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Bitcoin Power The Almighty Buck

Bitcoin Consumes 'More Electricity Than Argentina' (bbc.com) 355

Thelasko shares a report from the BBC: Bitcoin uses more electricity annually than the whole of Argentina, analysis by Cambridge University suggests. 'Mining' for the cryptocurrency is power-hungry, involving heavy computer calculations to verify transactions. Cambridge researchers say it consumes around 121.36 terawatt-hours (TWh) a year -- and is unlikely to fall unless the value of the currency slumps. Critics say electric-car firm Tesla's decision to invest heavily in Bitcoin undermines its environmental image.

The online tool has ranked Bitcoin's electricity consumption above Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.20 TWh) - and it is gradually creeping up on Norway (122.20 TWh). The energy it uses could power all kettles used in the UK for 27 years, it said. However, it also suggests the amount of electricity consumed every year by always-on but inactive home devices in the US alone could power the entire Bitcoin network for a year.
"Bitcoin is literally anti-efficient," David Gerard, author of Attack of the 50 Foot Blockchain, explained. "So more efficient mining hardware won't help -- it'll just be competing against other efficient mining hardware. This means that Bitcoin's energy use, and hence its CO2 production, only spirals outwards. It's very bad that all this energy is being literally wasted in a lottery."

In regard to Tesla's decision to buy bitcoin, Mr Gerard added: "Elon Musk has thrown away a lot of Tesla's good work promoting energy transition. This is very bad... I don't know how he can walk this back effectively. Tesla got $1.5 billion in environmental subsidies in 2020, funded by the taxpayer. It turned around and spent $1.5 billion on Bitcoin, which is mostly mined with electricity from coal. Their subsidy needs to be examined."
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Bitcoin Consumes 'More Electricity Than Argentina'

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  • by Karganeth ( 1017580 ) on Friday February 12, 2021 @05:14AM (#61055104)
    If Bitcoin's price goes up by a factor of 10, then so does its electricity usage. That's the nature of mining and it can't be escaped. The only thing that lowers mining electricity usage is the halving events that cut down the mining reward for each block in half - the next one is due in 2024.
    • by 1s44c ( 552956 )

      If Bitcoin's price goes up by a factor of 10, then so does its electricity usage. That's the nature of mining and it can't be escaped. The only thing that lowers mining electricity usage is the halving events that cut down the mining reward for each block in half - the next one is due in 2024.

      How did you reach that conclusion? Electrical usage and coin price seem loosely correlated at best. I don't believe electrical usage halved with previous block reward halvings.

      • by Karganeth ( 1017580 ) on Friday February 12, 2021 @06:28AM (#61055266)
        Mining machines are devices that convert electricity into Bitcoin. I can't think of a good way to explain it fully so I'll just walk through an example.
        Suppose there's a world with 100 mining machines on it that aren't turned on. Electricity costs $1/hour for each machine when turned on. On this world, Bitcoin's price is $4 and every hour one new Bitcoin is minted that gets distributed to miners. So starting from 0 machines running, the first owner thinks "I should turn on my miner to earn $4/hour minus $1 electricity costs for a profit of $3/hour", so he does. Now the second owner thinks "If I turn on my Bitcoin, I have a 50% chance of getting that Bitcoin worth $4, so my profit is 0.5*$4-$1=$1/Hour. The third thinks 0.333*$4-$1 = $0.33/Hour. The fourth thinks 0.25*$4-$1 = $0/Hour. So it reaches equilibrium at 4 miners and no more miners come along. Now, multiply the price of Bitcoin by ten and start this reasoning again. What you'll find is that there are exactly 10 times as many miners before equilibrium is reached again.
        In reality it's messier than this due to the costs and time taken of buying new mining hardware and the varying costs of electricity in the world - this creates a lot of noise that makes it hard to see the relationship were you to just look at the data. But it is at the core of Bitcoin that it's electricity price will always be tied to its price.
        • That equilibrium is an over simplified view of the world. There are many other factors. E.g.

          Financial: Telsa invests $1.5bn into bitcoin and the price shoots up by 25%. For that time there's no change in mining. It still consumes as much energy as before. Many miners do not magically appear out of nowhere for a new peak. It will take a while for new miners to come online *if* they come online. The reality being that many expect this to be a short term bubble and will not invest to meet the current price.

          Gov

          • Both those examples are incorrect. They might be correct for a few weeks, but your equation is still working its way back to equilibrium. More profits = more people trying to get rich. No matter how you slice it, we have seen it time and time again. Gold panning, oil drilling in texas, it all creates a flock of people. Only until the cost of mining yeilds no profit after expense will it stop. There are two ways to increase revenue...

            Increase the price
            Or decrease expense

            Right now its being burned at bot
        • by Entrope ( 68843 )

          The last guy who tried to prove the inevitability of an economic result like that from first principles rediscovered a maxim of economics: "The market can remain irrational longer than you can remain solvent."

      • Every time the price jumps more assholes setup mining rigs. The damn thing is setup to shit a coin every 10 minutes whether 100 people are mining or a billion people are. High coin price drives demand.
  • by FudRucker ( 866063 ) on Friday February 12, 2021 @05:32AM (#61055124)
    when were all sitting in the dark because the grid got fried from over consumption
    • That will never happen. For the time being, crypto mining is profitable and poorly-understood enough that authorities haven't done anything to curtail Proof of Work mining on a meaningful scale. Any significant drain on grid power will inevitably involve the authorities as they sort out why there are power shortages, outages, and other problems.

      • On the other hand, crypto mining is essentially constant over the entire day, good for baseload power plants. And if miners are paying for electricity, the government may actually like the extra income for electricity.

        AFAIK, soem countries have datacenters near big power plants for the reason that mining can be used to take the output from the power plant when the demand on the grid is too low (and selling it cheaper to the miners gets you some money compared to none).

    • Or over taxed in a hot dry forest producing yet more fires.
  • Enough! (Score:3, Interesting)

    by Artem S. Tashkinov ( 764309 ) on Friday February 12, 2021 @05:41AM (#61055132) Homepage

    First, it was a bubble waiting to burst but considering its age and interest even among large corporations it turns out to be not that bubbly, now all the crap talk about its power efficiency.

    Let's talk about all the banking institutions which have large buildings, servers, millions of people working in them using electricity, water and other resources. Let's talk about bailouts and how nowadays they primarily serve the riches and goverments.

    Let's also talk about how people waste literally millions of tons of resources on things which end up in landfills.

    If Bitcoin is worthless crap why are you even talking about it? Maybe in reality someone is scared losing control over the money printing machine and as a consequence control over the world? Is this what it's really about?

    And, no, PoS doesn't seem to be a solution. It has its huge pitfalls which have yet to be addressed. As inefficient as PoW is, it has proven to work. Maybe a PoS/PoW combo is the best way going forward.

    • Re:Enough! (Score:5, Insightful)

      by Ed Avis ( 5917 ) <ed@membled.com> on Friday February 12, 2021 @05:59AM (#61055184) Homepage
      Those banking institutions clear thousands of transactions every second. Bitcoin can't even manage one transaction per second. In terms of energy efficiency, the banks with their branches and large air-conditioned head offices are still way ahead of Bitcoin.
    • Re:Enough! (Score:5, Insightful)

      by WierdUncle ( 6807634 ) on Friday February 12, 2021 @06:18AM (#61055234)

      Let's talk about all the banking institutions which have large buildings, servers, millions of people working in them using electricity, water and other resources. Let's talk about bailouts and how nowadays they primarily serve the riches and goverments.

      Banks and other financial institutions perform useful functions in commerce, which is more than can be said for bitcoin mining. What gets me is that, for no good reason I can see, bitcoin mining appears to be designed to consume resources as greedily as possible. It is a bit like those competitions where people have to eat as much as possible in order to win, so pure greed and waste is rewarded.

      • by kick6 ( 1081615 )

        Let's talk about all the banking institutions which have large buildings, servers, millions of people working in them using electricity, water and other resources. Let's talk about bailouts and how nowadays they primarily serve the riches and goverments.

        Banks and other financial institutions perform useful functions in commerce, which is more than can be said for bitcoin mining. What gets me is that, for no good reason I can see, bitcoin mining appears to be designed to consume resources as greedily as possible. It is a bit like those competitions where people have to eat as much as possible in order to win, so pure greed and waste is rewarded.

        Found the MBA. Charging a fee for everything isn't a "useful function in commerce" it's a drag placed on all commerce so that the people with the most money can rent seek from everyone else with minimal effort.

      • What gets me is that, for no good reason I can see, bitcoin mining appears to be designed to consume resources as greedily as possible.

        Exactly. And what's sad is that those corporations could be reinvesting in their labor pool, instead of wasting it away on consumption of electricity. It sure worked well back in the 50's and 60's, before the hourly compensation diverged from hourly production, [epi.org] giving corporations a lot of capital to mess around with.

        I have a colleague who is investing in Bitcoin, and he h

    • PoW is slow and cumbersome. All those bank buildings and servers and such you're talking about handle far more in total transactions than PoW-based algorithms ever will. If we attempted to carry out all the world's financial transactions using PoW, we'd be in a terrible state.

  • Space Heaters (Score:5, Interesting)

    by adrian_vanburen ( 6426086 ) on Friday February 12, 2021 @06:09AM (#61055212)
    Because transistors shed heat at a 1:1 ratio with space heaters, soon we will have space heaters, water heaters, etc all doubling as bitcoin miners. Once that happens, there will be no chance of wasteful competition, no matter how big or efficient your mining farm is. You can't beat the guy just using it to heat his home. Also consider that some places like Stockholm use central heating for the entire city. Hot steam is delivered underground and it's used to heat all homes and water in the city. The heat is generated in a central location with lots of power. This generator could be converted into a bitcoin farm, with the heat captured and sent to the city to heat everyone's bedrooms while they sleep and their shower water and stuff.
    • Please stop. We don't need any more of your silly inefficient ideas.

      You want to save the world:
      a) abolish bitcoin
      b) abolish restive heaters and switch to heat pumps.
      c) heat cities with waste incinerators + CCS + scrubbers.

      Literally throwing bitcoin at anything you can suggest will result in a *less* efficient way of doing something than what we can achieve with current (dare I say, 30 year old) technology.

    • Stockholm is heated by incinerating thrash in plants that produce both electricity and central heating. The heat is basically a by-product from the electricity production. Resistive heating is quite inefficient compared to heating from the original heat source.
    • by Misagon ( 1135 )

      Sweden has an electricity shortage as it is. We don't need more server farms that only "mine" cryptocurrency.

      There is no shortage of central heating. Most central heating is hot water, heated in the cooling system in power stations, i.e. as a by-product of electricity production. This allows very efficient use of the energy from the fuel (nuclear or otherwise).
      Swedish homes are also typically well insulated, with triple glazing etc. So we don't need more central heating. The system is efficient as it is.

      Ene

  • Use the heat to heat up homes or make hot water, then it's not energy wasted.

  • I believe that Musk/Tesla is buying Bitcoin as an investment, not mining it. Buying and trading Bitcoin does not use tons of electricity, only mining it does.
  • Scalability (Score:5, Interesting)

    by Synonymous Cowered ( 6159202 ) on Friday February 12, 2021 @08:02AM (#61055460)

    So, since we are using Argentina for scale.
    Argentina has a population of about 45 million. Bitcoin can handled about 400k transactions per day (you can fit about 2760 transactions per block, and a block is mined about every 10 minutes). So that's about 146 million transactions per year.

    So by using the electricity of the entire country of Argentina, Bitcoin could allow each person in the country of Argentina to make 3.2 transactions per year. Better stock up on non-perishables.

  • Comment removed based on user account deletion
  • Move the 'Mining' for the cryptocurrency to Argentina.

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