Energy Cost of 'Mining' Bitcoin More Than Twice That of Copper Or Gold (theguardian.com) 165
An anonymous reader quotes a report from The Guardian: The amount of energy required to "mine" one dollar's worth of bitcoin is more than twice that required to mine the same value of copper, gold or platinum, according to a new paper, suggesting that the virtual work that underpins bitcoin, ethereum and similar projects is more similar to real mining than anyone intended. One dollar's worth of bitcoin takes about 17 megajoules of energy to mine, according to researchers from the Oak Ridge Institute in Cincinnati, Ohio, compared with four, five and seven megajoules for copper, gold and platinum.
Other cryptocurrencies also fair poorly in comparison, the researchers write in the journal Nature Sustainability, ascribing a cost-per-dollar of 7MJ for ethereum and 14MJ for the privacy focused cryptocurrency monero. But all the cryptocurrencies examined come off well compared with aluminium, which takes an astonishing 122MJ to mine one dollar's worth of ore. [...] To account for the wild fluctuations in cryptocurrency price, and therefore effort expended by miners, the researchers used a median of all the values between January 1, 2016 and June 30, 2018, and attempted to account for the geographic dispersal of bitcoin miners. "Any cryptocurrency mined in China would generate four times the amount of CO2 compared to the amount generated in Canada," they write, highlighting the importance of such country-dependent accounting.
Other cryptocurrencies also fair poorly in comparison, the researchers write in the journal Nature Sustainability, ascribing a cost-per-dollar of 7MJ for ethereum and 14MJ for the privacy focused cryptocurrency monero. But all the cryptocurrencies examined come off well compared with aluminium, which takes an astonishing 122MJ to mine one dollar's worth of ore. [...] To account for the wild fluctuations in cryptocurrency price, and therefore effort expended by miners, the researchers used a median of all the values between January 1, 2016 and June 30, 2018, and attempted to account for the geographic dispersal of bitcoin miners. "Any cryptocurrency mined in China would generate four times the amount of CO2 compared to the amount generated in Canada," they write, highlighting the importance of such country-dependent accounting.
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If Bitcoin was only mined with off-peak electricity, making Bitcoin the only sustainable currency on the planet.
"Off-peak" does not mean sustainable. Most off-peak power in America comes from gas or coal.
Most bitcoins are mined in China. China is also the biggest aluminum producer, producing more than the rest of the world combined.
There are 3.6 megajoules per kwh. Wholesale electricity in China is about 4 US-cents per kwh.
So if aluminum really needs 122mj = 34 kwh = $1.35 worth of electricity, to make $1 worth of aluminum, then the Chinese smelters are either getting really low prices on power, or are getting sub
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Aluminum is made where electricity is cheaper than that.
However the more obvious problem with this analysis is that $1 worth of Aluminum is a large piece that is actually useful to make things, some of which cost many orders of magnitude more than $1. $1 of gold is pretty tiny and difficult to make into anything worth much more than a few dollars. Also if Bitcoin crashes it's energy cost per dollar goes up a lot.
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You could use that for smelting aluminum, grinding wheat into flour, or other similar processes as well.
I know what I would rather have.
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How much would gold be worth if only priced in intrinsic value?
It's not that useful of question, and difficult to answer. Chemically gold is extremely useful. If there were no scarcity we'd use a lot more of it. It was discovered fairly recently that gold is a good catalyst for converting carbon monoxide to carbon dioxide. (effectively a different way to burn "wood gas")
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What intrinsic value does gold have?
This question is trivially answered with google, or even just Wikipedia. It has numerous applications which have nothing to do with how shiny it is.
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It has numerous applications which have nothing to do with how shiny it is.
But only 10% of the mined gold is actually used for those applications. The rest is stored in vaults or converted to jewelry, for no other reason than that's it's shiny and perceived to be valuable.
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But only 10% of the mined gold is actually used for those applications. The rest is stored in vaults or converted to jewelry, for no other reason than that's it's shiny and perceived to be valuable.
And presumably, like diamonds, that if you lock it up it continues to be valuable. But I propose that the intrinsic value of gold will continue to rise up until we get into serious asteroid mining, because of those very real practical applications. And locking up gold is essentially betting that this is the case. I personally agree, but my crystal ball has been cloudy before. Still, they're not making more gold around here.
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That's true, but that doesn't mean that gold has zero intrinsic value, only that the intrinsic value is much lower than the current market price.
Correct. And the market price has been much higher than its 'intrinsic' value for as long as gold has existed.
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Maybe I wasn't clear. The whole concept of value is man made. Those applications are for human benefit. There is no intrinsic (which implies natural) 'value' to gold or anything else.
Granted, but unless you aren't human, that's a ridiculous objection.
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Feel free to look up the word "intrinsic"
It's a lumpy world; it means essential, but in finance it's used to mean calculated value, not market-based. And if we're talking about an element, it means what it's worth based on what it's good for. The fact that people will pay for it for jewelry actually is part of its intrinsic value. I'm talking about it in the sense of the things that it's better at than other metals, like resisting corrosion, or reflecting heat. I think its value as jewelry is actually likely to fall over time, because it's old and
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It means, belonging naturally, essential. You could say naturally essential. Gold is very convenient, not essential. Food, water, shelter is essential, to more than just humans. That's real intrinsic value.
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Food, water, shelter is essential, to more than just humans. That's real intrinsic value.
All value is extrinsic, not intrinsic. One who has abundant food to eat, water to drink, and a nice place to stay will not place any great value on additional food, water, or shelter. The fact that humans need some amount of these essentials is an intrinsic property of humans. The fact that these things are needed by humans is not an intrinsic property of food, water, or shelter. The facts that they can satisfy thirst and hunger and protect one from the elements are intrinsic properties, but this only gives
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All value is extrinsic, not intrinsic.
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Maybe I wasn't clear. The whole concept of value is man made. Those applications are for human benefit. There is no intrinsic (which implies natural) 'value' to gold or anything else.
The value of everything is manmade. Even food only has intrinsic value because humans can eat it to get energy. Most stuff eventually comes down to "can I use it to get food". Gold will continue to be useful to get food as long as it has industrial and electrical uses. Does scarcity and hoarding affect the price, probably, but there are still plenty of marginal industrial uses of gold that would prop up the price if it started falling too much.
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Even food only has intrinsic value because humans can eat it to get energy.
Speciesist! :-) All living things need food to survive. We use and hoard gold to get sex. The primary objective is reproduction.
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If I put a bar of gold in your path you will pick it up.
...and at the earliest opportunity, I will sell it to someone else in exchange for cash which, unlike gold, is actually useful to me.
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What intrinsic value does gold have?
Gold has a ton of practical applications and if gold was more plentiful (and therefore less costly), it would have a ton more practical applications. Most of the stuff we use copper for (like wiring in houses), gold actually works better, it's just too expensive to use for those applications. Because of the high price of gold, we instead use it sparingly and only where we absolutely have to, but even if the investment and jewellery applications of gold disappeared tomorrow, gold would still have considera
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Most of the stuff we use copper for (like wiring in houses), gold actually works better,
No, copper conducts electricity better than gold. Only silver is slightly better than copper. In addition, copper only weighs half of gold, has slightly higher melting point, and is twice as strong, making it overall much superior for wiring than gold. The big reason for using gold instead of copper in some electrical applications is that gold doesn't tarnish, but for most cases, you only need a thin gold plating to benefit from that.
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Gold is beautiful. Yes, that is a valuable attribute.
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There is no such thing as "intrinsic value". There is only what others are willing to pay for it.
A hundred years ago, the thought of anyone paying money for horse manure was unthinkable. It had value as fertiliser, but nobody handed over money for something that was freely available on many streets. People pay (a small amount of) money for it today.
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Ideally not manufacturable - this means elements are ideal
...or counterfeitable. Gold became especially useful as a currency when touchstone was discovered.
No surprise here, it's designed that way (Score:5, Informative)
Can't speak for ethereum, but in the case of BC this is entirely intentional. Since the computational complexity of the BC transactions grows with time, it's unavoidable that the energy-usage is also going to increase at the same time. This, coupled with a finite cap on the total amount of BC is also what makes BC deflationary by design, which can be a good property for an investment but is overall a terrible property for a currency.
To claim that this is not intentional when it stems from the way the currency & cryptography is set up is just ridiculous.
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Since the computational complexity of the BC transactions grows with time
That's not how it works. The complexity grows with the mining capacity. And mining capacity grows (and possibly shrinks) with price of bitcoin, mining reward, and electricity. The mining reward consists of a fixed reward per block (halved every 4 years), plus a fee per transaction (determined by market mechanism)
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Since the computational complexity of the BC transactions grows with time
That's not how it works. The complexity grows with the mining capacity. And mining capacity grows (and possibly shrinks) with price of bitcoin, mining reward, and electricity. The mining reward consists of a fixed reward per block (halved every 4 years), plus a fee per transaction (determined by market mechanism)
You're right - it doesn't grow with time, it grows with transactions. It has nothing to do with the mining capacity, although transaction cost might increase as the capacity goes down, and the time to complete transactions will go up once capacity thresholds are reached. The whole thing is a virtual house of cards.
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You're right - it doesn't grow with time, it grows with transactions. It has nothing to do with the mining capacity,
The computational complexity is adjusted based on mining speed so that there is (on average) 1 block mined every 10 minutes. If mining capacity goes up, then more blocks are found, and difficulty is increased. If mining capacity goes down, difficulty is decreased.
The amount of transactions only affects complexity indirectly. As there is more demand for transactions, the mining fee goes up (not linearly, because the fixed block reward is much more dominant right now), which makes mining more attractive, and
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Thanks for educating people on this. One day hopefully people will realise that mining is just social engineering with no good technical backing. It's a way to get people to get on the bandwagon and support the network. For that it works, but for any other goal it's pretty terrible. In particular, crypto is supposed to be distributed, but mining encourages centralisation, because most profit can be made in areas where electricity costs less. Money also goes to those with the more money, those who can afford
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Yes, but what I'm saying is that the way it is set up has created a cycle. Because the amount of bitcoins awarded has a half-life, and because the awarded coin always goes to the group who solves the block, this has created a situation where the competition for new coins grows all the time, leading to higher centralization (most mining is now done by commercial operators) and increasing difficulty. If you look at the chart from the wiki [wikipedia.org] you'll not that although there are occasional small drops, the overall
What's The Net Pay??? (Score:1)
The energy cost doesn't fucking matter. The purpose of mining something is not to save energy. The purpose of mining something is to make money, regardless of whether you're mining gold, diamonds, or cryptocurrency.
So, the important fact is not how much energy it costs to mine the crypto; the important fact is does the crypto mining process create a net gain in money? If it makes money, that's all that matters.
How much energy is spent trying to mine gold and failing to do so profitably, or even entirely? I'
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How much energy is spent trying to mine gold and failing to do so profitably, or even entirely? I'm guessing most.
Private gold miners/companies don't have to provide numbers regarding the amount of gold they produce, so any estimate would be a guess. Presumably, publicly-traded gold mining companies produce more gold (I think they're required to state how much gold they produce) than private gold miners/companies, but that's another guess. I do know that for the old-fashioned, placer-mining, multistory, floating gold dredges (a pretty efficient way to mine gold, if the dredge is located in the right place), the price
The difference (Score:3)
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Bitcoin mining isn't difficult to understand. If people can get paid more for a bitcoin than it
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Also we don't have "blood bitcoins" yet: coins mined by kids under horrible conditions. Well, give it time...
Now you have me picturing hordes of children running on treadmills powering generators....
All this wasted energy (Score:5, Insightful)
All this wasted energy sounds like an argument for some stiff taxes on energy. I honestly see no other way to discourage people from wasting so much energy on these things. I'm all for cheap energy, but if people start wasting it like that, just because it's cheap, maybe the cost for energy should include its true cost, which includes the cost of repairing the damage it cases.
Of course that also means we should then invest those taxes into solutions for the problems created by this energy waste. Either cleaner energy technology, or carbon sequestration.
(Also, how is aluminium mining even economically viable?)
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Exactly. Imagine if all that computational effort had been put into Folding@Home or similar computationally heavy problems. How many complex problems would have been solved by now?
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Well, easy, just figure out a way for those tasks to become profitable by those who allow their computers to work on those projects, and you'll have people hooking into it.
While being altruistic can make a person feel good inside for a short time, it doesn't put food on the table.
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Either way they're crunching numbers. Might as well crunch something for all our benefit.
Strangely enough, you don't want bitcoin mining to be useful for any other purpose, otherwise profit motives for the other purpose could make bitcoin network less secure.
Either way, if folding@home is beneficial, then it's worth something, and people should be getting paid for the effort.
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Strangely enough, you don't want bitcoin mining to be useful for any other purpose, otherwise profit motives for the other purpose could make bitcoin network less secure.
Why would that make it less secure?
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Why would that make it less secure?
Because fluctuations in external factors could make it lucrative to invest in a bunch of miners, which would allow a 51% attack on the bitcoin network. If the miners are not useful for anything except bitcoin, then such an attack would leave all your miners worthless the instant you performed it. In most scenarios that would not be attractive. If you did all the investments for such a large bitcoin miner, it would benefit you to just mine bitcoins for a prolonged period of time without attacking the networ
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But even if mining solves medical problems, there's no personal profit in a 51% attack. And if you really do want to do a 51% attack for some reason and you have the resources, you could still do one right now. So I don't really see the security issue here.
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All this wasted energy sounds like an argument for some stiff taxes on energy. I honestly see no other way to discourage people from wasting so much energy on these things. I'm all for cheap energy, but if people start wasting it like that, just because it's cheap, maybe the cost for energy should include its true cost, which includes the cost of repairing the damage it cases.
Of course that also means we should then invest those taxes into solutions for the problems created by this energy waste. Either cleaner energy technology, or carbon sequestration.
(Also, how is aluminium mining even economically viable?)
Im heating my whole house with this. I would need heat in cold climate even if I did not do it this way. Is it an energy waste when you are consuming the heat generated from mining ? It feels like a really nice way to heat a house to me, and you get paid for it.... can you find other heating systems that pays you to heat your house ?
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If you use the energy to heat your house, that's definitely useful. I doubt most cryptomining energy is used that way, though.
Whether using electricity to heat your house is the most efficient way to heat it, depends on how your electricity is generated and whether heat pumps are a viable alternative.
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Even if the waste heat is a benefit, that's still turning a pure usable form of energy, one that's ready to do useful work, into waste heat. That electricity was probably generated by burning fossil fuels, spending roughly 3.3W of heat per 1W of generated electricity. Then you have transmission losses etc too. Any kind of resistive electric heating is extremely inefficient.
The only kind of electric heating that makes sense at household or larger scales is using the electricity to do the work of running a he
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That electricity was probably generated by burning fossil fuels, spending roughly 3.3W of heat per 1W of generated electricity.
It is more a 2 : 1 ratio, depending how you define efficiency, as a thermal power plant usually runs a bit less than 45% efficiency.
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The efficiency of a heat pump depends on the temperature you're pumping from. As GP said, with access to geothermal, it can be extremely efficient, but even if you're just pumping outside heat, it should have an efficiency of over 100% at temperate winter temperatures. But you're right that when it gets deep below freezing, heat pumps become pointless.
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So you're heating your house with an electric heat engine with a CoP of... 1.0?
You can do better.
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How many millions of people on this planet are on the edge of starvation? And you seriously propose increasing the cost of energy?
It's not a problem if you lower other taxes by the same amount.
You're proposing something that could literally kill millions? If not more? Because "the cost for energy should include its true cost, which includes the cost of repairing the damage it cases"?!?!?
You overlook the fact that people on the edge of starvation will also suffer when the effects of the damage come back to them.
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What is wrong with you?
How is bitcoin mining feeding those millions? Energy is being wasted on stupid things like this when it could be used to improve people's lives.
I'll gladly hear a better proposal from you, but at the moment, your argument sounds like we should leave things as they are so people will continue to starve while energy keeps getting wasted on bitcoin mining.
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He's a Democrat. They believe that regulations and taxes magically solve everything.
I'm not and I don't. Well, I'm a small-d democrat.
But in this particular case, the damage comes from the fact that the price of energy doesn't reflect its true cost. It does damage that is not included in the cost. The only thing I want is to include the cost of undoing that damage in the cost of the energy that's doing the damage.
One big thing this will accomplish, is that fossil fuels immediately become way more expensive than clean forms of energy, which will speed up adoption of cleaner energy. In much
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I'm all for cheap energy, but if people start wasting it like that, just because it's cheap, maybe the cost for energy should include its true cost, which includes the cost of repairing the damage it cases.
The true cost should be the price in any case. Not counting externalities is like "sticking it to the man" when self employed, you can pretend they don't exist but society pays the price. The opportunity to make large amounts of money then leads a few, through economies of scale, to profit disproportionately while the costs are socialized. It's not clear to buyers what those external costs are, and most people don't think about it much. This leads to the current state of affairs where libertarian views
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(Also, how is aluminium mining even economically viable?)
I'm reasonably sure that the energy cost given for aluminium was mostly for smelting, not mining. Aluminium is a fairly light metal, so even though a quick google was showing it 7 times the price of iron by weight, it's only about twice the price by volume. And it has uses where it is cheaper than other metals, like in drink cans, simply because of the properties of the metal.
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Yes, it was wasted.
All those people who set their computers spinning on pointless calculations and didn't win the bitcoin lottery have achieved literally nothing other than waste.
Those who did earn a bitcoin only succeeded in growing their own personal wealth without contributing anything useful to anyone else, and in the process made it that much more difficult for the next person to find one.
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(Also, how is aluminium mining even economically viable?)
Because aluminum is expensive per kg. With how wonderful it is as a metal you would think that hardly anything would be made out of steel any more, and you would be right if aluminum were cheaper. It's excellently cheap to recycle, so if we instituted a policy where everyone was responsible for the waste produced by disposal of their products, you'd see a lot more use of aluminum. By just the first time it was recycled, you would see break-even, or even economic benefit. Aluminum melts at literally a thousa
Re: Who are you to call the energy wasted? (Score:2)
Different people have different ideas of what is beneficial or useful - needless to say, many people clearly find mining bitcoin beneficial and useful otherwise they wouldn't be doing it. As a get-rich-quick scheme or for ideological views of currency and traditional banking - either way, people are doing it for a reason.
So who are you to say they are wasting energy?
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They are wasting energy because that's the explicit purpose. New bitcoins are awarded to the people doing the most pointless calculations, which wastes energy. You could award those bitcoins based on something more productive than that.
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There are other mechanisms that could be used like proof of stake or even proof of importance - but those trade different pros and cons and aren't as proven as PoW at this point.
Using large amounts of energy isn't the problem. Using large amounts of fossil-fuel energy is. Many miners are
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The purpose is using proof of work as the core mechanism to bitcoin's decentralised trust model.
Yes, but it's the proof of pointless work. Nothing useful is being done with that work. It would be very different if all that massive work accomplished something useful.
Using large amounts of energy isn't the problem. Using large amounts of fossil-fuel energy is.
Sadly, at the moment, the vast majority of energy in the world still comes from fossil energy. Energy used to win bitcoins is not being used to heat the homes of the elderly or increase food production in poor countries. If bitcoin miners use clean energy, that's fantastic of course. But if they buy clean energy that could also have been us
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You're absolutely right, and I did not express that correctly. It's dirty energy that needs to be taxed. If all energy were green, wasting it would be much less of an issue. (Though wasting it could still lead to shortages for people who need it for more practical things, of course.)
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It's not just about doing things we don't like, it's about harming others for profit. Because that's ultimately what's happening here: the price of fossil energy does not take the cost of pollution into account. Wasting it creates needless pollution that nobody is paying for. The tax would not serve merely to drive the price up, but to undo the damage caused. Energy that doesn't pollute would not be taxed, driving an enormous demand for cleaner energy.
And once all energy is clean, wasting it wouldn't be so
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I think there are better ways to take care of pensioners than that.
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Please tell me you understand the difference? You can make an airplane with aluminium, you can't make shit with Bitcoin.
Then explain why we are continuing to mine gold, when there are already huge reserves above ground sitting in vaults and in people's jewelry.
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I was going to say one process results in a high strength, light weight, corrosion resistant material with malability and ductility characteristics that make it useful in a wide variety of applications from food preservation, to aerospace. They results in some binary gibberish that is only useful as a fiat currency - while offering some unique properties its very unclear they are 1) advantageous or 2) justify the cost over other solutions.
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Thanks for your insights, but that was not an answer to my question.
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Then explain why we are continuing to mine gold, when there are already huge reserves above ground sitting in vaults
To put it in the vaults, of course. It's not like it's going to get there itself. I mean, duh!
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Re:Meaningless comparison (Score:5, Informative)
It is worth pointing out that aluminum is eminently recyclable, too. In fact, it takes only 5% as much energy [wikipedia.org] to recycle existing aluminum than to refine new aluminum from ore. Because of this, most of the aluminum produced in the history of humanity is still in use. One could think of that energy as a one-time cost, unlike cryptocurrencies, where there is no end in sight.
Most of the energy cost of refining aluminum comes from the fact that aluminum, unlike gold, is bound up in various oxides. To break the oxides and purify aluminum metal requires massive amounts of electricity - it's a lot like a battery in reverse [youtube.com]. Until we had access to large amounts of electricity, the alternative means of purifying aluminum were so costly and time consuming that aluminum was treated like a precious metal. Napoleon III had aluminum tableware [google.com] to flaunt his wealth and power (which is just laughable today, especially when you consider how soft pure aluminum is). The tip of the Washington Monument [wikipedia.org] in D.C. is aluminum. At the time (1884), it was the largest chunk of aluminum in existence.
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Because of this, most of the aluminum produced in the history of humanity is still in use.
It also doesn't hurt that aluminum oxide protects the underlying metal, so if you leave it lying around for a while, it remains highly recyclable. We do tend to aggressively recycle large steel things, but small ones are now just trash. Twenty years ago, steel was still worth scrapping for money. Today, there's few places that will take it without charging you for the privilege. Hopefully, this will have forward effects; more stuff made out of aluminum, less stuff out of steel, on the premise that it can be
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Twenty years ago, steel was still worth scrapping for money. Today, there's few places that will take it without charging you for the privilege.
You must live at a weird place. In Europe 90% of all steel/iron is recycled, just like aluminium (which is meanwhile close to 100%)
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If it is worth it to you, who cares. (Score:4, Interesting)
So the colleges get access to what amounts to a supercomputer
I get some crypto. I was doing this for nearly a decade before they added the crypto so it is either actual money in the future or just another way to keep score.
The last bonus is I had a stack of old machines in the garage collecting dust. A fresh OS install and BOINC and now they are set to wake up at night and crunch numbers to keep the house warm. It doesn't even matter that they are very outdated, any number crunching is a bonus, and the money that would have been spent anyway for the exact same thing. One day when I get motivated I'll rig up a thermostat that turns the software on and off so I can have better temperature control.
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In the long run, this is a good thing (Score:1)
After the great crypto crash, the world will be left with a lot of usable generating capacity in out-of-the-way areas, such as small dams in rural China. This will bring electric cars, etc., to areas that never contemplated having such big-city amenities.
Well, yeah (Score:3)
Energy Cost of 'Mining' Bitcoin More Than Twice That of Copper Or Gold
Well, yeah, but fake pyramid scheme "currencies" have more than twice the fake pyramid scheme coolness factor than either copper or gold, so there!
That's great! (Score:2)
Future energy consumption should drop for BTC, so that energy cost will probably put it below precious metals. Then people can stop bitching about BTC energy use.
Re: That's great! (Score:2)
Google-fu needed.
Mmmm (Score:2)
So, if the countries that have ample renewable power, like Germany f.ex. instead of paying Switzerland and Austria to take the surplus on some days off their hands, they could just mine bitcoins instead, simpler than storing it in batteries or generating hydrogen.
But is it more expensive than inkjet cartridges? (Score:2)
Just wondering.
Misvalued BTC? (Score:2)
the researchers used a median of all the values between January 1, 2016 and June 30, 2018
Wait a minute.... Averaging by median starting from 2016 is misleading. The COST TO MINE is not fixed. The cost to mine is a function of difficulty, and the difficulty is affected by hashrate --- how much hashrate people are willing to turn up is based on value but has steadily increased over time.
If you want to "average" the value of a BTC, then you should be doing a weighted average where the weight valu
I always get slammed for saying this (Score:2)
Privacy and low friction international transactions are the big advantages to crypto currency, but there are other ways to accomplish those goals without destroying the ecosystem and making the fossil fuel industry rich..
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Iceland is already home to large smelters like Alcoa.