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Bitcoin Businesses The Almighty Buck

Bitcoin Mining Now Accounts For Almost One Percent of the World's Energy Consumption (theoutline.com) 172

Posted by msmash from the side-note dept.
It is well-established established that Bitcoin mining -- aka, donating one's computing power to keep a cryptocurrency network up and running in exchange for a chance to win some free crypto -- uses a lot of electricity. Companies involved in large-scale mining operations know that this is a problem, and they've tried to employ various solutions for making the process more energy efficient. But, according to testimony provided by Princeton computer scientist Arvind Narayanan to the Senate Committee on Energy and Natural Resources, no matter what you do to make cryptocurrency mining harware greener, it's a drop in the bucket compared to the overall network's flabbergasting energy consumption. From a report: Instead, Narayanan told the committee, the only thing that really determines how much energy Bitcoin uses is its price. "If the price of a cryptocurrency goes up, more energy will be used in mining it; if it goes down, less energy will be used," he told the committee. "Little else matters. In particular, the increasing energy efficiency of mining hardware has essentially no impact on energy consumption." In his testimony, Narayanan estimates that Bitcoin mining now uses about five gigawatts of electricity per day (in May, estimates of Bitcoin power consumption were about half of that). He adds that when you've got a computer racing with all its might to earn a free Bitcoin, it's going to be running hot as hell, which means you're probably using even more electricity to keep the computer cool so it doesn't die and/or burn down your entire mining center, which probably makes the overall cost associated with mining even higher.
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Bitcoin Mining Now Accounts For Almost One Percent of the World's Energy Consumption More

Bitcoin Mining Now Accounts For Almost One Percent of the World's Energy Consumption

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  • This is actually good news (Score:3, Interesting)

    by Applehu Akbar ( 2968043 ) on Sunday August 26, 2018 @12:02PM (#57197666)

    After the upcoming cryptocurrency crash, small energy sources all over the place will be freed up for local use. Graphics cards are already becoming available again.

    • GPUs not used for bitcoin, bitcoin compromised (Score:5, Interesting)

      by perpenso ( 1613749 ) on Sunday August 26, 2018 @12:27PM (#57197790)

      After the upcoming cryptocurrency crash, small energy sources all over the place will be freed up for local use. Graphics cards are already becoming available again.

      Graphics card have not been able to mine bitcoin for many years. GPUs are only able to mine some alternative cryptocurrencies. And as these "alts" get popular they sometimes follow the bitcoin path and end up being mined by ASIC (application specific integrated circuit) hardware. GPU mining is relatively insignificant compared to bitcoin mining.

      The "other" significant cryptocurrency, ethereum, one that GPUs were able to profitably mine this last year, is planning on moving from a proof-of-work scheme to a proof-of-stake scheme for maintaining its block chain and rewarding the miners/forgers who do so. This is in part to avoid the power demands but also to allow ordinary users to help maintain the blockchain with ordinary computers.

      Right now bitcoin has deviated from its design and its security has been compromised by not having ordinary people maintain the blockchain with ordinary computers, by no longer having a decentralized system. By evolving to an ASIC system mining has become more centralized, both in terms of large commercial operations where a 51% cartel is more plausible and geographically by have the vast majority of mining located in a single country. A country not known for a hands off approach to economic matters.

      • Re: (Score:2)

        by AmiMoJo ( 196126 )

        A lot of the alternative coins are designed to be difficult to mine with an ASIC. The most common technique is to increase the memory requirements. You can attach memory to an ASIC, but it's hard and expensive to match the bandwidth of a GPU.

        • This has to be false because ASICs are by definition custom-designed; there is no fixed design rule for all of them.

      • Re:GPUs not used for bitcoin, bitcoin compromised (Score:4, Interesting)

        by Applehu Akbar ( 2968043 ) on Sunday August 26, 2018 @02:48PM (#57198542)

        Graphics card have not been able to mine bitcoin for many years. GPUs are only able to mine some alternative cryptocurrencies. And as these "alts" get popular they sometimes follow the bitcoin path and end up being mined by ASIC (application specific integrated circuit) hardware. GPU mining is relatively insignificant compared to bitcoin mining.

        It's true that because the amount of work required to mine new coins in BTC has already passed the capabilities of graphics cards, the largest mining operations have bypassed them and gone to ASICs. This has caused graphics cards to start coming back onto the market even though the crypto crash in only in its early stages.

        But the very fact that the number of different cryptocurrencies is proliferating tells us that the basic idea does not work. As each currency smashes into its supply limit, people who want to use crypto as money have to invent a new coin, and then teh next new coin, and then the next. Meanwhile, the holders of each coin think they can use their digital hoard as an "investment."

        What they don't realize is that although each cryptocurrency is in limited supply, the set of all coins minted in all cryptos is expanding like a mad puff of smoke. The cryptocurrency world is about to go Zimbabwe.

        • Re:GPUs not used for bitcoin, bitcoin compromised (Score:5, Insightful)

          by shess ( 31691 ) on Sunday August 26, 2018 @04:33PM (#57199256) Homepage

          But the very fact that the number of different cryptocurrencies is proliferating tells us that the basic idea does not work. As each currency smashes into its supply limit, people who want to use crypto as money have to invent a new coin, and then teh next new coin, and then the next.

          That doesn't follow. People who want to use bitcoin as MONEY have no problem, there's no need to invent a new coin for that. You can use any of these as money just fine, insofar as you can find people to make your transactions. The increasing computational needs of the network don't make it any harder (or easier) to use it as money, as bitcoin aims for a 10-minute block-completion rate.

          The reason we're getting so many cryptocurrencies is the same as the reason we get so many log-structured key-value stores. It's not because the existing ones don't do the job, it's because they are (relatively) easy to create and there are no barriers to entry. So technically capable newcomers see the system as it is, and imagine that all of the outstanding issues could be solved with some minor change, without comprehending the systemic issues which caused those issues. So we get another implementation which is slightly different, ad nauseum, but since the barriers to use really aren't technical in the first place, none of them really wins.

          • Re: (Score:2, Insightful)

            by Applehu Akbar ( 2968043 )

            No commodity that constantly rises in value can be used as a currency. Mark those words.

            In the medieval pre-technology world, gold made a perfectly good currency because its value was easily recognizable and only a small amount of new gold was physically mined per year, making the 'money supply' in gold close to constant. Because gold traded for the same amount of Stuff year after year, gold coins circulated universally in the same way that Euros and dollars do today.

            But when technology started to create ne

            • Hoarding vs. Using (Score:4, Informative)

              by DrYak ( 748999 ) on Monday August 27, 2018 @06:21AM (#57201906) Homepage

              No commodity that constantly rises in value can be used as a currency.

              Cryptocoin don't constantly rise in value, they constantly jump madly around like giant random number generator (due to a too weird and completely unregulated market - that last part is the whole point of their decentralized system).

              This make them hard (or more precisely: risky) to hoard, as in keeping them as an investment.

              This don't prevent them to be used as form of payment (more precisely: a payment-over-internet-without-a-central-autority <- the whole point of their invention).

              You use which ever way you want to convert you stable fiat USD into bitcoins (e.g.: you might be using a coin processor like bitpayment, but you might as well be trading them on IRC), and the marchant your buying stuff from will use which ever stuff he wants to convert them into their local stable EUR (usually some payment processor. Let's say coinbase this time, for the sake of variation).
              You use only stable USD.
              The marchant only use stable EUR.
              the volatile BTC are only used during the transaction.

              The fact that these BTC were valued at some completely different exchange rate yesterday, and will tomorrow exchange at yet another completely random rate, depending on the ups and down of that crazy market doesn't absolutely affect neither of you.
              It only concerns those who are into actually trading them (payment processors, exchange platforms, traders that inversts into them, etc.)

              It's still useful as a payment system over internet, and unlike old-school internet payment, there isn't a single or a few company that act as central chokepoint (unlike Visa, MasterCard, Paypal), in theory there isn't a central Bitcoin Inc. (though in practice, some mining pools are dangerously close to be able to achieve that).

              It's a bit similar to what systems like SEPA/IBAN have achieved between banks (and the various system that rely on that, like the swiss Twint) : as long as both endpoint follow the same protocol, you're free to choose any endpoint of your liking, and so do the merchant. (You don't need to both be registered at paypal, or both use MasterCard).

              • Cryptocoin don't constantly rise in value, they constantly jump madly around like giant random number generator

                Its not so random in the long term, just the daily / weekly / monthly sense. The enthusiasts, hoarders, are BETTING that history repeats itself. In the long term we see an exponential 10-20x spike, then a fast decline of about 75-80%, a 3-4 year plateau, repeat. I think this has happened 4 times so far and we seem to be finishing up on the current 75-80% decline. Assuming of course that this 4th time is like the last 3. That's a HUGE assumption, but that's how the hoarders are thinking. Get out near the top

          • People who want to use bitcoin as MONEY have no problem, there's no need to invent a new coin for that.

            Thing is close to no one is interested in actually using bitcoin (or any other crypto coin) as currency outside of certain people doing activities that are by and large illegal. Virtually all the interest in bitcoin is speculation in one form or another including a healthy dose of pump and dump and other fraud. Bitcoin isn't widely used as currency and is in no obvious danger of that changing any time soon.

            • Bitcoin is actually useful as a way to transfer funds. Sender buys bitcoins and immediate transfers them, recipient immediately sells them. Volatility usually isn't an issue as neither is holding bitcoins for any non-trivial amount of time.

              A merchant accepting bitcoins is usually a PR stunt. The merchants usually never see or touch a bitcoin. A payment processor handles the exchange rate from the merchant's USD/EUR/etc price, the payment address, the validation and then credits the merchant's account in

    • Re: (Score:1)

      by Anonymous Coward

      yeah, ", it's going to be running hot as hell, " is a false statement, mining hardware is very expensive and running it hot as hell shorten the lifespan significanty, most mining hardware run at a power limit around 75% which significanty decrease the energy consumption and increase the lifespan of the hardware which is even more important today with the very low profit margins and bad ROI.

  • Not using computers or anything general purpose (Score:5, Informative)

    by perpenso ( 1613749 ) on Sunday August 26, 2018 @12:12PM (#57197708)
    "It is well-established established that Bitcoin mining -- aka, donating one's computing power to keep a cryptocurrency network up and running in exchange for a chance to win some free crypto -- uses a lot of electricity." Not quite. No one is using their computer to mine bitcoin. That hasn't been profitable in many years. People are using dedicated highly specialized hardware that can do nothing else except mine, ASIC, application specific integrated circuit. This isn't really donating your computer power since these ASICs can do absolutely nothing else. "Computing power" implies something a little more general purpose.

    • Re: (Score:2)

      by Trogre ( 513942 )

      People absolutely are using their computers to mine Bitcoin.

      They're not earning anything but, like a miner out with a toothpick, they're hoping they'll strike it lucky.

  • Kind of the point (Score:3, Informative)

    by Anonymous Coward on Sunday August 26, 2018 @12:16PM (#57197732)

    First: "Gigawatt" is not a quantity, it's a rate. You don't use "gigawatts each day". You probably mean GWh (gigawatt-hours).

    Anyway, there are really two inputs to the mining equation. The first is electricity cost per hour of mining operation and the second is cryptocurrency value produced per hour of mining operation.

    Making mining more efficient will *increase* mining activity, at least until the market adjusts. (Because, the value of cryptocurrency produced per hour is directly influenced by how much mining hardware is in use network-wide). More efficient mining equipment reduces the electricity cost, therefore mining is more profitable, therefore it is done more. In no way would making mining equipment more efficient make the network use less electricity.

    Besides, there's a fundamental limit at work here... the reason that mining is electrically and computationally expensive is explicitly intended. The only reason the network works is because it is expensive and time-consuming to mine. That's the security mechanism that makes the thing work, and the core concept behind the blockchain.

    • A fundamental of this is the energy economy. Have cheap energy? Make it work. It started with stone mills, horses, tired back muscles, and grew to steam, hydro, fossil fuels, nuclear, solar, geothermal, and more.

      For more human power, sugar cane/beets, then potatoes, corn, and other sugar/starch fuels.

      This is an energy economy, and suits those that can make energy cheaply. In terms of its asset value compared to traditional currency, it's going to wax and wane, but the supply/demand will taper off if residua

      • Where will it pay? Electric cars, trucks, trains, container ships, data mining (you're the gold nugget), and more.

        Should fusion energy be made reasonable and profitable, or other sources found, cheap energy will fuel many efforts that we can't afford today.

    • cryptocurrency value produced per hour of mining operation.

      Well that part of the equation's easy. The value is zero.

  • Tulip fields take up one percent of arable land (Score:5, Interesting)

    by xack ( 5304745 ) on Sunday August 26, 2018 @12:20PM (#57197752)
    People are starving as people grow tulips instead of food. Meanwhile in crypto land precious rare earth metals have been wasted producing gpus and asics to feed the money factories, which will be useless when the difficulty rises again.

    • People are starving as people grow tulips instead of food.

      Nobody is starving because of it, though. There's more than enough food, it can be preserved and shipped if we care. We don't. But bitcoin is doing harm right now.

  • If the world got its energy as cheap as the BTC miners must be getting it for, the whole world could run on the budget of CA.

  • Could somebody get this right just once? (Score:4)

    by Waffle Iron ( 339739 ) on Sunday August 26, 2018 @12:23PM (#57197782)

    Narayanan estimates that Bitcoin mining now uses about five gigawatts of electricity per day

    I've been searching all my life, and I have yet to find a single news article from any source that manages to discuss the fundamental physical concepts of energy, power and time without erroneously jumbling them all together.

    • Re: (Score:1)

      by Anonymous Coward

      Few summaries show as much confusion and error as this summary though.
      Converting all of their possible claims into gigawatts (an actual measure of energy usage rate):

      5 gigawatts (from article)
      5 gigawatt-days each hour (120 gigawatts)
      5 gigawatt-hours per day (0.208 gigawatts).
      1% of total primary energy supply (192 gigawatts)
      1% of world electricity generation (27 gigawatts)

      If you can't get this right, and can't even get it clearly wrong, you should be neither a journalist nor an engineer/scientist. Just stop

  • What does this mean?

    It uses 5GW? Or it uses 5GWh per day?

  • Electricity is not the only form of energy....

  • IEEE agrees. (Score:1)

    by Anonymous Coward

    https://spectrum.ieee.org/energy/policy/the-ridiculous-amount-of-energy-it-takes-to-run-bitcoin

    vastly more energy needed than visa. vastly less transactions than visa.

    Mmmm global warming to create nothing.

    • except you'll note that article states a much smaller amount of electricity used by Bitcoin than the sensational nonsense of this article.

      Claiming 1 percent of is bullshit, a lie

  • In a given pace of hardware, performance does not scale linearly with electricity consumed. Higher clocks consume progressively more energy. So a producer will pick a clock such that the performance boost of the last bump exactly matched the marginal increase of electric consumption. However a sustainable operation needs an average marginal cost far below that to pay for fixed and capital costs.

    And this also ignore difference proof systems a crypto can use.

  • If Climate change wasn't a worry the this topic wouldn't even be worth discussing. Unfortunately it is and cryptocurrency mining is just making things slightly worst
  • Comment removed based on user account deletion

  • Comparison with gold, please? (Score:5, Interesting)

    by whoever57 ( 658626 ) on Sunday August 26, 2018 @12:54PM (#57197906) Journal

    Most gold that is mined is not used. It's just stored.

    What resources are used to mine the ~80% of gold which is not used?

    • Re:Comparison with gold, please? (Score:5, Insightful)

      by thegarbz ( 1787294 ) on Sunday August 26, 2018 @01:17PM (#57197994)

      Sure I'll give you a comparison with gold:

      Gold a noble material with special properties is bought and sold not just for its trading value but for actua looks, and a massive amount of specific applications too.
      Bitcoin is a system for converting energy into wishful thinking.

      The world would be better off if bitcoin had never existed.
      The world wouldn't function as we know it (many chemical reactions depend on gold catalysts, many more depend on gold for protection of materials from the chemicals being worked with) without gold.

       

    • Re: (Score:3, Informative)

      by Anonymous Coward

      Bitcoin mining power usage estimates: 1-4 GW ( anonymous experts quoted by Washington Post [archive.org]; Dec 2017), 3.3 GW (Power Compare, a consultancy [powercompare.co.uk]; Nov 2017), 0.5 GW (some random blogger who shows his working [zorinaq.com]; Mar 2017). I'm going to trust the last of these to be most reliable, and add a factor of two for a year's worth of growth, and guess 1 GW, acknowledging that there's a big error bar here.

      Taking a major gold-mining company (Newmont [wikipedia.org]), their energy usage [newmont.com] is 40-50m GJ = 1.4 GW. This is about half diesel fuel, a

      • Finally, total global power consumption is ~18,000 GW

        That is actually total global primary energy consumption. Total electricity usage is way lower, somewhere around 2200 GW or so.

    • If if that were true (which it isn't, as other have effectively responded), the best argument you can come up with in defence of bit coin is that two wrongs make a right?

  • Can we round up all the journalists who cannot keep "energy" and "power flow" straight? Actually, find out which ones actually understand the notion of "first derivative", and to be really squishy-soft generous, they'd only have to get examples of change-over-time, which are most of them in journalism. Economics is riddled with them, and then there's climatology.

    Anyway, round 'em all up and redirect them to a more appropriate profession, perhaps shoe sales or real estate development. Because if you can'

    • Re: (Score:1)

      by hansson ( 886936 )

      YES! Round 'em up!
      I work daily with electricians and energy consultants. You'd be surprised how many of them also confuse power and energy. And what's even more scary - many of the electricians are color blind!

    • Re: (Score:2)

      by GuB-42 ( 2483988 )

      Real estate development is not a more appropriate profession for these people. Energy plays a large part in real estate development now, and if they aren't able to know the difference between a Wh and a watt, they are going to mislead you, and unlike with journalists who write forgettable articles, it may cost you a lot of money.

  • I'm curious if anyone has compared the cost in energy to mine an equivalent amount of gold from the ground til it's minted as a coin to the amount to generate an equivalent BTC. Or Platinum. Or Silver. That's ignoring that Gold has uses besides as a store of value or even lesser as a means of exchange. Just converting all the digging and processing work to watts makes my head spin (I barely passed Algebra). Any numbers out there? thx!

  • > If the price of a cryptocurrency goes up, more energy will be used in mining it; if it goes down, less energy will be used

    Block difficulty is already used to self-regulate the timing of blocks. Difficulty correlates with energy use, and it's a proxy for the market value of the coins themselves. So if the effective difficulty is double, that means the value of the block reward in $USD is roughly double, tracking the energy needed.

    This suggests an interesting secondary regulation level - the block reward

  • dE/dt^2 (Score:3)

    by nickovs ( 115935 ) on Sunday August 26, 2018 @02:31PM (#57198398)

    > Bitcoin mining now uses about five gigawatts of electricity per day

    5GW/day is about 57.9K Joules per second per second, which represents a rate of change of power consumption. If this is true then by the end of the year most of the worlds electricity is going to be used for "mining" Bitcoin!

  • It's hard to imagine a more ridiculous waste of energy. There is an energy business conspiracy theory lurking here somewhere.
  • Is there any human invention that will not be used to mess up our planet?! Even effing space exploration, the most noble of pursuits, is descending into an extreme sport for bored billionaires.

  • much ado about nothing (Score:3)

    by iggymanz ( 596061 ) on Sunday August 26, 2018 @07:10PM (#57200074)

    Much more energy is used for porn distribution, storage and consumption. Plenty of other non-essential human things too.

    bitcoin doesn't matter; if the energy wasn't used for that it'd be used for something else

  • the overhyped energy consumption claims against bitcoin have been debunked already.

    it's a fool's investment vehicle, and very il-liquid so not a "money", and I wouldn't waste the power mining since it could go to near zero in a heartbeat...

    but it doesn't take that much power, IEEE spectrum article decrying the waste says it might take as much as Denmark by 2020...

    tiny power consumption

  • In the days of solar power and renewable resources are we really wasting THIS much energy just to make fake money? How much lazier can we get as a species? Get off your dead butts and actually EARN a living. Quit sitting around and letting everyone else do the work for you, ditch this crypto mining and use that electricity for other things that actually produce something worthwhile for society. I mean imagine how many stupid people we could sterilize with that....

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