[0] https://digiconomist.net/bitcoin-energy-consumption/
[1] https://www.google.com/search?hl=en&q=road%20distance%20san%...
Thank you for going through the numbers and adding the sources. I was on my phone and meant to circle back.
I have limited knowledge of Bitcoin so maybe not quite "explain like I'm five"... but close. :)
Once someone finds a winning block, they're rewarded with a number of Bitcoin. This subsidies the cost that goes into mining that block. However the reward halves after every 210k blocks, so as the reward goes down, miners will prefer to only include transactions with high fee. Eventually the true cost of mining will reflect in the transaction fee.
And to add to the "it costs 657.6kWh to process a transaction": energy is used to produce a block, which contains an arbitrarily defined number of transactions. Right now, Bitcoin Core limits each block to 1MB, which works out to about 2k transactions per block. If Bitcoin Core were to increase the limit to say 10MB, the energy used to produce a block doesn't change, but the energy used to process a transaction goes down tenfold.
Oh, it could be somewhat improved. Then it'd be "only" 65 kilowatt hours, compared to ~1 watt-hour for conventional payment networks.
(And, this assumes that the increase in bitcoin price doesn't cause more mining).
Sure, and? You get other benefits, those might not be relevant for you in which case keep using conventional payment networks. But if things like counterparty risk of your payment processor come into your calculations, even $10 dollars a transaction migth be a good deal.
It's called an externality. It doesn't matter if you'd pay $10 for it if the cost imposed is too great. There are a lot of things people would absolutely pay for that we don't allow, because of that. Dumb weird fantasies about decentralization or counterparty risk or whatever don't actually matter if the energy cost is that high. It's just not important enough. Sorry.
The cost imposed is proportional to the fee, since the fee has to pay for the electricity used to mine the transaction. And $10 of electricity is just... not a lot to worry about.
If you believe the electricity consumption in general has huge externalities, you have bigger problems than mining, and once you address those the mining cost/diffiuclty will adjust
No. Miners get rewards for mining blocks, which pay for 80%. Transaction fees don't pay for the electricity used in a transaction: not even close.
> If you believe the electricity consumption in general has huge externalities
Well, sure, I believe that electricity is artificially cheap. I also believe that spending $50+ of electricity per transaction done is absolutely nuts. And that amount is steadily increasing...
Indeed, from a decentralization perspective, mining is looking worse than proof of stake, etc.
That makes a lot more sense that many transactions are included within a block. So effective transaction fees are likely in the few cents USD range.
I've read that one issue with the latency of Bitcoin transactions is that many of the large miners from China have network issues. Would raising the block size to 10-100MB cause significant latency issues for transactions even if one could fit a lot more transactions into a single block?
There are two ways to understand your question so I'll just answer both of them:
Fitting more transactions in a block leads to faster confirmation, and potentially lower fee. When a transaction gets into a block, the network confirms that the transaction is valid and can't be reversed. Right now each block can only fit ~2k transactions, and since a block can only be generated every 10 minutes, the mempool (backlog of unconfirmed transaction) is rather huge. This site shows how big it is: https://jochen-hoenicke.de/queue/. Miners are incentivized to only select transaction with high fee into the next block, which in turn incentivizes users to pay more fee to get their transaction to confirm faster. With bigger blocks, more transactions get confirmed quicker, which leads to lower fee.
Bigger blocks however mean miners with slow internet connection are at a disadvantage. When a miner finds a winning block, they broadcast the block to as many nodes in the network as possible. After a while, a majority of nodes accepts that winning block, and the miner is eligible for the mining reward. If A finds the winning block 10 seconds after B, but A is able to propagate their block quicker than B, then it's possible that A's block is accepted and not B'. In reality, it's possible that B might still win the race, but the rule is: faster propagation => more chance of being accepted.
The cost is socialized across the block reward. So long as there’s more new money coming in than block reward paying electric bills on the way out, the cost of a transaction is socialized efficiently.
Elon’s $1.5B investment only lasted a total of 4 weeks. It’s already gone. It’s in the hands of Chinese coal produces now.
Because the comments above yours are misleading. Transactions don't consume mining energy. Miners expend the same amount of energy regardless if they are validating 1 or 1000 transactions in a block.
You’ll have to explain to me why when mining a block of transactions, it doesn’t make sense to break that down on a per transaction basis with division.
If the number of transactions in a block ever changes I’ll change my divisor. Until then the proof is on you isn’t it?
Because the division result is meaningless as it just reflects how full a block was, not the cost of a transaction. Again: miners expend the same amount of energy regardless if they are validating 1 or 1000 transactions in a block. Exactly the same amount. And whatever math you might be doing doesn't account for batched transactions (1 tx, N outputs), lighting transactions, or off-chain transaction (think tx within a platform like an exchange).
For one that’s horrifyingly wasteful - you say it like it’s a good thing but it’s really not. And two, I’m describing the network as it exists today. That’s not dishonest; there’s no plan to increase the quantity of transactions per block. If it ever changes we can run the numbers again. But saying it’s a bad way to run the numbers is like saying there’s no cap on the number of bitcoins because the core team could just change the cap. Ok, and if they do, we’ll run the math again.
It is a great thing: it means Bitcoin can scale without increasing energy consumption. See, that's my problem with the way you phrased your post. You misrepresent the system. You imply transactions consume energy when they don't.
You pretend they don’t but they obviously do! You’re green washing one of the biggest environmental tragedies since CFCs.
It could in theory scale past where it’s at but the core team won’t let it making your argument no more useful than my unlimited coins argument. In what way exactly is it different? Yes if we pretend it’s efficient, it is. But only in our imaginations.
Even if they did increase block size fundamental inefficiencies mean even at maximum scaling it can’t hold a candle to visa or even a raspberry pi running MySQL.
In the long term, if transactions count doesn't rise fast, we will also see significant issues, either with transaction fees going to absurd amounts, effectively banning btc as a payment medium, or with the miner pool decreasing to counts where decentralization becomes inexistent.
This ignores the transaction fees. Even though they are only 10-20% of the total fees a miner collects, 10-20% of a round-trip from SF to NYC is still a lot of energy.
Also the defense of "the energy is spent securing the blockchain" is missing the point, the blockchain isn't a good unto itself it's only useful as a log of transactions and you only need new blocks when there's transactions and if there are no transactions Bitcoin is basically dead.
It bugs me that even quality newspapers frequently mistake power (watt (W)) for energy (joules (J) or watt-hour (Wh, often with the usual metric prefixes)).
Perhaps this is the cost of running a secure system.
Fuck that. I can hate the game, and the players who decide to play it.
There's zero chance of ending the economic incentives of cryptocurrency mining without (global) government intervention. Instead, the best effort the US government has provided is increasing SUPPORT for it.
Apple took a unique, aggressive, and still-controversial stance for privacy. This position has easily cost them a double-digit percent of their revenue; the amount of money they could generate from selling out their billion+ users, who are generally above-average income, in the same vein Google does, is unfathomable. I don't like Apple as a company, but I still feel its important to give them recognition for how industry-leading they were, and still are, in pushing for Privacy.
There are ethics which can transcend corporate interest, even when considering negative PR. There are some things companies just don't do. The excuse of "optimizing shareholder profit" and "hate the game" is bullshit; it moves the onus of responsibility off of companies who are fully capable of acting more ethically by blaming some Invisible Hand as if they had no choice in the matter.
That's bullshit. Jensen Huang had a choice. He made it. End of story. You want to shift some blame onto Ant and the miners themselves; that's all fair game for Round 2. But at this time, we're still on Round 1.
Its reasonable for Nvidia to stand by and do nothing. Graphics cards are, after all, general purpose computing hardware. Even after they've outlived a useful life in a mining farm, those miners may attempt to extract an ROI by reselling them in secondary markets. Not ideal, but certainly better than Nvidia's plan for the future.
Nvidia's plan is to, instead, support miners directly, while intentionally tiering consumer hardware, then positioning the entire move as somehow "Standing By Gamers". A dystopian science-fiction author legitimately could not write a more canonically evil storyline. I would change this position if Nvidia walks back, cancels the CMP line, and continues forward with driver limitations on the RTX 3060 with public plans to move to in-silicon ethereum mining protection on future cards; I think that's reasonable, given its fair to assume that the "ship has already sailed" on Ampere. Until then, fuck Nvidia; I'm not touching anything their hands are involved in.
It is disgraceful to watch people such as Elon Musk and most of the VCs put money ahead of the environment.
Fiat bans cannot really work well against just doing math. Taxation schemes/financial regs tamping down on bitcoin speculation, what you can spend it on? By design I don't think you can just pump money into bitcoin in order to "deflate" its value without similarly consuming a lot of energy?
How would you execute an exchange ban politically? Any politicians who did this would be responsible for instantly vaporizing tons of value owned by an increasingly non negligible fraction of the population that spans a broad spectrum of political affiliation.
An exchange ban also wouldn't stop bitcoin, because the network would still continue running and anyone cutoff and stuck with bitcoin can still use it as a medium of exchange, and it could kick off its development as a direct unit of account. An exchange ban might even make using bitcoin as currency even easier, because if it's not legally exchangeable for fiat, how do you tax cap gains on it?
Stopping bitcoin is a REALLY hard problem. It would require a massive coordinated crack down by every government on the planet. And then you're left with a prisoner's dilemma. What happens if China or Russia publicly go along with such a ban, but secretly keep supporting it and buy up coins for themselves, preparing for a day when it will be the global reserve currency that dethrones the dollar? It's a similar game theory problem to why we will likely never live in a world without nuclear weapons.
The reason this will probably never happen is because every government will think through this game theory, and realize the risk of being on the wrong side of a potentially ineffective ban and hamstringing your nation's citizens and companies from participating and developing on the new global financial system, is greater than the cost of just capitulating and adapting to live with it.
Anyone who owns Bitcoin is gambling. There was never a guarantee that value would go up, or that the government squash the idea entirely.
If we as a society decide that Bitcoin is too dangerous, current holders should accept Bitcoin for what it was: a bad investment.
There are at least a couple of bitcoiners currently in Congress, including the new Senator of Wyoming who is publicly all aboard the idea that bitcoin is an important, long term store of value that the US needs to jump on board with.
How many politicians do you think already hold some bitcoin quietly, just in case?
>> It is disgraceful to watch people such as Elon Musk and most of the VCs put money ahead of the environment.
> I am sorry you did not buy it when it was cheaper. No need to hate it now because you were stupid back then.
You're obviously defensively making some false assumptions. The big one is probably assuming that people are primarily motivated by greed and jealousy, and that other motivations are fake and meant to disguise that.
And for the record, I agree with the GP, and I've made quite a bit of money off of this bubble by selling some bitcoins I mined a decade ago.
Isn't that a trend that has mostly ended or is about to end now? It looks like that was mostly caused by nm process improvements for ASIC chips in the past. With 7/5nm ASIC chips it seems like it should now progress as fast/slowly as the nm process capabilities of chip manufacturers in general.
Not pro-BTC, but this seem very much like faulty interpolation based on a past trend.
3nm will hit in 2024, but until then there will always be advances in chip design. It’s not just about speed, it’s also about thermals, power consumption and manufacture price to work out the TCO of mining.
I'm not an expert on chip design, but I would have assumed that there isn't a lot of room for improvements of ASIC mining chips, given that they are probably a straightforward implementation of the hashing algo used in Bitcoin (and that a few thousand+ times), in contrast to CPU design which is more dependent on other computing/hardware trends.
Also remember an ASIC miner will generally use more than it costs in electricity each year, so a relatively small improvement in hashes / watt makes a big difference to overall profitability.
CPU design is more complex, but also has more people working in the space and has been going for longer. I just get sceptical if someone says this is as good as it is going to get because history shows usually those predictions end up being wrong. As a child I thought Super Mario 64 was as good as computer graphics were ever going to get...
That doesn't diminish the hashing power of the equipment you already bought though (and the topic was obsolete equipment).
> so a relatively small improvement in hashes / watt makes a big difference to overall profitability
Yeah, that's a fair point.
> I just get sceptical if someone says this is as good as it is going to get
And I'm skeptical if people blindly extrapolate past trends, assuming that they will continue to hold. I wasn't saying that it won't get better from here on out, just that the extreme growth that was mostly fueled by quickly going through the existing nm process steps can't be sustained, and that from now on it will follow the same slowish pace as all chip miniaturization.
It means even more equipment to go obsolete when improvements come through - and more equipment deployed does not equal more bitcoins generated, so it is an issue of more hardware that will ultimately end up in landfill / being scrapped.
> And I'm skeptical if people blindly extrapolate past trends
Well I'm also sceptical of people who blindly assume progress won't be made. To quote someone in 2014 predicting what would happen to ASIC design...
> As an emerging field of IC design, bitcoin mining ASICs have experienced rapid evolution over the past two years. However, they cannot keep evolving and developing at the current rate.
https://www.coindesk.com/bitcoin-mining-can-longer-ignore-mo...
Well, still, try see how profitable your 3 year old ASIC miner is today...
I don't get this comparison because Nvidia isn't a Bitcoin mining technology company. Or at least they weren't until a week ago. When someone deems it not profitable to mine on a set of 50 GPUs they purchased, they can resell those to gamers. But these mining cards are just e-waste.
> Don’t hate the player; hate the game.
Games don't exist without players.
Of course they do. Just because a game isn't being played doesn't mean it doesn't exist. Or at least, the rules do.
In a world of 7 billion humans, all you need is 2 to be the first movers and start playing. If the game is rewarding to the players, then it will continue to attract more players and grow until the size of the network of players itself becomes a huge part of the value of playing.
Games are just a protocol. And if the protocol is useful and better than other protocols, or has some first/second mover advantage, then the network using the protocol will grow until it saturates the addressable nodes.
Except they can't. GPUs used for mining are trash - too much heat and stress continuously.
Think about the average load on a consumer card used normally - maybe a daily 4 hour gaming binge max?
Meanwhile a mining card is running near 100% capacity 24/7, probably without enough cooling.
A world with more access to energy and cheaper silicon chips is probably necessary to address the immense challenges civilization is facing.
It's rather strange to see so many luddites on HN advocating to ban technology they dislike.
First, they came for the miners. You'll be cancelled someday too.
In the Wild West you would need maybe several horses each in order to exchange a certain amount of gold. What does the carbon usage be here?
Bitcoin solves that problem in software, which is magnificent. For the same carbon footprint.
That won’t stop Nvidia having a near monopoly on high end GPU. They use this to jack up the price of machine learning cards as well.
The Titan RTX is ~$2,500, which is incredibly well-priced considering that a 100G dual NIC is going to cost you $1,250.
With a 3080 you can make over $12/day in BTC and the electricity costs required are less than $2 in a majority of the US [0].
[0] https://www.nicehash.com/profitability-calculator/nvidia-rtx...
NiceHash rents your hash rate to buyers, you mine ethereum, while they pay your rewards in btc.
If you want ethereum directly, you can mine for a pool like ethermine or flexpool.
There's a profitability floor on hashes/KWh. When coin's price goes as sky-high as it has been, it pushed GPU mining back into the black. This is likely a temporary state of affairs; either the network difficulty will increase to where only ASICs can break through, or the price will decline.
The main cases I image are:
1. The miner doesn't want to deal with price fluctuations and wants to prevent arbitrage risk
2. It might be more profitable to outsource smallish coins that have to buy hashing power to stabilize their network (though that would probably also be covered by the profit switcher)
3. Money laundering <--- Which I assume is the biggest portion
Anyway, I now have six machines set up in my (previously... freezing cold garage), generating around £20 to £25 day total, after electricity costs. I’m on a metered power supply that is much cheaper at nighttime.
The benefits of NiceHash are:
- super simple set up. Literally an installer, it benchmarks the machine and gets to work in minutes. They have their own OS as well. That’s a rabbit hole for a few evenings this week to have some fun with.
- mobile app for monitoring all your rigs - temperatures, profitability, etc.
- pretty decent web front end for tracking progress, crypto prices, rig stats, etc.
- automatic switching between the most profitable algorithms in real-time. If the market are paying money for a specific currency/algo, it will swap to where the money can be made quickly and automatically without you needing to be involved.
- easy to disable specific algorithms that don’t work well. First day it kept jumping to KawPow, but for me this was really poor for profitability on my hardware, so it’s literally a click to disable that algorithm in their software.
I guess it just works, is largely set and forget, but offers lots of tweaking, monitoring for those with the desire to do that. Is it the most efficient or profitable? I’m starting to think not, but I’m still at the bottom of the curve for all of this, however, NiceHash has provided the perfect springboard into a new (to me) world.
BTW, I am fairly anti crypto in general. I’m kind of doing this as a learning experience while I have some free hours to burn each week on learning about something I feel I should know a lot more about while having a bit of fun in the process.
Setting up a miner yourself doesn't take much work but it won't have profit switching or extra cloud features that Nicehash or Minerstat have.
No, you can mine Bitcoin on your GPU or CPU. It will work.
Go mine Ethereum or Monero instead.
I was just correcting that. Bitcoin isn't unable to be run on GPUs or CPUs.
I think that's important to point out.
> No one mines bitcoin on GPU's anymore, since 8? years.
I'm not saying that's a good thing, I'm just saying its not the transactions that use power.
Like literally every other piece of Bitcoin or crypto mining technology. It’s straight to the landfill every 6 months.
Bitcoin generates 100 GRAMS of ewaste for every transaction. Every 2 transactions consumes as much energy as driving a Tesla from SF to NY [edit for clarity: round trip] and as much ewaste as throwing your phone out the window along the way.
Don’t hate the player; hate the game. Nvidia is maximizing shareholder value as per their charter, creating differentiated product offerings for different segments. Quadro, RTX, CMP. It’s all segmentation, and better, likely binning. I wonder if CMP products are just failed RTX and Quadro parts they’re offloading. For every card Nvidia doesn’t sell, Ant will sell 2 ASIC miners.
Time to push back on proof of waste, and end the economic incentive.