I’m not shocked to see this. I’m bullish on bitcoin overall, but at this point I believe the Geo-political risk caused by the insane power requirements of current day mining are the biggest danger to bitcoin as a whole.
Obviously the network and operate fine with less power, but if that reduction in hash rate occurs because most of the world has banned mining, you can imagine a situation where the remaining miners can much more easily centralize and control the network.
On the other hand, with China already home to > 70% of mining (per this article), perhaps it’s more surprising this hasn’t happened already.
As someone living in the European Union I'd be extremely surprised if bitcoin isn't taxed/regulated to death within 1-2 years here. The recent price increase will attract the attention of governments sceptical of assets they don't understand (they don't understand it, but they want a piece of it), and they will get loud support from the environmentalists who are alarmed by the reports making the rounds ("more power than Argentina", "more power than The Netherlands") etc.
I would vote in the EU elections for almost any parliamentary group that makes this a priority. This is a perfect example of an issue where union-level decision making is required to curb a destructive activity.
There are good examples of countries getting together to shut down destructive activities when market forces were unable to. Bans on leaded gasoline and ozone-depleting CFCs, for example.
IMO it would be enough if regulators take action against crypto exchanges. Tax outflows heavily, audit companies located in the EU, track bank transfers received from exchanges outside the EU. Controlling the exit ramps to euros is achievable. People can still trade on IRC or whatever, but the scheme is much less appealing when you don't have easy retail money flowing in to buy those coins.
This is not the same situation as your examples though. Here you are basically saying that the resulting pollution from electricity generated to mine bitcoin is worse than other uses of that same electricity. It's a slippery slope if you start to decide what people can use their electricity for. For example. Assume exactly the same energy usage. Why is surfing on HN a better use of that electricity than mining?
There are many EU directives that are indirectly aimed at limiting how people use energy, for example requiring high thermal insulation windows. Taxing crypto exchange outflows is no different IMO.
> As someone living in the European Union I'd be extremely surprised if bitcoin isn't taxed/regulated to death within 1-2 years here.
The EU has no fiscal competence, this is left to the individual states.
I don't think much Bitcoin mining is done in the EU? Much of the EU has the most expensive electricity in the world.
From a fiscal point of view the taxation of cryptocurrencies depends on each nation. Many have already decided, by law, how to tax Bitcoin and cryptocurrencies. For example in Portugal if I'm not mistaken Bitcoin is considered a currency and gains made on currencies are not taxed. In other countries it's considered capital gains. Etc.
None of it is harmonized.
The EU simply doesn't have the authority at the moment when it comes to fiscal matters (it's the same for taxes on cars, gold, jewelry, whatever).
The EU probably can issue a rule banning mining using proof of work in the EU that'd then have to be translated into national laws: but I don't think that'd change anything.
Banning mining in China, however... That one would probably have consequences.
This seems unlikely. Big mining operations are already structured as corporations and taxed on their profits. Electricity is already heavily taxed in many countries in the EU. As long as it doesn't pose a threat to the electricity net there is no reason to single out bitcoin for energy use, it's not like the energy is different.
Crypto in general poses a problem for lots of governments. You want to avoid their control, they want to control you. They have manpower and violence, you have, at best, a network of willful individuals.
So either this is a tide that changes the whole world, or it's going to be harshly confronted. Doesn't matter that Tesla buys n bitcoins, or Microstrategy or whatever.
And I do have money on crypto. Not on bitcoin, not a lot, but that would against my interests too.
Can we stop calling everything a “black swan?” This would not be a black swan; nation states should be expected to have the ability to find a vulnerability in an application such as coinbase.
Now, if you were to say a nation state decides to hack the blockchain, well, I’d call that a black swan.
I suspect this has more to do with Chinese internal politics ("We're tired of spending money on industries in Inner Mongolia that aren't part of the national industrial plan or whatever we're calling it this week") than anything to do with the environment. They still added a lot of coal plants last year. They just want to spend the resulting power on something other than businesses in Inner Mongolia.
It’s subsidized power and these “businesses” are effectively just reselling that power to foreigners at a markup. No government would want to participate in that.
I agree with you in theory, but in practice it's the only way to be competitive as a poor country. From the perspective of most countries that do this the only thing you can do is build more renewables.
But the economic theory doesn't even agree with subsidies. It's only a populist belief that they work. China's economy boomed from free trade with the US
The economic theory can say what it will, in most countries electricity would be so expensive that starting a business or even running a household would be really complicated.
It works for them. We still have a trillion dollar a year trade deficit with China overall. (And likely to get worse, now that the mysterious-it-came-from-wet-markets-honest non-Chinese virus has defeated Trump).
Everyone in the modern western Tech scene believes they're environmentalists and believes all the modified-limited-hangouts in order to continue to pretend they are. Meanwhile their iphones were made in a country that added 40 gw of coal power last year.
The problem with bitcoin mining is that they require very little human resource compare to other industries that requires similar amount of electricity. It's more likely the local government is concerned of employeement rate.
> I suspect this has more to do with Chinese internal politics ... than anything to do with the environment.
It's both. From the article:
In terms of helping China meet its goals of reducing carbon emissions, Inner Mongolia has not had a good track record. It failed to meet China’s energy-saving target in 2019. The central government criticized Inner Mongolia for its “serious problems with energy conservation,” according to People’s Daily, a mouthpiece of China’s Communist Party.
Chinese internal politics also include environmental regulations. If the government of Inner Mongolia doesn't want to exceed the energy consumption limit again, they need to make cuts somewhere.
Now the specific choice of banning cryptominers is a matter of Inner Mongolian internal politics. But it's unsurprising that they'd prefer local businesses over some bitcoin miners who could easily move their operation to a different province (as many of the examples in the article did.)
"Around 60% to 70% of bitcoin is currently mined in China, where more than two-thirds of electricity generation comes from coal. But bitcoin mining facilities are concentrated in remote areas of China with rich hydro or wind resources (cheap electricity), with about 80% of Chinese bitcoin mining occurring in hydro-rich Sichuan province. These mining facilities may be absorbing overcapacity in some of these regions, using renewable energy that would otherwise be unused, given difficulties in matching these rich wind and hydro resources with demand centres on the coast."
Assuming China like most other developed countries has something resembling a unified grid the adjacency of consumption to renewable resources means nothing. Part of that power will still end up comeing from coal, even if it has to take a contrived path through multiple interconnects and load-balancers to do so
Your assumption is wrong. China is still rolling out long distance high voltage power lines, but even then transmission losses would mean that proximity is advantageous.
Coal is more expensive in China. So if you're doing something that is reliant on energy and doesn't need to be close to physical supply chains, there is a huge incentive to move to provinces where renewable (cheaper) energy is available.
That depends on the electric grid being disconnected so there's 'wasted' renewable capacity that can't be used in other areas currently serviced by coal thermal plants. Otherwise even with transmission loses it'd be better used transferred to one of the other regions.
i feel like HN's outrage about bitcoin mining is just virtue signaling.
1. bitcoin has created a market where people purchase security of their assets with the ultimate currency - energy. that market isn't going anywhere, the idea is out of the bag and you can't un-discover it.
2. energy consumption is not what causes carbon emissions, energy production does. stop chasing consumers and start regulating producers if you're honest about being so very concerned about environment.
3. it's not your business what i do with the energy that i buy at market rates.
1. Bitcoin is not a store of security, it's a highly volatile market that most experts agree is going to crash soon. Even if it doesn't, that's still a clear gamble, not "security". (Nor, in financial terms, is it a "security", as no regulator treats it as such)
2. Our infrastructure is only equipped to produce a finite amount of energy plus emergency output, and much of that emergency output is fossil-fuel-based. Even building new "green" plants has a high amount of carbon output due to concrete production. Energy is a zero sum game until we master fusion, and Bitcoin is the least efficient allocation of that resource.
3) Yes, it is, because the government also already regulates how much energy can be used in appliances or businesses. More broadly, it is literally the government's job to step in when a behavior is, at scale, creating a significant negative drain on society's resources for no tangible benefit.
1. those experts have been agreeing it'll crash ever since bitcoin hit $1, sorry if i dont have a lot of faith in their expertise.
2. .. in which you agree that producers, not consumers are responsible for carbon output. i dont get your "zero sum game" idea, we already have plenty of fusion energy available - it's called the sun. as for allocation efficiency - that's just like your opinion man.
3. i guess we'll have to wait til' you get whats the tangible benefit then...
These arguments often take the form of [complaint about Bitcoin not working] → [sardonic counter about Bitcoin working despite the nay-sayers]
A better way to frame the problem IMO is that if Bitcoin works as intended, it will only serve to create a new elite of early adopters that will be even more massively powerful than the traditional one
So you have a lose-lose proposition for late adopters, with collectivized costs and pollution, and basically the promise of boundless wealth for the rest. I can't blame early adopters from working towards this, but in turn they can't blame the rest from reacting.
first, those were not the arguments in form "complaint about Bitcoin not working", those were attempts to rebutt my earlier statements why it's erroneous to view bitcoin in context of environmental issues.
> if Bitcoin works as intended, it will only serve to create a new elite of early adopters that will be even more massively powerful than the traditional one
sure, early adopters will reap some benefits, but it's laughable to suggest they will be any competition to current elites. a valid criticism of bitcoin would be that current elites will adopt bitcoin to cement the existing inequalities, but a) that would already be some redistribution of wealth, b) there's already plenty of wealth cementing options in form of london real estate, etc, singling out bitcoin here seems disingenuous.
I'm not singling out bitcoin. In fact the London real estate is a good analogy to crypto.
You have people with London properties getting super excited and people with no such properties not getting excited at all. Both are right. A handful of previously poor people manage to get a property thanks to being in the right place at the right time or some other improbable condition, but most don't. Many participants in the market are already massively wealthy. Overall, nothing makes it plausible for the property market to be meaningfully called an engine for the redistribution of wealth
You say it's not going anywhere but things can change. Bitcoin's energy use is roughly proportional to the price. If people sell bitcoin and buy another currency that is more proof of stake the energy useage can go down.
Maybe you didn't mean it quite this way, but: "virtue signalling" is not evil, it's an integral part of human social dynamics, probably since before agriculture. And if you think you never do it, I think you're deluding yourself.
The reality is that you can't dictate what power is used. Power on a large scale is extremely hard and expensive to transmit. Comments like this do not consider the larger picture.
If you plop a mining farm down next to an existing hydro dam that was previously used for powering aluminum smelting, then that farm is now funding the maintenance of that dam. That dam then can provide power to the surrounding community. It isn't about making up a difference, it is about keeping that dam running. Oh and what's worse for the environment then wasting energy on mining bitcoin? Aluminum smelting.
This is exactly what coinmint did at an old Alcoa facility in upstate NY. They are using power that would otherwise go to waste. It is too expensive to build more transmission lines to feed power to people further away. Re-using the Alcoa facility also helps fund its further cleanup from the years of toxic waste produced there. A bunch of drone computers is a perfect use.
I'm all for shutting down coal based mining. At this point most large mining operations are not profitable on that anyway and have moved to other sources of power.
Disclosure: I am a large very scale ETH miner who uses hydro (but not at coinmint, I'm just very familiar with their facility).
> It is much more efficient than existing financial systems
I find this really hard to believe. And it would really depend on what you’re measuring. If we look at transactions per second, the numbers aren’t good for Bitcoin. But really, what we’re talking about here is transactions per Watt of power. I’d love to know what these numbers are, but I can’t imagine it looks good for Bitcoin.
Maybe it looks better if you look at the total value of transactions per Watt (fewer transactions, but at high amounts). But then, Bitcoin starts to look more like a reserve currency where the major transactions are between large clearinghouses instead of a totally decentralized monetary system.
How is it more useful if >6 billion people are using the traditional system and a few hundred thousand, maybe a million are using cryptocurrencies while consuming an amount of electricity equivalent to Denmark?
Bitcoin, Ethereum etc. can be spent nearly nowhere except at exchanges because it's a pain in the ass to handle for merchants while I can pay with my Visa in the most countries seamlessly.
And how can it "bank the unbanned" when people need to have not only a smartphone but also a stable internet connection to the networks because if I don't observe the blockchain, I am still reliant on intermediates which are called payment processors in the traditional system that already exist.
Crypto currencies are just unnecessarily speed running financial history. Carried by ancaps and speculation that are only pushing it because legislation didn't catch up, yet.
This is including industry like aluminum smelting which are basically running their own power plants to work. Aluminum is either used directly or indirectly for everything produced.
It's also including households, trains, data centers, etc. Things people actually use to live. Meanwhile with Bitcoin people are just rushing to calculate as much zeros as possible into their hash to append 1 MB of data to a chain.
This thread is full of conflicting logic. For example:
“No one has the moral authority to tell you what is a good or bad use of energy” followed by “Bitcoin uses less energy than than banking and the military,” implying that these are “bad” uses of energy — and in fact, that’s the entire foundation of the Bitcoin cult! That Bitcoin is better than Fiat, that it’s the righteous currency because of decentralization/etc. When you have God on your side (in this case, Satoshi, someone revered despite having never been revealed as existing...) you can justify anything. Even massive energy waste and pollution.
Bring your data and let’s have at it. How much energy does it use? What function does your alleged waste serve that is already served elsewhere in society?
Creating a global sound money that won't be debased or censored. More than worth the electricity cost. Why do you want to forcefully stop people who voluntarily buy and use electricity to update a shared database? Just because you don't like it?
Energy use is allocated by how people spend their money. By choosing how you spend your money, you can choose how the energy is produced. If bitcoin is banned, then people spend their money on something else.
If people buy bitcoin instead of buying a new car, then the net effect on environment is positive, given that car production uses more fossil fuels than bitcoin production.
I don't think they're banning coal powered bitcoin mining. They're banning it in Inner Mongolia in particular. They're selling their inter-regional political conflicts as environmentalism.
China still built some 40 GW of coal plants last year.
Except using electricity at German prices wouldn't allow one to break even mining Bitcoin. They'd be at a net loss. Also Germany will have to clean up its act by 2038, 8 years later than most of the EU.
This is the reason I'm rooting for the underdog DPoS/ORV currencies like Nano. Bitcoin is slow, too expensive to run and is becoming increasingly centralized--the opposite of what it was trying to be.
Bitcoin is an asset, not a currency. Like any other assets, it carries it's own risk profile. Nano is more like a currency, but I feel that if we were to move to a blockchain-based solution it would be a huge waste to not include programmable money on the mix, something that Nano doesn't do by design.
That's like saying you like cars, but motors have to go. There are no interesting digital currencies that are not proof of work based (yet). Hopefully that will change soon.
I take it GP meant mining without gigantic electricity consumption: so not proof-of-stake but proof-of-work
> ... and how does it differ from regular fiat money today?
There was a discussion here a few days ago where people were trying to determine how many swiss bills were circulating... Someone commented on the irony, in a thread hating on cryptocurrencies, that anyone at anytime can know exactly how many, say, Bitcoin or Ethereum do actually exists.
There are other difference between government issued money and cryptocurrencies: for example some cryptocurrencies have a fixed, carved in stone, supply curve and so you can know beforehand exactly how many are going to be mined each year.
This is quite different, for example, from Venezuela's bolivar: Maduro just announced that 1 000 0000 bolivian bills were going to be printed now.
> that anyone at anytime can know exactly how many, say, Bitcoin or Ethereum do actually exists.
Isn’t there a distinction between issued/minted currency and the amount in circulation? With Bitcoin and physical cash you know how many coins are minted and notes issued etc.
But how much of that is in circulation? Does lost physical currency still qualify as in circulation? What about Bitcoin wallets long lost by their owners (such as the British man who keeps wanting a rubbish dump to search for a HDD he threw out years ago, or the person who forgot his password and has 2 attempts left until the wallet self destructs). I don’t think either currency can accurately track the amount in circulation.
The blockchain provides a complete record of the movement of bitcoins. So for a given address, you can see how long value has been there, and the addresses that participated in the send transaction, and so on. You can't from there figure out how many coins are still available for circulation, but you can see how much has moved (or hasn't moved) over any period of time (last day, last week, last year, etc). From there you can define circulation statistics, like 'value that hasn't moved in 3 years' or whatever.
For paper money, the fraction that gets destroyed is probably small enough to not matter.
>physical cash you know how many coins are minted and notes issued etc.
but with coins/cash the actual circulation can exceed what the government claims to have issued, through counterfeits or malfeasance (ie. the government under-reporting the issuance).
the network is also barely functional these days. resyncing is so slow its hardly worth running a node. oh also pretty sure PPC is proof of stake, it was the first widely traded (maybe first, period?) crypto to implement PoS.
I don't think there is any difference. When the Federal Reserve purchases securities in the markets, they do it by just "creating" money. I think they literally just type in a number into a computer and use those newly created funds.
You could do this in any centrally digitally managed currency too. You could probably do it with a blockchain currency too if you get enough people to agree to the change.
Of course, if you don't like this, there's always the gold standard.....
> You could probably do it with a blockchain currency too if you get enough people to agree to the change.
That's a huge difference. The fed can print money whenever they want, whereas with bitcoin they need to convince a supermajority of the miners and users, otherwise they end up with a forked chain like bitcoin cash/gold/sv.
Presumably he's talking about proof of stake. It's not a prefect replacement for proof of work, but it's also less centralized than the current fiat system.
From what I've read, mining makes digital currency subject to control by governments that can subsidize or even monopolize the mining process. So a mining-free currency might be closer to the dream of a currency that is not subject to government manipulation. That's assuming a different technology doesn't just expose a different hack.
Probably. I'm guessing that a currency that's permanently free from government interference is a pipe dream. Or perhaps more likely, a cat and mouse game like trying to keep a computer system from getting hacked. Each currency will have a honeymoon period before people figure out how to corrupt it, so the solution may be to live with a constant evolution of currencies.
people on HN like to whine about the environment. they love the statistic that bitcoin uses more energy than argentina. ask them 6 months ago (when bitcoin still used the same amount of energy as argentina) and they will tell you how much they love btc and decentralization.
> I suspect a lot of people didn't realize how much power was being used for bitcoin.
And another thing which changed is that, every time the price of Bitcoin increases, it can (and will) use more power (the amount of power a Bitcoin miner uses is limited by how much power it can buy with the mining rewards, because if it used more power than that, it would be mining at a loss). There's a lot of difference between when one Bitcoin was USD 1, when it was USD 4000, and now that it's over USD 50000. Someone who was OK with how much power the Bitcoin network used back when the per-block mining reward was around USD 50, might not be OK with how much power the Bitcoin network uses now that the per-block mining reward is over USD 325000.
Could be that, and it can also be that people are capable of being massive hypocrites. Nobody who opposes Bitcoin on environmental grounds has anything to say about the sheer waste and pollution that most of us take part in. If Bitcoin is so bad for using as much energy as Argentina, then we should stop using energy to stream entertainment, which we are doing now more than ever.
> "Nobody who opposes Bitcoin on environmental grounds has anything to say about the sheer waste and pollution that most of us take part in."
[citation needed]
> "If Bitcoin is so bad for using as much energy as Argentina, then we should stop using energy to stream entertainment, which we are doing now more than ever."
Until we get off fossil-fuel based electricity, all environmental arguments are going to be based off marginal utility. There's a trade-off.
I personally think that Bitcoin at best is an unregulated financial market and at worst fake internet money. The fact mining contributes to more energy consumption than entire countries is worrying to me. It's a problem that's only going to get worse.
On the other hand, let's look at your argument about streaming entertainment. Currently plugged into my house, I have 2 TVs and 4 computer monitors. I use these to stream entertainment (among other things). Is it wasteful? Yeah, but entertainment is necessary for a balanced life and mental well-being.
Are my 6 screens wasteful? To some extent, although most of that waste is a byproduct of manufacturing where the 'off' button doesn't turn my screens off; it just puts then in a sleep mode which consumes power. So all 6 screens consume some amount of electricity 24 hours a day. This is a problem which should be fixed.
This is a problem with most modern appliances. It contributes to enough excess energy consumption that it even has its own name--vampire electricity.
You see? People can have critiques of both at the same time. But even if you take all the vampire electricity my appliances consume, it's still a drop in the bucket compared with what it takes to mine fake internet money.
Hi, I oppose bitcoin and have lots to say about the sheer waste and pollution that most of us take part in.
I also put my money where my mouth is! I drive electric and charge only at my employer, which uses 100% solar. I don’t eat meat. I shop at package free groceries. I eat as much local food as possible. I don’t stream movies or music.
We exist, my friend, but that’s besides the point. There are no saints in systems as complex as energy. You can only take aim at the big stuff and hope you can make an impact.
Bitcoin is entirely unnecessary, unlike eating and driving. Participating is a choice. And it’s a bad choice.
Personally, I am of the opinion that individuals should be able to use electricity however they choose, provided they pay a market rate for it. Interesting to see HN praising the CCP's policies in this regard.
There is no market rate for electricity in any reasonable country. Electric generation is one of these things the free market doesn't do well, so the vast majority of electricity markets are either completely state operated (as in Canada, much of Europe, China, etc...), or highly subsidized.
The first is way more efficient and allows for much lower electricity rates, and the second is the only way to get the economics right to allow for growth.
That comes inevitably with regulatory restrictions on what you can do and how you can do it. Forbidding people using coal power to mine bitcoin is more than reasonable and indeed typical as far as energy use regulations go.
Market rates for electricity do not exist in a country where the power grid is controlled by communists. Given that most countries subsidize electricity consumption the same basic issue applies.
Looking beyond naive libertarianism, there is the bigger question of waste and whether people are entitled to consume a resource regardless of the application. Historically efficiency was seen as a virtue, but modern attitudes are more open to waste. It’s a fair question to ask whether this is an aberration.
>Market rates for electricity do not exist in a country where the power grid is controlled by communists. Given that most countries subsidize electricity consumption the same basic issue applies.
Yes, that's a problem in my view. Observing that it is the status quo doesn't rationalize it or further prohibitions to defend price controls.
I'm not sure if you would regard it as naive, but price controls are widely regarded as inefficient distortions of a market.
I live in Québec. We have state run electricty, which turns a profit and isn't subsidized. It's by far the cheapest in North America, and the essentially the cheapest unsubsidized energy in the world. The grid is also 99.9% renewable (everywhere except for some islands)
So the idea that price controls and nationalization somehow causes inefficiency in this case is just a tale economists tell themselves. In the real world, all of the most successful energy grids use those tools.
If Quebec is running a profitable business, there's no argument in what I wrote?
The most I could say is that there may be unseen costs of nationalization. I.e. it could be cheaper still if privatized, but that is further afield from the discussion. In HN parlance I suppose I could demand that you provide evidence and sources proving the same power stations wouldn't operate more efficiently under private ownership, but I don't think that would be fair or friendly.
Profitable for the province is different from profitable for a business.
Even if hydro itself isn't making more revenue than its direct costs, if it increases the tax revenues for the government by better uses of the electricity, the government is still making a profit
There are unseen benefits to nationalization too, not just costs
Replying due to edit : you can claim that a free market could be cheaper. But there are free energy markets right next to Quebec, and costs are around twice as high, so you are arguing against reality.
Hydropower is not geographically unique, there are many US states (and Chinese provinces) which use mainly hydropower.
If you think that I am overextending the term free market, then you must agree that there are no energy free markets? There are two options here. Either there are, and they are all suboptimal to at least some state run solutions, or they don't exist, in which case my argument still applies.
Yes, many places have hydropower. Some have more than others. There are also population, consumption concerns relative to the supply. The Wikipedia article notes that the Quebecois authorities subsidize aluminum smelters with a goal of job creation. Perhaps the market price could be even cheaper without this subsidy?
Electricity markets are generally highly regulated, public-private partnerships or outright nationalized. I don't see a dispute here or an argument.
Observing that something is commonplace isn't a rationalization of the efficiency or morality of the practice.
>you are arguing against reality.
This isn't helpful. Different individuals have different observations, experiences, perceptions and thus opinions. That's healthy. It is the source of discussion. Would it be helpful if I characterized this turn of phrase as you arguing for an exclusive license on "reality"?
No, I don't think that would advance the discussion at all, but it would be equivalent to what you've offered in my view.
I agree that much of the value of cryptocurrency comes from regulators making transacting online difficult. BTC emerged after the demise of LibertyReserve and eGold.
However, if you are claiming there's no incentive to create more efficient cryptocurrencies, I disagree. Energy efficient, faster and cheaper options exist.
You should look into the altcoin space where a lot of very smart people are trying a lot of different things. Now whether you put your money into them or not is an entirely different discussion.
I’m sure there are many interpretations of the motivations behind this. Regardless, the resulting reduction in carbon emissions can only be a good thing.
Obviously the network and operate fine with less power, but if that reduction in hash rate occurs because most of the world has banned mining, you can imagine a situation where the remaining miners can much more easily centralize and control the network.
On the other hand, with China already home to > 70% of mining (per this article), perhaps it’s more surprising this hasn’t happened already.