Re There Is Nothing Virtual About Bitcoin's Energy Appetite

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: David Orban <david () davidorban com>
> Date: January 22, 2018 at 9:13:04 AM EST
> To: Dave Farber <dave () farber net>
> Subject: Re: [IP] There Is Nothing Virtual About Bitcoin's Energy Appetite
>
> There are several considerations to be made against the arguments bashing cryptocurrencies based on their energy 
> consumption.
>
> 1. The comparison must be made with the alternative. Even Google had published a report a decade ago in which it 
> justified the energy use of its data centers. Compare the cost by getting in the car and going to the library to do 
> the search equivalent to a query on Google. How much does the traditional monetary and banking system cost? Starting 
> from the cost of paper, printing and its distribution, collection, sorting, security, robberies, to inefficiencies 
> and distortion of values.
>
> 2. The focus of attention could be on things that are not possible otherwise. How many questions would not even be 
> asked if Google did not exist? If we give up blockchain because it is a waste, what opportunities for emancipation 
> will not arise for billions of people who are not eligible to participate in the current financial system?
>
> 3. All considerations observe the economy as a closed system, a zero-sum game. But you do not win because I lose. The 
> energy invested in securing the Bitcoin network is not removed from communities living in poverty.
>
> 4. We need to build ambitious new realities. If you have to choose the method of allocating resources and settllng 
> payments of economic transactions for the swarms of intelligent robots that will colonize the asteroid belt, do you 
> prefer to use banknotes or credit cards?
>
> 5. There are alternatives that are continually explored in the current architecture of blockchain and Bitcoin. Not 
> only proof of stake, which will be adopted by Ethereum, but also, for example, the knowledge mining that Neuromation 
> is implementing, where it uses the blockchain GPU network to generate synthetic data to train neural networks, 
> democratizing access to modern deep learning techniques of artificial intelligence. [1]
>
> Peter Van Valkenburgh writes: "Bitcoin: a $200,000 bounty every 10 minutes to find the cheapest electricity on the 
> planet." [2]
>
> The processing power of ASICs is non-local: you can buy the cards, and ship them wherever you want. This means that, 
> after the first few weeks when a new card is released, computation can theoretically get uniformly distributed. Why 
> isn't it? Because electricity becomes one of the most important factors of mining profitability. If you were to 
> represent as an animation Bitcoin mining density on a heatmap, and overlapped it with a scalar field map of the price 
> of 1 kWh, there would be a decreasing difference between the two. The economic incentives of the 12.5 BTC every ten 
> minutes of the Bitcoin network's heartbeat (until the next halving) push to a constant exploration of where can 
> electricity be reliably cheap anywhere on the planet.
>
> Valkenburgh again: "If you want to see a Moore’s-Law-like revolution in energy, then you should be rooting for, and 
> not against, Bitcoin. The fact is that the Bitcoin protocol, right now, is providing a $200,000 bounty every 10 
> minutes (the bitcoin mining reward) to the person who can find the cheapest energy on the planet. Got cheap green 
> power? Bitcoin could make building more of it well worth your time." [3]
>
> [1] http://neuromation.io
> [2] https://twitter.com/valkenburgh/status/938828317750431744
> [3] https://coincenter.org/entry/how-bitcoin-could-drive-the-clean-energy-revolution
>
> (Disclosures: I'm long on Bitcoin, Ether, many tokens, own and operate cryptocurrency mining equipment, and am an 
> investor or an advisor in token sale projects, including Neuromation.)
>
> ᐧ
>
>
> David Orban
> "What is the question that I should be asking?"
> twitter, linkedin, etc: davidorban
>
> > On Mon, Jan 22, 2018 at 2:06 PM, Dave Farber <dave () farber net> wrote:
> >
> > ---------- Forwarded message ---------
> > From: Dewayne Hendricks <dewayne () warpspeed com>
> > Date: Mon, Jan 22, 2018 at 4:55 AM
> > Subject: [Dewayne-Net] There Is Nothing Virtual About Bitcoin's Energy Appetite
> > To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> >
> >
> > There Is Nothing Virtual About Bitcoin’s Energy Appetite
> > By NATHANIEL POPPER
> > Jan 21 2018
> > <https://www.nytimes.com/2018/01/21/technology/bitcoin-mining-energy-consumption.html>
> >
> > SAN FRANCISCO — Creating a new Bitcoin requires electricity. A lot of it.
> >
> > In the virtual currency world this creation process is called “mining.” There is no physical digging, since Bitcoins 
> > are purely digital. But the computer power needed to create each digital token consumes at least as much electricity 
> > as the average American household burns through in two years, according to figures from Morgan Stanley and Alex de 
> > Vries, an economist who tracks energy use in the industry.
> >
> > The total network of computers plugged into the Bitcoin network consumes as much energy each day as some medium-size 
> > countries — which country depends on whose estimates you believe. And the network supporting Ethereum, the 
> > second-most valuable virtual currency, gobbles up another country’s worth of electricity each day.
> >
> > The energy consumption of these systems has risen as the prices of virtual currencies have skyrocketed, leading to a 
> > vigorous debate among Bitcoin and Ethereum enthusiasts about burning so much electricity.
> >
> > The creator of Ethereum, Vitalik Buterin, is leading an experiment with a more energy-efficient way to create 
> > tokens, in part because of his concern about the impact that the network’s electricity use could have on global 
> > warming.
> >
> > “I would personally feel very unhappy if my main contribution to the world was adding Cyprus’s worth of electricity 
> > consumption to global warming,” Mr. Buterin said in an interview.
> >
> > But many virtual currency aficionados argue that the energy consumption is worth it for the grander cause of 
> > securing the Bitcoin and Ethereum networks and making a new kind of financial infrastructure, free from the meddling 
> > of banks or governments.
> >
> > “The electricity usage is really essential,” said Peter Van Valkenburgh, the director of research at Coin Center, a 
> > group that advocates for virtual currency technology. “Because of the costs, we know the only people participating 
> > are serious, that they are economically invested. That creates the incentives for cooperation.”
> >
> > This dispute has its foundations in the complex systems that produce tokens like Bitcoin; Ether, the currency on the 
> > Ethereum network; and many other new virtual currencies.
> >
> > All of the computers trying to mine tokens are in a computational race, trying to find a particular, somewhat random 
> > answer to a math algorithm. The algorithm is so complicated that the only way to find the desired answer is to make 
> > lots of different guesses. The more guesses a computer makes, the better its chances of winning. But each time the 
> > computers try new guesses, they use computational power and electricity.
> >
> > The lure of new Bitcoins encourages people to use lots of fast computers, and lots of electricity, to find the right 
> > answer and unlock the new Bitcoins that are distributed every 10 minutes or so.
> >
> > This process was defined by the original Bitcoin software, released in 2009. The goal was to distribute new coins to 
> > people on the Bitcoin network without a central institution handing out the money.
> >
> > Early on, it was possible to win the contest with just a laptop computer. But the rules of the network dictate that 
> > as more computers join in the race, the algorithm automatically adjusts to get harder, requiring anyone who wants to 
> > compete to use more computers and more electricity.
> >
> > These days, the 12.5 Bitcoins that are handed out every 10 minutes or so are worth about $145,000, so people have 
> > been willing to invest astronomical sums to participate in this race, which has in turn made the race harder. This 
> > explains why there are now enormous server farms around the world dedicated to mining Bitcoin.
> >
> > [snip]
> >
> > Dewayne-Net RSS Feed: http://dewaynenet.wordpress.com/feed/
> > Twitter: https://twitter.com/wa8dzp
> >
> >
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