In really Bitcoin's power consumption is ~500 MW as of 3 months ago, which is less than the amount of electricity spent on decorative Christmas lights in the US: http://blog.zorinaq.com/bitcoin-electricity-consumption/
Also, Christmas lights can use a lot of power. Your example reminds me of those electric heater ads that say their product uses as much power as a coffee maker.
It is still increasing at a rate that would make most startups jealous when they look at their own growth rate: https://blockchain.info/charts/n-transactions?timespan=2year...
"If it ever becomes popular for more than crime and tax evasion, that's as lot of Christmas lights."
It's already more popular than that. Bitcoin is no longer driven principally by "sin" activities: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2808762 And see the nice growth in various areas: https://en.m.wikipedia.org/wiki/History_of_bitcoin#Growth
More popularity will lead to higher bitcoin prices, and that will indirectly to more power consumption for hashing until no-arbitrage equilibrium is restored.
http://blog.zorinaq.com/bitcoin-electricity-consumption/
Tl;dr: "the electricity consumption of the network at 3250 PH/s adds up to 470-540 MW".
Scarcity is a good attribute for a currency. Plus having a currency that mirror an asset (gold, energy) is actually a bad idea economically speaking because then the currency cannot be used in time of crisis to soften economic downturns. Which is what was used during the 2007 crisis. People do not realize how much worse the 2007 crisis would have been without the measures taken by the Federal Reserve.
IMO, the attractiveness of bitcoin is about being a secure decentralized payment system everything else is fluff. Such a system takes some energy to work what a surprise...
Do you guys think that all the financial institutions combined use less energy than bitcoin ? Bitcoin is probably using a lot less energy...
I shared your concern until recently. But then I learned more about fractional reserve banking: with suitable (lack of) regulations banks can and will create just the right amount of extra bank money to satisfy extra demands from the general population for holding extra money.
Historically, just conditions have held in eg the free banking episodes in Scotland, Canada, France, Australia. (I think in the Song dynasty in China, too.)
https://www.alt-m.org/2015/04/28/what-you-should-know-about-... has a bit of background on history. And George Selgin has a bunch of paper really delving into the automatic adjustments that profit seeking banks will produce on their own accord.
But free banking is much closer to the way major currencies actually operate today (which also involves money supply determined primarily by banks' willingness to extend credit and fluctuating from day to day) than the concept behind Bitcoin or indeed the gold standard (supplies of a particular currency should be limited by [proof of] specific type of work and only able to grow, and very slowly)
> Australia. Operating with few restrictions, Australian banks were large, widely branched, and competitive, and they practiced mutual par acceptance, making the system resemble Scotland’s. The Australian episode is of special interest for suffering the worst financial crisis known under a free-banking system. After a decade-long real estate boom came to an end in 1891, some building societies and land banks failed, after which 13 of 26 trading banks suspended payments in early 1893. George Selgin (1992a) finds that the banks’ reserve ratios do not indicate any overexpansion of bank liabilities during the boom, though some banks clearly made bad loans. The boom was rather financed by British capital inflows, which suddenly stopped after the Baring crisis of 1890. Kevin Dowd (1992) adds that the banks were not undercapitalized. He argues that “misguided government intervention” in the first failed institutions “needlessly undermined public confidence” in other banks, while other interventions boosted the number of suspensions (all but one of the suspended banks soon reopened) by providing favorable reorganization terms for banks in suspension. (For a different view, see Turner and Hickson (2002).
I don't understand your second paragraph. You can have free banking in a gold standard or in a fiat regime. The historic free banking episodes regularly cited were in a gold standard setting. (But perhaps the confusion comes from 'Internet-Austrians' common insistence on 100% reserve banking as a mandatory feature of what they'd call a gold standard?)
(Bitcoin in its current parameters is more or less trying to imitate a gold standard.)
Internet Austrians and Bitcoiners believe that what is used as money should be a commodity with highly constrained supply, hence full reserve requirements for the former and a unified ledger and no credit-creation mechanism for the latter. Free bankers (and some altcoiners, and the economic mainstream) believe that what is used as money should be a promise from a financial institution with a flexible supply based on credit creation (disagreeing with each other on whether it's best backstopped by convertibility to a [quasi]commodity or central bank reserves under stricter regulations)
Free banking fanatics' arguments that Australian free banking practices were fundamentally sound and systematic collapse happened only because the government saved some of the worst ones should be taken with the same pinch of salt as anarchists' claims that people are fundamentally non-violent with crime occuring mainly as a reaction to police brutality.
As an aside:
Reading about how free banking can automatically can adjust the amount of bank money created over eg a fixed amount of gold to keep nominal GDP stable even in the face of eg increased demands for holding money from the general population, made me much more sympathetic to bitcoin's fixed supply than I'd been before. Since some kind of inflation, price level or nGDP targeting seemed like a good idea for a currency regime, and I could only assume that bitcoin was bound to fail before.
Of course, the mechanism George Selgin describes don't necessarily have to work that way. But at least it's something that looks plausible.
It's not. One immediate limit is ground space.
I don't think Visa uses up as much energy as a small country for processing 7 transactions per second at full speed.
This "waste" is actually a kind of security all its own.
(Eg even with bitcoins, you'd still have essentially the same stock market. You might be trading coloured coins on the blockchain, but people would still need to work to raise capital etc.)
I guess where we disagree is in how much of a proportion effort in finance is spent on producing that kind of trust vs other activities (like eg capital allocation, or hunting for arbitrage activities etc).
Ie even if bitcoin was purely running on renewable energy, it would still crowd out other users of renewable energy, and those might fall back to coal.