Crypto

Elon misunderstands energy use, block size, and block time for Bitcoin. The B Word response.

Elon, the energy cost from bitcoin mining is proportional to its monetary value. Mining is a competition where each participant is incentivized to spend as much money on equipment and electricity as is profitable. This market will exist for any truly decentralized cryptocurrency. Other cryptos cost less to mine right now because they are worth less, not because they provide more transactions per block. Bitcoin started with just one computer in 2008, using a CPU to process blocks. It could scale back down to that size one day if people stopped valuing it and discontinued mining. The majority of energy used to mine is not spent on processing and recording transactions, it is spent on “rolling dice” for a chance to be the winner of each block and receive the associated transaction fees and block reward. Elon, your affinity for other cryptos with increased block size and block time may be functional for some nodes who have access to gigabyte Ethernet and abundant hard drive space, but that’s not scalable globally right now. People in many countries cannot afford multiple terabyte hard drives to store the entire blockchain. Currently, Bitcoin requires less than one Terabyte, and that’s after 10 years of use. The risk of such a change, to faster block times and larger block size, is that we could see a choke point emerge with cloud hosting becoming the only way to support and participate in a larger blockchain network, as is the case for E, which relies on Amazon Web Services running Infura. E is not decentralized and will become increasingly political with a transition to proof of stake, if they are able to accomplish this. The point of bitcoin is to overcome human directed monetary systems that can be influenced by majority stakeholders, lobbyists, or law makers. Bitcoin is a responsive system that scales up and down, seeking out stranded energy, providing a new way to use excess energy globally, and communicate value broadly. It is absolutely scarce, just like our time. This is what makes it worth trading our time and energy for.

This message is in response to The B Word talk today, which can be viewed here https://youtu.be/XKCipYaDIGw if you see anything that is incorrect or wish to provide clarification, please do.

Show More

9 Comments

  1. >Other cryptos cost less to mine right now because they are worth less, not because they provide more transactions per block.

    It’s not quite that simple. In the long run, the amount of money spent per day on the ongoing resources needed for mining (for Bitcoin, that’s primarily electricity; for Chia it’s expendable SSDs) will trend towards the value of the increase in supply per day.

    Yes, within a 4-year halving window, you can expect bitcoin mining’s electricity use to correlate to the price of bitcoin, because the daily increase in supply is constant.

    But you can’t do that same simple comparison between different coins. Take a hypothetical altcoin (let’s call it Pinecoin) that is similar to Bitcoin in every way, including current price, except its block reward is currently 3.125 units per block instead of Bitcoin’s 6.25 units per block. We can expect Pinecoin miners as a whole to use only half as much electricity as Bitcoin miners do as a whole.

    The interesting result of this is that Bitcoin will be like this hypothetical Pinecoin in a few years.

    So I don’t think it’s accurate to say that other coins’ mining uses less electricity just because they’re worth less.

  2. Your first sentence is incorrect.

    Price has nothing to do with hash rate in any direct way. Bitcoin becoming popular due to rising prices is about as close as you’ll get.

  3. So much noise while ignoring the most obvious answer…decentralized!
    All others are just clones with a single point of failure.

  4. > Elon, the energy cost from bitcoin mining is proportional to its monetary value.

    Yeah, this is a very bad thing… it means if it took over the entire monetary supply hypothetically and replaced fiat, mining would be using 40% of all human electricity.

    I wouldn’t really be like… defensively bragging about that yo. You should probably rather be trying to come up with ways to make energy usage NOT tied to market cap.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button