your taxes in other governments.
In fact other governments in a game theory like ploy to get ahead of your country may agree to international agreements that they know they can game to their advantage.
The fundamental assumptions are wrong. You're not in this together. All countries are in direct competition, and some a more cut-throat than others. If potential disaster B is coming irregardless, country B can position themselves to come-out on top of country A when it does.
An argument could be made if we don't apply the Carbon Tax to poor or third-world countries it will help them develop faster... but those third-world countries shouldn't be shipping us resources in the first place!
Name one international treaty that has ever had teeth where the benefits of non-conformance out weight the teeth.
Country B could tarrif country A in return and some countries cannot afford the cost of what that may do to them.
So you end up with an international treaty without international conformance or a treaty with no real teeth because the signee's have contributed to it what would allow "them" to game the treaty.
And funnily enough, it's still lower than it would have been without the treaty. It's almost as if compliance doesn't have to be perfect to be effective, fancy that.
Nations agreed on laws for ocean and air travel. Countries that disobey them are ostracized or even subject to violence. Nations could in theory do the same for polluting the ocean and air. But that gets viewed as denying developing countries the benefits developed countries had.
If it worked it wouldn't be happening, the fact that it is happening, and to well known country's proofs they don't work and is profitable for country B and C for it to continue to not work.
This not withstanding the obfuscation of country of origin that can happen If country B and C really wanted to work together.
I agree with every part of that sentence except the "just". People have been trying desperately to do that for 40+ years without success, it's clearly not easy.
Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
There are tons of things the society could do without and be better off. Or maybe not, who decides? Surely it shouldn't be majority as then we will approach Idiocracy level of civilization in no time with Kayne designer flip-flops getting a yay and NASA or a new semi-conductor start-up getting a may.
I think there are two problems with crypto currencies:
1) Pollution and carbon emission is not taxed but should be.
2) Regulators allowing the situation where magic token is the only way to do certain kind of trades while competition faces insurmountable mountain of regulation and requirements. If it was possible to make fast money transfer system without hiring the army of lawyers in every country you want to operate then BTC would never gain any traction.
>Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
Considering the array of competing cryptocurrencies that consume far less energy while providing more transactions per second and additional features like smart contracts, yes it is. For example. Ethereum has twice as many transactions per second while consuming a third of the energy.
Given that bitcoin would also work without a Proof of Work, yes, it's a more stupid way to burn resources than pretty much anything else. Bitcoin without the ridiculous amount of energy consumption is possible, though I'm personally doubtful that will happen.
As an example Cardano and Tezos are two blockchain based on Proof of Stake, they both require a very low amount of energy compared to bitcoin or ethereum (no mining rigs, a node can run on a raspberry pi 4).
The big problem with proof of stake is that it requires a centralized root of trust.
Suppose for example that I takeover the Cardano website. I could create my own root block and generate millions of 'stakers'. Staking requires ownership but since it's my own new chain, I can generate coins easily without expending any real-world resources. As a new user, how could you differentiate the 'real' Cardano chain from mine?
Isn't this basically the case with github now? i.e all the cryptos have their code public on github so if I wanted to start mining, I'd have to go there to get the code
With Bitcoin, there are quite a few completely independent clients available: https://en.bitcoin.it/wiki/Clients, but the beauty of proof-of-work is that you do not need to trust any of them.
With proof-of-work chains, one can download the blockchain even without a client and write a simple program/script to calculate the total work (hashes) embedded in the chain. This provides a completely independent measure of trust.
With PoS, you must assume you can trust the client or root of the blockchain, which really kills the primary use-case of a decentralized currency.
Proof of work needs to go to the gutter. It was a bad idea to begin with. Proof of stake makes more sense and operates like a bank deposit interest rate
> If it was possible to make fast money transfer system without hiring the army of lawyers in every country you want to operate then BTC would never gain any traction.
I don't know where you get the idea that BTC is being used primarily to transfer money fast between countries without lawyers being involved, because as far as I can tell that's mainly a hypothetical use case rather than one that happens often in reality.
> Is BTC really more stupid way to burn resources than making sports cars? F1 racing? Gold mining?
Even looking at the usage of graphics cards specifically, is Bitcoin an objectively worse usage of those chips than playing video games? Than running ML models at Facebook?
>is Bitcoin an objectively worse usage of those chips than playing video games?
I have done a lot of activities in video games that would require significant CO2 emissions in real life. Potentially millions of tons. So yes, it's much better. There is also a significant population of software developers that picked up programming because of video games. Economic simulation games can help you develop an intuition on how to run a company and how they work without having to risk starting a real company with the potential to fail and ruin you financially.
Meanwhile the only worthy claim that Bitcoin has is that it's a middleman for central bank money. Yes it probably funded a lot of good economic activity, but it's the job of the central bank and government to do that. If they didn't fail then Bitcoin would have literally nothing to do.
Do we not realize the massive incentives Bitcoin is providing for energy production? If we could just agree to tax carbon emissions (the thing most of the world agrees is bad), then we should encourage this behavior as much as possible.
We’re creating a wonderful scenario where miners would be investing in as much cheap energy as possible. If their cost gets to close to average, then they can just leave it to the market.
Miners are interesting in extracting the cheap energy from the market. There's literally no incentive for any of that benefit to fall to anyone else, and in fact using up low-carbon electricity for cryptocurrency PoW "mining" takes away the benefits of the low-carbon investment from everyone else.
I do not understand this argument. The fact that bitcoin mining is profitable inherently means that society has already deemed it useful, no? Users would not pay for it if it were not useful.
> Everything we do as a society I think should be from time to time evaluated
Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
> the incentives should be updated to support things that are consider useful, and to penalize things that we do not.
Please define useful. Humans have different needs and value things differently. What is useful to one may not be useful to the other. Any system that picks winners will also pick losers.
> I do not understand this argument. The fact that bitcoin mining is profitable inherently means that society has already deemed it useful, no? Users would not pay for it if it were not useful.
Just because there is a market for something doesn't mean that "society" as a whole has decided that it is useful. There's an underground market on taking out hits on someone else, that doesn't mean that "society" has decided that murder is good.
> Who should do this evaluation? If not users freely allocating their own resources on the free market, then who?
A public body that is democratically constrained.
> Please define useful.
Welfare enhancing for humanity. Sometimes, a welfare enhancing step will involve losers and winners, you're right. For instance, if one person held $200 billion and the rest of humanity held $1, redistributing that money would almost certainly be a welfare enhancing step given diminishing marginal utility of the $.
We put far too much faith in centralized authorities to arbitrate standards of morality. How sure are you that such an authority will actually reflect the best interest of the people, and not itself?
> There's an underground market on taking out hits on someone else, that doesn't mean that "society" has decided that murder is good.
That's a great cherry-picked example, but there are far more examples of people freely purchasing what they deem to be useful, and even more examples of useless things disappearing because no one wanted them. Most failed startups we cover here are probably an example of the latter, and there's plenty of discussions of how to achieve the former on hn, too.
> Welfare enhancing for humanity.
Who gets to determine this, except the members of humanity themselves? Does some 'public body that is democratically constrained' know what's best for each individual person it's responsible for? Does it adhere to some ideology that dictates the universal moral good, whether everyone else likes it or not? How does a group of politicians living in their own little bubble know what's best for Joe Plumber in e.g. North Dakota?
What moral framework do you suggest that we inflict upon all of humanity?
I consider it reasoning from the limit case - obviously the existence of a market is not sufficient to prove that society has decided it is good, as the counter-example of the market in murder shows. Nothing more behind that statement and I think that markets are often a powerful tool.
> What moral framework do you suggest that we inflict upon all of humanity?
You can't escape "inflicting" a moral stance on the world. In the hypothetical world where the one has $200 billion and the remainder have $1, perhaps the government is not "arbitrating standards of morality", but if they make it illegal for the 7 billion to steal from the one person who has $200 billion, they are taking an ethical stance and "inflicting" it on the rest of the world.
We're a socially cooperative species - obviously we need a way to govern the form of those interactions, even in order to have a functioning market in things.
> You can't escape "inflicting" a moral stance on the world.
Only if you start from the assumption that such things as bitcoin mining ought to be regulated in the first place. You're right - we are a 'socially cooperative species', and we're good at it. Leave us alone to cooperate and don't invoke some government authority.
I'm arguing that involving a governmental authority to arbitrate morality is a can of worms that really doesn't need to be opened here.
> Nothing more behind that statement
Fair enough, I thought you meant to take that statement farther than you did.
> You're right - we are a 'socially cooperative species', and we're good at it. Leave us alone to cooperate and don't invoke some government authority.
So it's cool if I go to someone and take their bitcoins from them at gunpoint? Or start Mafia 2.0 and create my own protection racket here in SF?
I don’t understand - it’s like we have to repeat the same mistake over and over again. What industries have historically successfully self-regulated for the benefit of the society at large? Regulations and government involvement is why we don’t live in a slave society with a handful of militaristic barons.
> You're right - we are a 'socially cooperative species', and we're good at it. Leave us alone to cooperate and don't invoke some government authority.
Isn't "some government authority" exactly how we as a species go about "socially cooperating" on a larger scale?
Thanks for the reply, it helped me understand where you are coming from.
For purposes of discussing bitcoin, it is a global good, and environmental concerns are a global concern. If there is a global market for bitcoin, then taxing bitcoin mining (or other such measures) in one country would just incentivize miners to move to another country. So any such action as you describe would need to be coordinated on a global level among several or all nations.
> There's an underground market on taking out hits on someone else, that doesn't mean that "society" has decided that murder is good.
Not sure if it is fair to compare bitcoin production to murder. I agree that we need some sort of action for climate change, but I am not sure regulating bitcoin is the answer. We'd have to apply the same subject "utility" measuring stick to _any_ activity that consumes electricity and regulate that. Like others have suggested, maybe taxing certain types of energy usage directly according to their climate change impact would be more effective and would apply evenly to all goods / services without deciding on behalf of individuals what is useful and what is not.
> So any such action as you describe would need to be coordinated on a global level among several or all nations.
I was not the original person you were discussing with, so I don't think a tax specifically on bitcoin mining would be the best idea, but yes global problems require global scale coordination often.
> Not sure if it is fair to compare bitcoin production to murder.
My point is merely that the fact that a market exists for something is not sufficient to show that "society" has decided it is useful IMO.
> Like others have suggested, maybe taxing certain types of energy usage directly according to their climate change impact
Yeah, I was the one who commented that, so I definitely agree
The fact that tulips are selling for 10x their prior year price inherently means that society has decided tulips are more valuable than gold. People wouldn't be investing their life savings in tulip futures if they weren't a stable store of wealth, right?
I’m truly shocked by the number of people who totally fail to grok the economic logic behind a lot of the projects being built on blockchain tech. Many dismiss such work as totally worthless.
I suspect such dismissive types lack the combination of deep technical ability and profound economic intuition that made the Collison brothers wealthy. Or maybe it’s just that they don’t care to think these things through. Like PG says in his exploration of the aphorism “a word to the wise is sufficient:” “Understanding all the implications — even the inconvenient implications — of what someone tells you is a subset of resourcefulness. It's conversational resourcefulness.”
>I’m truly shocked by the number of people who totally fail to grok the economic logic behind a lot of the projects being built on blockchain tech.
If you are so shocked then please explain why Bitcoin miners refused to increase the transactions per block to a level that is suitable for Bitcoin? It's literally a configuration flag they have to change and the environmentalists and people against power waste would be happy and you could tell them to shut up. The people using Bitcoin as money would also be happy. Everyone would be happy except some puritans that insist on a specific block size.
The reality is that no amount of economic intuition and deep technical ability can explain this and it's not making any neo "Collison brothers" types wealthy. It also isn't a problem of not thinking things through. It's not a matter of groking economic logic because there is literally no economic argument in favor of restricting transactions per block. It's worthless because everyone that wanted to use Bitcoin for its intended purpose has already left and only those who are in it for the bubbling behavior have stayed.
I will even admit that after understanding the long term trend of Bitcoin (not the xth bubble that is currently occuring) I would buy it, but again, only for speculation. It's worthless, as a currency, precisely because its deflationary, expensive and slow to transact, a tax nightmare because of capital gains and the fact that nobody accepts it.
So yes, it definitively is worthless. Just because some tech dudes bet on price increases doesn't mean it isn't worthless.
I'm more shocked by the number of people who fail to grok the economic logic and still engage in correct behavior. They make the mistake of equating the power consumption as necessary to process a certain amount of transactions and they are definitively wrong, however their judgment is still right. Bitcoin wastes too much power for the little value it provides. They don't have any right to be worthy of your criticism but yet they do, if you listened to them your crappy little currency would be better off and that's why your argument is on very thin ice.
I have an absolute disdain for dishonesty. Own and admit your mistakes instead of pretending that the other side is wrong.
> If you are so shocked then please explain why Bitcoin miners refused to increase the transactions per block to a level that is suitable for Bitcoin?
I'm no Bitcoin maximalist, but this problem cannot be solved by increasing storage requirements in a linear fashion to accommodate more transactions, as then you are trading one problem for another.
Case in point Bitcoin Cash which, (if actually used) with a block size of 32MB could grow at 1.6 TB/year, prohibiting most individuals from running a node.
There's also the problem analogous to road planning where adding lanes does not decrease congestion, because the level of congestion than exists represents what people are willing to tolerate before giving up on driving.
That being said wrt your question there's also an element of greed in that there's money to be made selling level 2 solutions, but it's not as clear cut as the big block crowd would have it.
If you don't believe me or don't get it, I don't have the time to try to convince you, sorry. I don't intend to use that quote in a bad-faith way; it's just the truth.
If you'd like to open-mindedly consider the alternate position, the writing of Balaji Srinivasan might not be a horrible place to start. It seems like you disagree with all the other points I make as well. Unfortunately the same time constraints apply; I can only encourage you to mull them over.
> I’m truly shocked by the number of people who totally fail to grok the economic logic behind a lot of the projects being built on blockchain tech.
Literally none of them have any logic behind them other than "let's add blockchain at the end, and ask investors for money".
> Many dismiss such work as totally worthless.
It is absolutely, 100% entirely worthless with no exceptions.
> I suspect such dismissive types lack the combination of deep technical ability and profound economic intuition that made the Collison brothers wealthy.
Stripe actually does provide a useful, and a used service with a well-defined and understood economic model.
> Understanding all the implications — even the inconvenient implications — of what someone tells you is a subset of resourcefulness. It's conversational resourcefulness
Yes, And the implications of bitcoin are simple: it's a useless wasteful technology that still hasn't found any useful application, or an application that cannot be achieved faster and more securely by other means.
> My take on this is the following. Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do not.
Who is “we” and why to “we” get to decide instead of “they”? This approach to governing only sounds good when you’re not in the sights of those with the legislative pen.
In Iran, “we” (the government) have decided that “they” (gay people) should not be able to live openly gay.
I am not an anarchist or libertarian, so I believe in democratic governements. And I do believe it's their job to establish rules/regulations/laws that benefits society as a whole. Obviously and important point is the government must be democratically elected, to be able to control/revert things if the governement screws up.
So do you admit that to an anarchist or libertarian that Bitcoin does have value? The US military is the #1 user of energy on the planet. I definitely consider them a net negative to humanity, yet they're what's propping up the same neo-liberal democracy you think should be establishing the rules. Is that an acceptable use of energy to you?
I think Bitcoin is an excellent use of energy because it's at least a potential alternative to our current governmental systems. A small piece of the puzzle but a prerequisite to change none the less.
> I have never understood why "reductio ad absurdum" is popularly considered a 'fallacy'.
> It seems like a perfectly logical argumentative technique,
It's both. The strong form of the valid argumentative technique involves what amount to a series of valid syllogisms, where each step from the premise to the false conclusion involves a true premise and a logical (and therefore absolute) implication. The false conclusion drawn through valid implication and and a series of premises all but one of which is accepted as true thereby disproves the premise that was in doubt. There is a weaker but still valid (though not in the logical sense) form, where the steps aren't logically necessary but contingently true, with both the intermediate premises and the inferences with high enough likelihood that the conclusion is very likely true if the questioned premise is true.
The fallacy has a similar shape but involves intermediate premises that are false or at least unjustified, or intermediate steps that are unwarranted, or consists of steps that are a likely enough individually but which in aggregate are not sufficiently likely to justify the conclusion that the premise is false.
Most commonly, the fallacy form rests on what reduces to the reasoning:
1. If A, it is most likely that B
2. Most likely A.
3. Therefore, most likely B.
A contradiction (A ^ ~A) is the point at which reductio ad absurdum is achieved. It proves that a false assumption was made.
A counter example to a universal proposition is but one means of finding a contradiction since the universal allows you to assert the positive. A proof that no examples exist would contradict the statement that some do, just as effectively achieving reductio ad absurdum.
What you're saying is not incongruous with what I'm saying.
statement leads to contradiction -> "general-statement is actually false in at least one case", so if reductio ad absurdum is defined as achieving a contradiction, then the original statement is false in at least one case.
You're making the mistaken assumption that people care about whether Bitcoin is being mined. They only care about it not being mined in their backyard because the low electricity prices are just meant to be a subsidy to local residents. The electricity is being exported to a different location for a fat profit. If that other location is mining Bitcoin you're just giving the local residents more money. It's a pure net loss for Bitcoin miners.
You say that as if having an industry based around a speculative asset that is more volatile than OTM stock options sucking up a third of your countries energy resources is actually an advantage in some way.
The goal however is not to prevent bitcoin mining, that can be easily achieved, the goal was to reduce. carbon emission, and now they are being emitted by the ton in another country that uses cheap coal to power the them. You've achieved a net negative from the stated goal.
bitcoin is now significantly contributing to an existential threat. Its not alone of course...most things we do daily do so. However, I wish it wasn't such useless work.
Capitalism seems to be the best of the possible solutions to the resource utilization problem.
Bitcoin seems to be just the latest in a long string of events suggesting that humans are irrational, not necessarily that capitalism or markets are bad.
If Bitcoin were processing a zillion transactions at a very very low fee per transaction, I believe few people would be saying it was a waste of resources.
my point exactly! The only reliable indicator of whether btc is good or bad overall is time. I was of the latter opinion, but what am i compared to the Great Musk? (judging by past experience, the answer is nothing).
> Everything we do as a society I think should be from time to time evaluated from a point of view of benefits for society/world and then depending on this evaluation, the incentives should be updated to support things that we consider useful, and to penalize things that we do no
This is vague to the point of meaninglessness. On one level, it describes democracy and lawmaking. On another level, it describes communist-style state control of economic factors.
