[askmike]

What article is claiming is based on a misunderstanding of how Bitcoin works, this really is an odd way of thinking about it.

If half of all people stop sending bitcoin around, the amount of electricity used doesn't go down by 50%. So you sending or not sending bitcoin doesn't impact the electricity spend by miners at all.

Miners mine to secure the network, there is not a certain amount of electricity needed per transaction.

[rspeele]

But, the only purpose of mining -- the whole purpose of the blockchain -- is to facilitate transacting.

So if the network can only do X transactions per day, and it costs $Y to run the network, it seems fair to use a "cost per transaction" to describe that inefficiency.

Kind of like how I could represent the total cost of ownership of a car (purchase price, oil changes, tire changes, big repairs, fuel) in terms of $ per mile, even though out of all those costs, only fuel is directly consumed by driving a single mile.

[lowkey]

It is incorrect to assume that the only, or even the most important, purpose of bitcoin is for transactions. Bitcoin users primarily hold Bitcoin as a store of value or speculative savings technology, typically held over long periods of time (years) with an expectation of price appreciation at the expense of short-term volatility.

It is not, as many on HN have correctly pointed out, a viable transactional currency for most use cases due to price volatility, taxation related friction, limited real-world adoption for payments or transaction costs. The only compelling transactional use cases I know of are censorship resistant payments (e.g, Wikileaks) or high value international funds transfers outside G8 countries where wires are slow and risky.

Most Bitcoin is held by savers or speculators over long periods and transactions are infrequent. Therefore the primary purpose of Bitcoin mining is securing the network from bad actors. Bitcoin is a secure vault on the internet. Just because people put money in and take money out of a vault doesn’t mean the purpose of a vault is transactions. It is security against 51% attacks.

Therefore, the appropriate measure is not cost per transaction. It is cost per total value secured.

[danShumway]

If 50% of Bitcoin users went away tomorrow or stopped transacting, almost certainly the amount of electricity used would decrease, because the value of the coin would decrease.

This is like saying that if the US banned gold that gold mines wouldn't be impacted at all. Demand (and thus profitability of the asset) fuels mining.

People mine because mining is profitable, not to secure the network. Securing the network is a side effect.

[steeve]

True, but the network serves a purpose. Without transactions, would there be a network to begin with? Therefore, you can model a per transaction cost within certain bounds.

[lukeschlather]

It's incorrect, but absent Bitcoin having an actual plan to increase transaction volume it's a reasonable way to imagine what a world where Bitcoin actually functioned as a currency might look like. It's possible that the bitcoin design is fundamentally flawed and cannot scale, but in some ways, OP has a very charitable way of imagining what it would look like if Bitcoin could actually function as a global currency.

[paulgb]

It's not so odd. Those people are willing to transact in Bitcoin because it's sufficiently secure against a 51% attack. So in a sense they're consuming the benefit of the overall network hashrate, even though the cost they pay is heavily subsidized.

[danans]

> Miners mine to secure the network

They are ultimately humans, not machines, so they mine for the mining reward, not as a public service of securing the network.

Transactions are the only service provided by Bitcoin (what else is a currency for other than transactions?), so it's totally fair to consider it's energy cost per transaction, especially since the banking system is evaluated in the same way.

[tromp]

> there is not a certain amount of electricity needed per transaction.

Not yet. But that will be increasingly the case in the coming decades as the block subsidy gets repeatedly halved into insignificance. Then the brunt of Bitcoin's security (protection against 51% attacks) will have to be borne by transaction fees.

[danbruc]

How saturated is Bitcoin currently? I stopped following the details years ago but I guess Bitcoin could not handle a ten fold transaction rate increase today, right? Which means at best - if you completely saturate the network - you could get the costs per transaction down to 10% of the given number.

[speedgoose]

If all people stop using bitcoin, the amount of electricity goes to zero.

[yobbo]

Classic confusion about marginal costs.

The price of bitcoin is supported by inflow of "fresh money" from newcomers. If this inflow stopped, for how long would mining continue?

[cookingrobot]

The price of Bitcoin is not supported by the amount of fresh money coming in. It’s based on the lowest price a current Bitcoin holder is willing to sell for.

If all Bitcoin holders decide tomorrow that it’s worth $200k per coin, then that’s the price, even if there are very few buyers at that price.

It’s like the price of a stock: it’s not dependent on trading volume.

[leifg]

So?

It’s so frustrating having these discussions about energy consumption.

If you make a statement about the absolute energy consumption of a PoW blockchain, the first response usually is “But this other thing consumes way more energy!!!!”

In order to compare the consumption of the network to anything you will need to calculate it by some unit of utility. Transactions is the only metric that makes sense.