The Bitcoin now stands for that lost value, and there is now a corresponding psychological motive to replace the valuable thing that was lost (electricity, and all that goes with it including environmental impact) by mentally investing that loss in the Bitcoin token. So you protect it, you support the network that it exists within, you talk it up to your social circle, you do everything you can to make it as valuable to others as it is to you. All of these activities also take time and resources, aggravating the impact of the original loss commitment. You do this because someday you want to give it to someone else, whom you've convinced of its worth, in order for them give you back the value you lost by creating it.
There is no "environmental mitigation" for Bitcoin's energy use, this behavior (or a permutation of it in term of other forms of irreversibly burned value, like time* ) is an essential property of cryptocurrency, without which it would cease to exist.
Disclaimer I hold Bitcoin, not because I think it is a new form of money or "decentralized" in any way that matters (quite the opposite in fact), but because it is possibly the most clever and subtle ruse to access the gambling instinct in a demographic whose constituents commonly believe themselves to be "above" playing the lottery or falling for Ponzi schemes. Yes, the irony is not lost on me. Still, this is a huge untapped market.
* also a bit of a dodge as IIRC POS still requires keeping a machine running even if it's not dedicating all cycles to the staking algo. Anything that "recovers value" from the process of "burning value" defeats the entire purpose of burning value to create psychological motivation to mentally allocate it to the token it replaces.
Which, incidentally, is why you won't see much growth from cryptos that try to do something "useful" (like fold proteins) while also standing as a counter for burned value. If running the algo is more useful for A, because A is in a position to monetize the work outside the currency being created, than it is for B, who can't use the data or results from the work algo, why would B prefer to support that crypto over another whose work algo is equally useless for all?
The difference with stocks, however, is that stocks don't make a big show of pretending to be decentralized. Everyone knows and acknowledges that a relative handful of well-connected actors have enough leverage to wash everyone else out of TSLA if they so chose, but for the Bitcoin cultists it's anathema to even suggest the same inexorably centralizing forces are at work. A lot of collective effort is spent on propping up the "decentralization" meme (and its accomplice, the "anonymity" meme), effort which ironically makes the proponents value their Bitcoin all the more; they want to realize a return on that work.
This is based on the false premise that energy, or anything else needs to be given up in exchange for crypto, or any other form of currency.
We could create a zillion cryptos out of thin air and just hand them out. That's one way to do it.
Central banks do it another way.
The 'energy' thing is just nonsense, it's just something that happens to be baked into this specific form of BTC generation.
It's just a peculiarity of bitcoin and the way some cryptos are generated.
There is no theoretical generalization to the notion of energy->currency so the OPs premise of energy->value doesn't make any practical sense ... other than for BTC.
Gold has that mechanism by being a rare metal - there’s only so much of it in our vicinity. Bitcoin gets that mechanism from universal law of physics - you can’t create energy from nothing.
The 'security feature' of BTC, which happens to be related to energy has nothing to do with currency, or necessarily even crypto-currenices in the general sense.
The OP was trying to imply some kind of theoretical implication between 'energy used + value creation' (and you're also tying that to energy 'secure' usage).
Yes - we know BTC is 'tied to energy' - but that's irrelevant in the bigger picture, it's a specific feature of BTC - it's not a 'fundamental' problem.
There are myriad ways if distributing currency, even 'security' that don't involve arbitrary amounts of energy usage.
BTC/Crypto is kind of infuriating space of very smart technical people who have almost no financial knowledge 'discover' what they think of as new, but in reality, most of this has been known since the dawn of classical economics. BTC is a novel thing, that's about it.
it's literally the mechanism that solves double spend problem, which i'm pretty sure is quite important for a currency and to my knowledge wasn't solvable in trustless manner prior to bitcoin.
With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)
I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.
For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.
Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.
It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.
There are a few asic's for ETH, but the hash algo is fundamentally executed through memory. Even if you build an asic for ETH, you are always tied to the speed of memory.
Therefore, a GPU is going to be the most ROI efficient mechanism for a long time (asics cost more to build than a commodity GPU) and even more so, older GPUs work just as well from a ROI perspective because newer GPUs are more expensive.
This means ETH does not see the same hashrate growth (and energy usage) as BTC, while maintaining the same level of security.
The vast majority of energy usage for blockchains, is green energy hydropower using excess power from facilities that already exist. Why? Because this is the lowest cost and prior to this current bull run, was the only way to be profitable.
Why would this be true? The R&D costs of a commodity GPU can be amortized across more customers than an ASIC, and the same is somewhat true for capital costs (masks, etc) -- but the manufacturing cost of an ASIC should be at worst the same as a GPU (with one fewer middleman adding a margin on top of those costs), and in general cheaper (since die size can be reduced, or an older process can be used).
It really boils down to economy of scale. AMD can produce chips (and solutions) at much more scale (and thus far less expensive) than relatively small Innosilicon can. AMD has closer relationships to the fabs.
It also is other factors that go into this. Like the critical memory controller component. AMD owns the patents. AMD can also buy memory chips in larger bulk (and thus less expensive).
Also, the R&D on GPU's is an already amortized cost. They already exist. ASICs have to be engineered from the ground up and do what GPU's already do.
At the end of the day, this is also beneficial because GPU's can be repurposed, while sha256 ASICs are just e-waste every time a new round of smaller nm tech comes out.
I see a place for both BTC and ETH. BTC is digital gold (yes, I know HN hates that, but short of a better set of words, it is what it is.)
The thing that, in my opinion, disconnects ETH from BTC is CeFi/DeFi. It really is the programmable money... but not money in the context of a currency every day people spend.
I'm talking about money in the context of "institutional money". Like the trading desks in Wall Street. Where money goes to use in making more money. All those crazy algo's that people use to pool funds and hedge and trade are getting created out in the open now and solidified (see the pun?) in code.
That is where ETH shines. The amount of development and innovation happening there, at 'move fast and break things' speed is literally amazing. Heavy emphasis on 'break' because these things are getting hacked almost daily. But just like crypto exchanges (which used to get hacked daily), it'll settle down eventually.
Interestingly, as soon as I could (Nov 6th), I bought $100 each of BTC and ETH on paypal within minutes of each other. A little experiment. Today, the ETH is worth 5.5% more and both are up a combined 32%. I don't think people are paying close enough attention to this difference because they are blinded by the 32%.
It seems to me that the nature of Bitcoin as a pseudonymous currency actually facilitates and encourages illicit power stealing arrangements like this. In other words, it’s pretty easy for me to just send you some of my freshly minted BTC from the mining farm your company is powering, and nobody is likely to ever find out.
Unless corruption can be rooted out (highly unlikely), there will be no incentive for Bitcoin mining energy to come from legitimate sources, never mind clean sources.
Could those governments pull the plug on bitcoin?
Any improvements to the efficiency of proof of work will be countered by a difficulty adjustment, by design.
https://www.prnewswire.com/news-releases/layer1-launches-bit...
https://www.crusoeenergy.com/news-and-media/2020/1/10/denver...
The carbon footprint is funded by the block reward which is halved every 4 years until it dwindles to nothing. Progress is slow, but inexorable.
How so? That is a non binding resolution where the world's greatest polluters are still allowed to increase their carbon footprint. Countries receive all sorts of praise for signing it and their so called commitment to "battle climate change", even though it's still business as usually, but at least they signed it I guess.
And since a lot of mining is done in countries where the majority of their energy comes from fossil energy sources it has a footprint.
But hey, at least the rest of world leaders are virtue signaling about their greenness, that’ll help the planet!
US has achieved a lot (especially Tesla) _despite_ the leadership working against it for a long time.
I’m not sure I follow this (admittedly I don’t know much about how BTC actually works). Doesn’t mining also serve the purpose of verifying transactions?
https://www.jbs.cam.ac.uk/faculty-research/centres/alternati...
I'm more interested in the variety of "energy recovery" startups out there - eg https://www.crusoeenergy.com/ - that are harvesting wasted energy to mine cryptocurrencies
They might bring down transaction fees, but most of the money in mining is from block rewards, which depends on the market price of Bitcoin rather than transaction volume.