I don't understand how, with the cost associated with re-opening and operating the plant, the cost of purchasing the rigs, the cost of paying to offset their carbon emissions, the cost of the gas, etc., this can be profitable? Or is it a bet that Bitcoin is going to rise? That seems incredibly risky, even in the crypto space.
The fixation with the dollar value of Bitcoin has led to the sad debasement of Bitcoin. Now people hoard it and traders prey on retail investors with it.
Well, from my perspective, a bunch of us are playing some very weirdly human constructed game of wasting life years on work and passive content consumption.
If we ever make it to a cashless utopia, I'm pretty sure someone's going to look at us and see how much untapped human potential was wasted on years of watching a screen and experiencing dopamine release.
Bitcoin is subject to the Lindy effect. Neither of those timelines are very good bets. It’s already been around for 12 years.
If you see a lot of people doing something intentionally and you think they’re wasting resources, you probably just don’t understand what they’re spending resources on.
Proof-of-work blockchains were necessary to bootstrap proof-of-stake chains. Proof-of-stake is necessary to scale blockchains. It’s a relatively small, temporary price to birth a revolutionary technology.
Bitcoin mostly reuses wasted energy where there is no other better paying customer. Even if we would stop all Bitcoin mining on the planet, it wouldn't make any difference for this wasted energy, it wouldn't be put to other uses.
Please take the time to watch this podcast about bitcoin and electric grids and power usage:
...except that people are bringing new carbon-emitting power plants online to power their mining rigs.
Really though, this argument is utter nonsense. Solar/wind/etc. power being dumped into Bitcoin mining means carbon-emitting power is being used elsewhere instead of being shut down. Bitcoin is an environmental disaster that consumes massive amounts of energy just to process a tiny number of transactions.
What do you think would happen? Electricity doesn't just get "vented", and grids can't generate too much above usage without serious damage. If it wasn't being used it wouldn't be generated.
51% attack resistance requires that mining be resource-intensive and have significant opportunity costs. Otherwise - if mining is not costly and wasteful- it's not costly for an attacker. If electricity prices went down to 1% of their current value tomorrow, miners would need to increase their electricity consumption by approximately 100x, or network security would suffer.
To the extent that energy or resources used for mining are free, or surplus (would otherwise be wasted)... that mining activity provides no security to the network.
This is the same reason advances in miner performance (e.g. better ASICs) don't provide more network security. Miners mine faster, but any attacker would have access to the same technology. The only thing that can actually make the network more secure is using more scarce resources - whether directly, .eg. via energy usage, or indirectly, by manufacturing ASICs, etc.
Bitcoin mining is not resource-intensive in the sense that, say, aluminum smelting is. The thing about aluminum smelting is that if there's efficiency improvements, that's good! That means more aluminum from the same limited supply of free/low-cost/surplus energy. I like aluminum! But when somebody finds a way to, say, double the hashrate-per-watt you can get mining Bitcoin... the hashrate increases, but the network-security-per-watt stays the same. It has to.
It's not resource-intensive in the sense that automobile transportation is. If cars get more gas-efficient (or energy-efficient in general), awesome! Everybody's life gets better. If Bitcoin mining gets more efficient... miners just mine more. No extra security. No actual reduction in resource usage.
Assuming that miners mine when it's profitable (+EV) and don't mine when it's not profitable, Bitcoin's difficulty adjustment system implies the following: "The sum of all transaction fees and the coinbase reward for each block equals, on average, the cost of the resources used by all miners during that block period plus a small profit."
In other words, with a 6.25BTC block reward at current prices, every Bitcoin block requires burning about $250,000 in resources- or about $1.5 million an hour.
Now, that doesn't have to be electricity. If we discover free energy tomorrow and electricity prices go to zero, the resources used would likely switch to be those used in miner ASIC manufacturing- since every ASIC made would be a literal free money printer. But you'd still need to (amortized across the ASIC's life, of course) use resources worth about $1.5 million an hour on network security - or accept that network security is weaker. And to be clear, that's "worth" including things like transportation costs- natural gas may be worth $X per BTU, but natural gas out in the middle of nowhere where it'd otherwise be flared is worth far, far less, and using it thus provides far less security.
So, Bitcoin is either insecure or wasteful on an almost unimaginable scale - and probably isn't even wasteful enough today. (And no, that's not an XOR.)
The only way I can see not to wind up at this conclusion is to argue that markets aren't even weakly efficient.
The push to use clean energy for Bitcoin will ultimately lead to the increase of clean energy and lower costs of it for all, especially, for out of the beaten path locations. It might seem like a waste of energy but all technologies look like wasted effort until they are not.
This is a great example of the transition happening. Coal --> gas --> Solar? Nuclear? Hydrogen? ...
I think we are about to pass the tipping point of Bitcoin being around until money is no longer needed. There will be a time when Bitcoin will be expensive enough that it will be profitable to build a Solar Power plant to mine Crypto in the middle of the desert with nothing else around. I bet it will be in a bit over 2 generations, 40+ years.
This statement is from someone who used to think that $10.00 was a crazy amount to pay for Bitcoin.
Why would you build that solar power plant there when you can build them on the grid itself?
The investment sell I've been seeing lately is to burn stranded natural gas (that would otherwise be flared) in generators that would power a crypto mine. That also gives you 24/7 runtimes without needing energy storage systems.
[+] [-] coralreef|4 years ago|reply
[1]https://www.gem.wiki/Federal_coal_subsidies
[2]https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subs...
[+] [-] anonporridge|4 years ago|reply
[+] [-] antocv|4 years ago|reply
[+] [-] opheliate|4 years ago|reply
[+] [-] DSingularity|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] stonkdonk|4 years ago|reply
[+] [-] richwater|4 years ago|reply
[+] [-] knuthsat|4 years ago|reply
If we ever make it to a cashless utopia, I'm pretty sure someone's going to look at us and see how much untapped human potential was wasted on years of watching a screen and experiencing dopamine release.
[+] [-] ekster|4 years ago|reply
[+] [-] wyager|4 years ago|reply
If you see a lot of people doing something intentionally and you think they’re wasting resources, you probably just don’t understand what they’re spending resources on.
[+] [-] dcolkitt|4 years ago|reply
[+] [-] wizzwizz4|4 years ago|reply
[+] [-] DJBunnies|4 years ago|reply
[+] [-] nullsmack|4 years ago|reply
[+] [-] phasnox|4 years ago|reply
[deleted]
[+] [-] zyphr|4 years ago|reply
Please take the time to watch this podcast about bitcoin and electric grids and power usage:
"The Truth About Bitcoin's Energy with Harry Sudock" https://youtu.be/vSkEgUsgP3E
And one other point: energy usage != pollution
[+] [-] betterunix2|4 years ago|reply
Really though, this argument is utter nonsense. Solar/wind/etc. power being dumped into Bitcoin mining means carbon-emitting power is being used elsewhere instead of being shut down. Bitcoin is an environmental disaster that consumes massive amounts of energy just to process a tiny number of transactions.
[+] [-] pchristensen|4 years ago|reply
[+] [-] CJefferson|4 years ago|reply
[+] [-] skybrian|4 years ago|reply
[+] [-] XMPPwocky|4 years ago|reply
51% attack resistance requires that mining be resource-intensive and have significant opportunity costs. Otherwise - if mining is not costly and wasteful- it's not costly for an attacker. If electricity prices went down to 1% of their current value tomorrow, miners would need to increase their electricity consumption by approximately 100x, or network security would suffer.
To the extent that energy or resources used for mining are free, or surplus (would otherwise be wasted)... that mining activity provides no security to the network.
This is the same reason advances in miner performance (e.g. better ASICs) don't provide more network security. Miners mine faster, but any attacker would have access to the same technology. The only thing that can actually make the network more secure is using more scarce resources - whether directly, .eg. via energy usage, or indirectly, by manufacturing ASICs, etc.
Bitcoin mining is not resource-intensive in the sense that, say, aluminum smelting is. The thing about aluminum smelting is that if there's efficiency improvements, that's good! That means more aluminum from the same limited supply of free/low-cost/surplus energy. I like aluminum! But when somebody finds a way to, say, double the hashrate-per-watt you can get mining Bitcoin... the hashrate increases, but the network-security-per-watt stays the same. It has to.
It's not resource-intensive in the sense that automobile transportation is. If cars get more gas-efficient (or energy-efficient in general), awesome! Everybody's life gets better. If Bitcoin mining gets more efficient... miners just mine more. No extra security. No actual reduction in resource usage.
Assuming that miners mine when it's profitable (+EV) and don't mine when it's not profitable, Bitcoin's difficulty adjustment system implies the following: "The sum of all transaction fees and the coinbase reward for each block equals, on average, the cost of the resources used by all miners during that block period plus a small profit."
In other words, with a 6.25BTC block reward at current prices, every Bitcoin block requires burning about $250,000 in resources- or about $1.5 million an hour.
Now, that doesn't have to be electricity. If we discover free energy tomorrow and electricity prices go to zero, the resources used would likely switch to be those used in miner ASIC manufacturing- since every ASIC made would be a literal free money printer. But you'd still need to (amortized across the ASIC's life, of course) use resources worth about $1.5 million an hour on network security - or accept that network security is weaker. And to be clear, that's "worth" including things like transportation costs- natural gas may be worth $X per BTU, but natural gas out in the middle of nowhere where it'd otherwise be flared is worth far, far less, and using it thus provides far less security.
So, Bitcoin is either insecure or wasteful on an almost unimaginable scale - and probably isn't even wasteful enough today. (And no, that's not an XOR.)
The only way I can see not to wind up at this conclusion is to argue that markets aren't even weakly efficient.
[+] [-] WheelsAtLarge|4 years ago|reply
This is a great example of the transition happening. Coal --> gas --> Solar? Nuclear? Hydrogen? ...
I think we are about to pass the tipping point of Bitcoin being around until money is no longer needed. There will be a time when Bitcoin will be expensive enough that it will be profitable to build a Solar Power plant to mine Crypto in the middle of the desert with nothing else around. I bet it will be in a bit over 2 generations, 40+ years.
This statement is from someone who used to think that $10.00 was a crazy amount to pay for Bitcoin.
[+] [-] Scoundreller|4 years ago|reply
The investment sell I've been seeing lately is to burn stranded natural gas (that would otherwise be flared) in generators that would power a crypto mine. That also gives you 24/7 runtimes without needing energy storage systems.