How Bitcoin's vast energy use could burst its bubble

[adam2]

Bitcoin "mining" does, so far as I know, produce a small but known reward for a finite amount of effort, which means computer processing power and electricity consumption. This is not directly comparable to actual physical mining for say gold. A gold miner could expend a lot of effort and find nothing, another miner might find a hugely valuable nugget of gold after little effort.
Success in physical mining is partly down to luck.

[PS_RalphW]

Bitcoin does not just consume electricity. Dedicated bitcoin mining hardware is replaced on average every 16 months , generating 30,000 tons of waste computer hardware every year, about the same as the Netherlands.

https://www.theguardian.com/technology/ ... wo-iphones

[kenneal - lagger]

Bitcoin, its method of generation and its popularity are all just symptoms of the crazy economic system that we live in. Energy is treated by economics as just an ordinary infinitely replaceable economic input rather than a fundamental of life that needs to be looked after and conserved.

[Catweazle]

Bitcoin, its method of generation and its popularity are all just symptoms of the crazy economic system that we live in. Energy is treated by economics as just an ordinary infinitely replaceable economic input rather than a fundamental of life that needs to be looked after and conserved.

I think you're missing the point of bitcoin. It's simply a method of moving money without leaving tracks behind and the staggering price rise reflects how much money is queueing up to be "lost". The people doing it don't give a stuff about how much energy it uses.

[UndercoverElephant]

Bitcoin, its method of generation and its popularity are all just symptoms of the crazy economic system that we live in. Energy is treated by economics as just an ordinary infinitely replaceable economic input rather than a fundamental of life that needs to be looked after and conserved.

I think you're missing the point of bitcoin. It's simply a method of moving money without leaving tracks behind and the staggering price rise reflects how much money is queueing up to be "lost". The people doing it don't give a stuff about how much energy it uses.

That's not what many of the bitcoin evangelists think it is. They think it is the modern equivalent of gold - a truly neutral, reliable and un-debasable currency which will save the modern world when the fiat money system collapses. Yes, it allows money-laundering, but that's just a bonus.

[Catweazle]

They might be right. My gut feeling is that bitcoin is going to collapse as soon as governments find a way of tracing ownership and tracking activity. The big players - and there are some people holding huge amounts - will probably see this coming and sell off their holdings, leaving the small, hopeful investor holding the baby.

Gut feeling isn't very reliable though, not a substitute for research, I'd be interested to read other opinions.

[UndercoverElephant]

I don't understand the technical details well enough to know if it will ever be possible to track it. My gut instinct also tells me it is going to go back down to zero one day too though, simply because it is completely dependent on high technology and has no intrinsic value.

[Catweazle]

Encryption relies on the fact that although any code can be cracked, the most sophisticated codes will take hundreds of years to break. However, if there is a breakthrough in computer power the game changes.

In 2015, Google and NASA reported that their new 1097-qubit D-Wave quantum computer had solved an optimization problem in a few seconds. That’s 100 million times faster than a regular computer chip. They claimed that a problem their D-Wave 2X machine processed inside one second would take a classical computer 10,000 years to solve.

http://quantumly.com/quantum-computer-speed.html

[kenneal - lagger]

The value of bitcoin is just as fiat as any currency, perhaps more so as no authority recognises it and there is no large money printing machine to back its value up. Also a collapse in the internet from, say, a power loss renders it completely valueless.

[UndercoverElephant]

Printing machines don't back the value up of any currency. The opposite is true. Printing machines have the power only to devalue currencies.

[Mark]

Fear and excitement in El Salvador as Bitcoin becomes legal tender:
https://www.bbc.co.uk/news/technology-58473260

Bitcoin protests in El Salvador against cryptocurrency as legal tender:
https://www.bbc.co.uk/news/world-latin-america-58579415

[adam2]

Printing machines don't back the value up of any currency. The opposite is true. Printing machines have the power only to devalue currencies.

Agree, the main merit of bitcoin is that governments cant print more of it as they are apt to with paper money.

[Catweazle]

Printing machines don't back the value up of any currency. The opposite is true. Printing machines have the power only to devalue currencies.

Agree, the main merit of bitcoin is that governments cant print more of it as they are apt to with paper money.

On the other hand, the printing machines are owned by a government, and that government gives some credibility to the currency. I struggle to see Bitcoin becoming a genuinely useful currency long-term if it isn't actually backed by anyone except the vendors who will accept it. If some vendors decide not to accept it that might prove to be contagious, investors could be left holding a bunch of Bitcoins that they can't spend.

I'd like to know how much actual goods is being bought with BTC, as opposed to BTC being bought as an investment or used to move money from one place to another.

[kenneal - lagger]

Printing machines don't back the value up of any currency. The opposite is true. Printing machines have the power only to devalue currencies.

That is only true if the printed money is used for current account spending. If the printed money is used to pay for capital items and the money repaid from the profits made by the capital items the new money is only temporary and is not inflationary or so I have often read. The building of the capital item puts money into the hands of people who will spend it to live and so boosts the economy. Taxation of the rich to redistribute money would also boost the economy as it would encourage the circulation of money rather than it stagnating in the hands of a few.

[BritDownUnder]

I am in favour of a new Bitcoin being set up called PonziCoin.

After an initial coin offering at a small cost in USD made to the PonziCoin founders' offshore bank accounts, subsequent coin offerings will be issued free of charge and and users will be able to manufacture unlimited quantities of new PonziCoin at will.

A bit like the Central Banks really.