I see news stories that will give examples of how much energy a type of technology uses (usually AI or crypto). They’ll claim very big numbers like the whole ecosystem using “as much as a small country” or one instance of use being “as much as an average home uses in a year.”
With the crypto ecosystem being so big and I’m less inclined to defend it, I haven’t thought as much about the claims. But with AI while it still has problematic aspects, it also has a lot of useful applications. When I run a single query the idea it’s the same energy as driving my car ten miles or whatever doesn’t seem to pass the smell test.
How are these numbers generated? Historically media doesn’t do great with science reporting (“a cure for cancer was just invented” etc) so just trying to get some context/perspective.
I said the environmental cost, let’s just look at one tiny fraction of it, money needs armoured trucks to move around, an armoured truck does 4 Km/L according to a quick google search, every bank has at least one armoured truck that gets driven around daily, let’s assume they use a single litre of fuel each day to account for the possibility of some days not being driven around. This means a single bank uses around 200L a year. Just in the US there are over 72k bank branches, that means ober 14 Million Litres of fuel. A diesel engine produces 2.7Kg of CO2 per Litre, i.e. a very low estimate is that 39 thousands Tons of CO2 emitted just in the US only by moving money around.
When you add all of the small stuff, for all of the physical currency in the world, plus all of the stuff for the digital version of that same currency I think it surpasses Cryptocurrency usage by a long shot, especially because crypto farms are almost exclusively located near green power plants because for example during raining season electricity is much cheaper since they will generate it regardless of usage.
That’s the point that everyone misses in cryptocurrency, the technology can already process global levels of transactions, the amount of energy that a crypto farm consumes is independent of number of transactions processed, finding a block with one or thousands of transactions is essentially the same difficulty, and consumes the same amount of energy. The cost of energy is only directly related to the difficulty, and the difficulty is only a matter of how fast blocks are being found, essentially the system tries to stabilise so that you get one block every 10 minutes regardless of amount of computers trying to find the next block. If there are more computers the difficulty goes up, less computers less difficulty, but the size of a block, i.e. the limit of transactions that can be processed during a period of time, is virtually infinite (not technically because you need to account for network speed, storage capabilities and a bunch of other stuff, but it’s independent of electricity consumption). To prove that take a look at Bitcoin Cash (BCH), it’s essentially a fork from Bitcoin that increased the block size but where the underlying technology remains the same. It uses a lot less energy BTC but that’s only because less miners are interested in it. Even using 10% of the energy, currently BCH can process 100 transactions per second, to put that into perspective MasterCard processes 5 to 6k transactions per second, while Visa a whopping 65k, so BCH can’t currently compete with either, but it outperforms BTCs 4 TPS by a LOT while consuming a lot less energy even though it’s the same technology. So again, the cost of energy of a cryptocurrency is a function that depends only on the amount of miners, not what those miners are doing.
Even IF amount of transactions had a significant impact on time to find a block, that would mean that more adoption would diminish the difficulty to maintain balance. E.g. if 100 computers take 10 min to find a block of size 1MB, but they take 20 min to find a 2MB block, the difficulty will drop by half of there are twice the transaction to maintain the average of one block every 10 minutes.
Finally, none of this has anything whatsoever to do with profitability. A coin being profitable to mine dictates how many computers will be trying to mine it, but the system self regulates, if miners migrate the difficulty goes down to compensate. But less difficulty makes it more profitable so miners come back, so on and so forth.
I don’t think the goal is to replace cash, it’s to replace electronic transactions, so I don’t see that as an energy savings. (also every branch of every bank does not have an armored truck)
The reason I suggest difficulty of mining would increase at global adoption is because we already see the price of a single Bitcoin went way up with very little adoption. If the entire world was using it the price would go up much higher. The higher the value of Bitcoin the more people will be drawn to mining, the higher the difficulty of mining goes, the greater energy required to sustain the blockchain.
You are wrong, cryptocurrency replaces money, not digital transactions. Bitcoin has its own value, independent of dollar or gold, it’s not meant to be used instead of MasterCard, but instead of dollars. If you only look at a small fraction of what cryptocurrencies do the energy consumption will look huge, it’s like using a supercomputer as a calculator and complaining it consumes too much power.
That’s not exactly how it works, more adoption doesn’t necessarily increases price, ethereum and Bitcoin Cash are a lot more used than BTC yet their price is lower. Price is determined by speculation, and the vast majority of people have only heard of Bitcoin, so that’s what they invest in. Also Bitcoin can’t grow any more, essentially everyone with an ASIC profitable in Bitcoin is already pointing it to Bitcoin, so it becoming more popular couldn’t possibly make more ASICS point to it, and if difficulty starts to increase the less profitable ones would mine something else and difficulty would fall again. If on the other hand any other coin became the most popular then part of those ASICS would look to that.
Don’t you think if some other currency surpassed Bitcoin as the best known and universally adopted currency that people would start speculating on the new currency instead of Bitcoin?
The issue is both proof of work and limited number of coins. As more people use a limited number of coins, the price will go up and so mining difficulty will go up, and so energy use goes up.
I think the future of cryptocurrency is inflationary coins that use proof of stake. (Also with anonymity built in instead of pseudonymity)
If a coin is used the speculating goes down, same reason people don’t speculate with dollar value, if X coins buys you a hot dog it gets a lot harder to speculate, the price becomes what people who use it give it. This is similar to gold, while it was used like money it was quite stable, but as people started to use dollars and the dollar decoupled from gold, actual gold became a lot more speculative.
Again no, the more coins people hold the more the value goes up, people actually using the coins doesn’t interfere in their price, unless you get to a point where there aren’t enough coins for everyone. But even if it got to the point that the price increases because everyone wants to use it and there aren’t enough coins for everyone to use, I don’t see how that would make mining more expensive. Like I said, processing 1 or 1000 transactions has a similar difficulty. The price of the coin going up could affect profitability, but the amount of ASICS is constant, so the power is already being consumed to mine other coins and would just be pointed here instead of there but would still have been consumed regardless.
I agree inflationary PoS coins, especially ones with smart contract capabilities such as Ethereum are way more useful. I understand the appeal for anonymity, but I disagree on the importance of it, I think most cryptocurrencies are anonymous enough even though like you pointed out they’re not fully anonymous.