Bitcoin in a hyperbolic bubble

[DublinHead54]

I came across this article today (Link), again highlighting the energy consumption of Bitcoin mining, what I found quite interesting is the comment below. So whilst people can harp on about BTC going to use renewable energy to mine nobody actually knows if they are or not.

'Since there is no government body or organization that officially tracks where bitcoin is being mined and what type of electricity miners are using, there is no way of knowing whether miners are using electricity that is fueled by renewable energy or fossil fuels.'

This site is also useful

Cambridge Blockchain Network Sustainability Index: CBECI

The Cambridge Blockchain Network Sustainability Index (CBNSI) is created and maintained by the Cambridge Digital Assets Programme (CDAP) Team at the Cambridge Centre for Alternative Finance, an independent research institute based at Cambridge Judge Business School, University of Cambridge.

cbeci.org

 

[tecate]

The economics of mining are such that generally, in the long run, the most efficient miners will put all other miners out of business

Research has been cited on this thread which indicates a significant and ever increasing proportion of bitcoin mining relies on renewable energy sources. But the bottom line is as Dazed points out. We know that bitcoin mining is continuously pursing the cheapest energy on the planet - and that this process is unrelenting. Unwanted/excess/stranded renewable energy is the cheapest energy on the planet. Therefore, it's logical why we see a higher percentage of renewables in the bitcoin mining mix by comparison with gaming and other power hungry activities. Furthermore, it's also clear that bitcoin miners can only be buyers of last resort - if someone bids up the price, then that energy is going to be too costly for them. There is no competition for said energy with other users in those circumstances.

 

[WolfeTone]

'Since there is no government body or organization that officially tracks where bitcoin is being mined and what type of electricity miners are using, there is no way of knowing whether miners are using electricity that is fueled by renewable energy or fossil fuels.'

So whilst people can harp on about BTC using fossil fuel energy to mine nobody actually knows if they are or not.

 

[DazedInPontoon]

So whilst people can harp on about BTC going to use renewable energy to mine nobody actually knows if they are or not.

I agree, but of course that also applies equally to people harping on about BTC not using renewable energy.

Additionally, while it may be difficult to actually verify 100% with your own eyes what miners are doing, we can listen to what they are telling us they are doing. For example one mining company GAM:

Great American Mining monetizes wasted, stranded and undervalued gas throughout the oil and gas industry by using it as a power generation source for bitcoin mining. We bring the market and our expertise to the molecule. Our solutions make producers more efficient and profitable while helping to reduce flaring and venting throughout the oil and gas value chain.

Or you can read about Icelandic mining here and decide that they are probably lying, and that they're actually burning coal and I couldn't prove you wrong.

 

[tecate]

So whilst people can harp on about BTC using fossil fuel energy to mine nobody actually knows if they are or not.

Building on that further, we also don't know how much of that fossil fuel energy is simply wasted energy. i.e. if it wasn't being used to power bitcoin mining, would it simply remain uncaptured?. Coal-based power generation stations are notoriously inefficient and have to be kept stoked and burning even in times when there is no demand from the grid.
We know that power companies directly have gotten involved in bitcoin mining on this basis. It makes complete sense that they would.

 

[DublinHead54]

So whilst people can harp on about BTC using fossil fuel energy to mine nobody actually knows if they are or not.

I agree, but of course that also applies equally to people harping on about BTC not using renewable energy.

Additionally, while it may be difficult to actually verify 100% with your own eyes what miners are doing, we can listen to what they are telling us they are doing. For example one mining company GAM:


Or you can read about Icelandic mining here and decide that they are probably lying, and that they're actually burning coal and I couldn't prove you wrong.

Of course this is true and you are stating the obvious which I agree with. I'm not sure why I'm being attacked.

There is nothing inaccurate in that article.

 

[DublinHead54]

Building on that further, we also don't know how much of that fossil fuel energy is simply wasted energy. i.e. if it wasn't being used to power bitcoin mining, would it simply remain uncaptured?. Coal-based power generation stations are notoriously inefficient and have to be kept stoked and burning even in times when there is no demand from the grid.
We know that power companies directly have gotten involved in bitcoin mining on this basis. It makes complete sense that they would.

Are you saying that all fossil fuel usage for bitcoin mining is coming from surplus supply?

You are over simplifying how electricity works, whilst fossil fuels bad an inefficient. Demand for electricity changes on the grid throughout the day, grid networks have to run surplus due to the time it takes to react to demand. If every coal plant across the world can be used to mine bitcoin that's great. Even with renewables there will be surplus in demand and there has been a rise in battery storage systems to smooth this out. So even with renewables there will be a surplus.

Is this happening at scale? Or who is coordinating a move to mine BTC with surplus energy? It seems like a no brainer

 

[WolfeTone]

I'm not sure why I'm being attacked.

Who is "attacking" you?

 

[DazedInPontoon]

I'm not sure why I'm being attacked.

I quoted you in my post, but I didn't mean to attack you or that post specifically, but moreso the general FUD. Apologies.

 

[DublinHead54]

I quoted you in my post, but I didn't mean to attack you or that post specifically, but moreso the general FUD. Apologies.

I must have misunderstood FUD, which I believe is meant to be the spreading negative and false information. Everything in that article was factual and accurate.

More generally what 'general FUD' are you referring to.

This is the classic technique in this thread....when faced with a well written factual piece of unbiased information that is viewed as negative towards BTC the topic gets changed by attacking the poster or making erroneous inaccurate statements.

I'd prefer if you just stuck to commenting on the actual post.

 

[DazedInPontoon]

As I said, I'd no problem with your post other than wanting to quote the line about no one knowing what energy sources miners are using to highlight that it applies to both side of the argument. I was agreeing with what you said.

I also had no problem with the article you linked,

In the context of the point about not knowing what energy source miners are using I probably should have found some other post to quote like:

Most of the bitcoin is done in China using dirty means

 

[WolfeTone]

thread....when faced with a well written factual piece of unbiased information

It wasn't the article, the article is fine.

It was your reference to some who "harp on" about renewables.
"Harp on" is euphemism for someone going on about something in an annoying manner.
That is what you claimed. Those who talk about bitcoin and renewable energy are annoying. Which is quite odd, considering the article you linked suggests that no one really knows how much fossil fuel, or clean renewable energy is used for mining bitcoin.

 

[DublinHead54]

It wasn't the article, the article is fine.

It was your reference to some who "harp on" about renewables.
"Harp on" is euphemism for someone going on about something in an annoying manner.
That is what you claimed. Those who talk about bitcoin and renewable energy are annoying. Which is quite odd, considering the article you linked suggests that no one really knows how much fossil fuel, or clean renewable energy is used for mining bitcoin.

I guess I should have worded it as both sides of the argument harping on about the source of energy usage. Everything is superfluous and the only fact that we should agree on is that Bitcoin mining requires a large amount of energy consumption. Whether that is from renewable / spare capacity / fossil fuels does not reduce the baseline fact.

 

[WolfeTone]

Everything is superfluous and the only fact that we should agree on is that Bitcoin mining requires a large amount of energy consumption.

I don't think anyone here has ever disputed that?
Bitcoin mining uses a lot of energy, so does the airline sector.
Arguably most aeroplane flights that occur are driven mostly by consumer indulgence rather than necessity.

 

[tecate]

There is no justification for singling out bitcoin's energy use whilst ignoring that of other sectors. It's far too easy for media to crunch out a 'btc uses more energy than country x' click bait article. The BBC article which re-ignited this discussion here is a completely unbalanced piece from someone who called the downfall of btc in 2013.
However, if people insist on forcing that debate, then the design of bitcoin as it relates to energy consumption needs to be noted...i.e. its designed such that miners are incentivised to seek out the cheapest energy on the planet to survive...and that will invariably be unwanted renewable energy. For that reason, we see a far more greener element to the btc mining mix than compared with other energy intensive activities.

 

[DublinHead54]

This is a discussion on BTC though, pointing out the usage energy of other sectors has nothing really to do with BTC energy usage.

Given it has been pointed out that the design of BTC is to use the cheapest energy source available 'unwanted renewable energy' why are we yet to see this happen at scale? When is it going to happen? I think this is a novel idea, but I've not actually seen much indication of that move happening.

I personally don't think the benefits of BTC justifies the energy consumption under the current adoption of BTC and the predominant use case as a store of value. You have to remember BTC was designed to be a decentralized currency, not a store of value lining the pockets of Wall Street.

 

[WolfeTone]

This is a discussion on BTC though, pointing out the usage energy of other sectors has nothing really to do with BTC energy usage.

True, but I am confused now as to why BTC, using alot of energy is an issue?

I get that if it requires a lot of energy and that energy is sourced for fossil fuels polluting the planet, that is an issue.

I don't get if it uses a lot of energy, and that energy is increasingly sourced from wasted fossil fuel energy, or clean renewable energy, why that would be an issue?
The planet has an abundance of clean renewable energy sources. The difficulty is trying to harness that energy at affordable cost. I'm no expert but I understand there is a considerable capital investment at global public and private level in research and development into innovating technologies to do just that?
And bitcoin miners have a clear incentive to source cheaper energy.
So, like anything else, consumers and businesses will use the cheapest option.
Overtime, these options will become less viable via higher prices, taxes, cheaper cleaner alternatives.

Now I have to go. I need to go to the recycling plant to offload some waste in an environmentally friendly way.
On the way back I will fill up my diesel car and buy a couple of bags of turf.

 

[DublinHead54]

True, but I am confused now as to why BTC, using alot of energy is an issue?

The energy usage is a fact.

So I think that based on your comment your view is that BTC is viable if using renewable sources in the long run? What is your view on a central bank that is printing money using renewable energy sources?

The difference here is that BTC miners are motivated by it being a cheaper source, wheras the Central banks are mandated by governments to move to renewable sources. So it is a fair assessment that if coal remained the cheaper source of energy that BTC miners would use that as the source? It has been pointed out here by @tecate in the context of chinese miners the government or even the military can do nothing towards them and thus could not enforce sanctions.

I think given there is an unknown around how much BTC is mined by renewables and over time this may change by design and the mining centralization will decrease. However, I think those arguing on the opposite side should treat the established financial markets e.g. Central Banks as also being able to evolve as the world moves towards enhancing renewable energy supplies.

I don't think it is fair to argue using future examples of BTC but not allowing for the same use of future landscapes in established markets.

Whilst I continue to play an active role in the cryptocurrency community, I am less drawn towards BTC which has deviated too much from its original value. Broader the energy usage to maintain an asset that is making wall street rich regardless of the source I don't think is justifiable or what we originally wanted to achieve.

I am not sure how people can justify the adoption of BTC by wall street as good for the community? Although it being good for our personal investments. I fear BTC will just become a commodity used to profit.

 

[WolfeTone]

The energy usage is a fact.

I have never disputed this. No-one has.

So I think that based on your comment your view is that BTC is viable if using renewable sources in the long run?

Yes, along with all other industries and sectors.

What is your view on a central bank that is printing money using renewable energy sources?

I think it is a great idea.

wheras the Central banks are mandated by governments to move to renewable sources.

It has been pointed out here by @tecate in the context of chinese miners the government or even the military can do nothing towards them and thus could not enforce sanctions.

Well I think if governments are mandating CBs to move to renewable energy sources then the same governments should practice what they preach and only allow import goods and services from foreign countries if they are satisfied that the foreign country is manufacturing and delivering the goods and services using renewable energy sources.
This will put the dirty fossil fuel industry out of business in no time.

I don't think it is fair to argue using future examples of BTC but not allowing for the same use of future landscapes in established markets.

I'm not arguing that at all.

am not sure how people can justify the adoption of BTC by wall street as good for the community?

I didn't.

 

[DublinHead54]

Well I think if governments are mandating CBs to move to renewable energy sources then the same governments should practice what they preach and only allow import goods and services from foreign countries if they are satisfied that the foreign country is manufacturing and delivering the goods and services using renewable energy sources.
This will put the dirty fossil fuel industry out of business in no time.

So you aren't allowing time for governments and manufacturing to change over time? Conversely you are accepting that BTC needs time to convert to 100% renewable?

So you have a different view on how BTC should change vs say regular manufacturing? Or is your view that the switch should happen immediately regardless if it impacts BTC or not? Every industry should move to renewable immediately or die?