• Same story, different day...........year ie more of the same fiat floods the world
  • There are no markets
  • "Spreading the ideas of freedom loving people on matters regarding high finance, politics, constructionist Constitution, and mental masturbation of all types"

The black hole cost of mining Bitcoin that no one is talking about

Goldhedge

Moderator
Site Mgr
Sr Site Supporter
Joined
Mar 28, 2010
Messages
31,098
Likes
38,760
Location
Planet Earth
#1
The black hole cost of mining Bitcoin that no one is talking about

10:00 AM

One of the more lucrative businesses that have sprung up in 2017 is that of Bitcoin, and other cryptocurrency mining. In fact in areas where governments subsidize cheap electricity (Russia, China, and Venezuela), these mining operations have grown and multiplied substantially.

However as most of us know regarding Bitcoin, as the volume of produced coins increase, the time and duration to mine the remaining coins lengthens. And in an interesting study out on Nov. 23, the current electricity use incurred for Bitcoin mining operations now exceeds the total combined output of 161 nations, and by February of 2020 could exceed the entire amount currently produced by the entire world.




Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.

However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins. According to Digiconomist’s Bitcoin Energy Consumption Index, as of Monday November 20th, 2017 Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh. That’s the equivalent of 0.13% of total global electricity consumption. While that may not sound like a lot, it means Bitcoin mining is now using more electricity than 159 individual countries (as you can see from the map above). More than Ireland or Nigeria.

If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption. – Power Compare UKTo keep up with this demand, alternative forms of energy would be needed to fuel cryptocurrency mining, possibly within just a years time. Because if not then sovereign governments would surely need to get involved as the current global grid system is inadequate to facilitate a doubling of its electricity output.
 

Buck

Gold Member
Gold Chaser
Joined
Apr 13, 2011
Messages
3,217
Likes
2,730
#2
Don't forget the power required to charge our electric cars

Happy Happy
Joy Joy
 

arminius

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Jun 6, 2011
Messages
3,434
Likes
4,444
Location
right here right now
#3
Lotta black holes all over the time and place no one wants to talk about.

Funny how that works...
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#4
If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption.
Perhaps at some point in the future, this is what could end up allowing another crypto to supplant bitcoin. The free market will ultimately decide.
 
Joined
Mar 31, 2010
Messages
235
Likes
137
Location
Northwest
#5
No one is talking about it? Everyone paying attention to bitcoin is talking about it (or should be). Every bitcoin transaction (not a block or a bitcoin itself) now costs over $100 in electricity -- even if you're just sending a buck or two.
 

nickndfl

Midas Member
Midas Member
Sr Site Supporter
Joined
Jan 7, 2011
Messages
12,363
Likes
10,489
Location
Florida
#7
It's crazy and defies logic notwithstanding fiat currency. When the chickens come home to roost on BTC there will be many sore butts.
 

anywoundedduck

Gold Member
Gold Chaser
Joined
Mar 31, 2010
Messages
2,553
Likes
2,665
Location
Kentucky
#9
I never witnessed such a lucrative scam ever. The King of all Scams.
And the payoff for the Perps will be quick and dirty, as they will have cashed out the day before, and turned their ill gotten gains into silver and gold.
So what safeguards exist for Bitcoin to keep the dump end of the pump from happening?
None you say?
Oh.
 

Someone_else

Gold Member
Gold Chaser
Site Supporter ++
Joined
Mar 31, 2010
Messages
2,084
Likes
2,480
#11
So what safeguards exist for Bitcoin to keep the dump end of the pump from happening?
Okay, I am going to think out loud on this...

First, all transactions are public.
Second, a "big" sale would mean the seller would probably have to find a big buyer first.
How to advertise the desire to dump a large number without disturbing the market?
Or maybe the seller could dump a huge number of Btc on an exchange and let many small buyers eat it up.
If I had a thousand Btc, could I sell them for $$$ in a reasonable time? Are there enough eager buyers?
What if a hundred other big sellers were also deciding to sell at the same time?
How many buyers will keep buying on the dips, how many will stop and say, "Okay, I'm good"?
How many will think, "With all these sellers dumping, it's probably going down to $1000 and I can get another chance to invest at the bottom"?

And to repeat the first point, everyone can see all transactions. Everyone will see the signals.

Supply and demand can be fickle.

Last question: Has any actually sold a thousand Btc in one transaction? I mean in the last few years.
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#12
Second, a "big" sale would mean the seller would probably have to find a big buyer first.
How to advertise the desire to dump a large number without disturbing the market?
Or maybe the seller could dump a huge number of Btc on an exchange and let many small buyers eat it up.
If I had a thousand Btc, could I sell them for $$$ in a reasonable time? Are there enough eager buyers?
What if a hundred other big sellers were also deciding to sell at the same time?
How many buyers will keep buying on the dips, how many will stop and say, "Okay, I'm good"?
How many will think, "With all these sellers dumping, it's probably going down to $1000 and I can get another chance to invest at the bottom"?
What you are asking are the same questions one could about any market. How do you dump X amount of gold, or silver, or houses, or bushels of wheat or anything else that you owned enough of to alter the market when doing so? Why wouldn't the same answers apply to btc?
...and anyone who was swift enough to still have many thousands of btc they bought for .005cents each, wouldn't want to or need to sell it all. Why would they? Just selling small amounts continuously no matter the price would could net thousands per Month. Being in such a position, what more could you ask for?

It'd be like if Ag had kept going up in 2011 and was by now $1000/ounce and you were sitting on 10 monster boxes you bought when Ag was $4/ounce. You could sell 2 a week and live rather nicely for the next 40+ years. Sell it all and you're back in inflationary dollars. What good is that?
 

Mujahideen

Black Member
Midas Member
Site Supporter
Joined
Mar 31, 2010
Messages
9,418
Likes
15,666
Location
America!
#14

andial

use default title
Midas Member
Site Supporter ++
Joined
Apr 1, 2010
Messages
10,490
Likes
10,780
#15
WTF Bitcoin cost more to make than it worth?
 

Someone_else

Gold Member
Gold Chaser
Site Supporter ++
Joined
Mar 31, 2010
Messages
2,084
Likes
2,480
#16
WTF Bitcoin cost more to make than it worth?
From what I understand, new "coins" appear at fixed intervals, and the "miners" are competing to get the fixed number of coins. To compete, you have to spend computing power, which costs energy. There are so many miners competing for those few coins, and they are using tremendous amounts of energy doing so. Apparently, the cost of that energy is somewhere around the price of the new coins.

An analogy might be that you use your computer to write a business contract, but the cost of the computer resources is so high that it is roughly equal to your expected business profit.
 

solarion

Gold Member
Gold Chaser
Site Supporter ++
Joined
Nov 25, 2013
Messages
5,050
Likes
7,613
#17
From what I understand, new "coins" appear at fixed intervals, and the "miners" are competing to get the fixed number of coins. To compete, you have to spend computing power, which costs energy. There are so many miners competing for those few coins, and they are using tremendous amounts of energy doing so. Apparently, the cost of that energy is somewhere around the price of the new coins.
That's an oversimplification of how bitcoin mining subsidies are rewarded, but essentially accurate. What is completely ignored in what you said is that the miners are also the ones processing transactions. For a proof-of-work algorithm like bitcoin to function as a currency there has to be mining.

Most of these stories make it sound as though the energy being used to mine bitcoin is expended only to produce new bitcoin, and that's not the case.
Exactly how is bitcoin a scam? Please explain.
Because...reasons. Same as how/why bitcoin is a ponzi. Reasons.
 

Buck

Gold Member
Gold Chaser
Joined
Apr 13, 2011
Messages
3,217
Likes
2,730
#18
IIRC, in order for the security of each transaction to be complete, miners create algorithms which act as the security for each transaction
without the miners, there would be no security

It all makes no sense to me, once the last Bitcoin is mined, there will have to be fee's attached, which will be used to pay for the miners, who will now burn up electricity, to solve algorithms, which in turn act as the security for the block-chain, i.e., for the individual Bitcoin transactions

Now, scale that up into a real currency and it can't be done economically

Fad
Make the money while you can but be vigilant as someone will end up holding an empty bag

IMHO, of course but the simple facts appear to fit
 

Buck

Gold Member
Gold Chaser
Joined
Apr 13, 2011
Messages
3,217
Likes
2,730
#22
Good Point now shhhhh
Watch the Boobies

:blond:

Bitcoin is good
China is alright
:blond:
Bitcoin is good
China is alright
:blond:
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#23
Hey, it's about time the Chinese gov did something good for us, right?
....and all this time they just thought they were helping their own citizens. lol
 

solarion

Gold Member
Gold Chaser
Site Supporter ++
Joined
Nov 25, 2013
Messages
5,050
Likes
7,613
#24
It all makes no sense to me, once the last Bitcoin is mined, there will have to be fee's attached, which will be used to pay for the miners, who will now burn up electricity, to solve algorithms, which in turn act as the security for the block-chain, i.e., for the individual Bitcoin transactions
Right...in 2140 when the last bitcoins are mined. ...and there are already fees attached to bitcoin transactions. Those fees already go to miners.
Fad
Make the money while you can but be vigilant as someone will end up holding an empty bag
A sentiment that has been repeated over and over for the past 9 years and has been wrong each and every time.
 

arminius

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Jun 6, 2011
Messages
3,434
Likes
4,444
Location
right here right now
#25
Until it happens, and reaches it's natural fiat value, zero, and worse. And it will. Enjoy playing with your imaginations or should I say, their machinations, folks.
 

solarion

Gold Member
Gold Chaser
Site Supporter ++
Joined
Nov 25, 2013
Messages
5,050
Likes
7,613
#26
Until it happens, and reaches it's natural fiat value, zero, and worse. And it will. Enjoy playing with your imaginations or should I say, their machinations, folks.
How can you be so certain of that, when we all know the history of fiat currencies? ...fiat currencies that provide zero accountability and zero transparency.

While I am not a huge fan of the proof-of-work model, I would say bitcoin has a far greater chance of surviving long term than does any government issued fiat currency...and we all use those. The USD in its current form has only existed for 46 years and it's already overdue to be rebuilt/replaced...bitcoin's performance the past 9 years is making it obvious that people are ready for something outside of government control that competes with fiat.
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#27
The USD in its current form has only existed for 46 years and it's already overdue to be rebuilt/replaced...bitcoin's performance the past 9 years is making it obvious that people are ready for something outside of government control that competes with fiat.
IMHO, what needs to happen is for btc (or some other crypto that is proven to be a better choice) to eventually be used for all international transactions.
 
Joined
Mar 31, 2010
Messages
235
Likes
137
Location
Northwest
#28
WTF Bitcoin cost more to make than it worth?
If we do the math, at least given the current trending figures, the answer appears to be yes. Someone check my arithmetick here, but it seems reasonable:

  • The current reward for mining a block is 12.5 BTC, so we'll call it $125,000 with BTC at nearly $10,000 right now.

  • The number of transactions per block varies from a few hundred to a couple thousand, depending on day-to-day conditions and trends, but let's call it 1500.

  • Ignoring transaction fees additionally paid to the miners, that works out to around $83.33 profit per transaction, as compared to $100 in electricity cost.

  • Miners are also perfectly free to "prefer" transactions with fat fees attached to them, so that might make up the difference and even add a little extra to sweeten the pot.
 

solarion

Gold Member
Gold Chaser
Site Supporter ++
Joined
Nov 25, 2013
Messages
5,050
Likes
7,613
#29
If we do the math, at least given the current trending figures, the answer appears to be yes. Someone check my arithmetick here, but it seems reasonable:
It's interesting maths, but there are problems.

Bitcoin miners are doing more than "just" competing for a mining subsidy, they're processing transactions. Your maths applies a value of zero to this even while you're throwing out transaction fees paid to miners. This despite the fact that transactions are the entire reason bitcoin exists. I mean if it(bitcoin) couldn't be used for transactions, why would anyone care about bitcoin mining subsidies?

Also how do you arrive at $100 in electricity costs? Electricity rates vary wildly all over the globe as does the efficiency of the ASICs that do the maths. Those with inefficient gear and/or high electricity costs are eventually forced to shut down.

Here's a chart of the average transactions/block for the past 1 year. Your estimate of 1500 looks low.
https://blockchain.info/charts/n-transactions-per-block?timespan=1year
 

arminius

Gold Member
Gold Chaser
Sr Site Supporter
Joined
Jun 6, 2011
Messages
3,434
Likes
4,444
Location
right here right now
#30
Is the fact that it requires electricity to function at all not it's most fatal weakness.
 

solarion

Gold Member
Gold Chaser
Site Supporter ++
Joined
Nov 25, 2013
Messages
5,050
Likes
7,613
#31
Is the fact that it requires electricity to function at all not it's most fatal weakness.
Not really. Nearly all modern commerce requires electricity...really think those snowflakes with apple pay are toting around a bunch of soon to be eliminated cash?
 

GOLDBRIX

God,Donald Trump,most in GIM2 I Trust. OTHERS-meh
Platinum Bling
Site Supporter ++
Joined
Apr 4, 2010
Messages
6,578
Likes
6,797
#33
Yep.
...but if most mining is being done in China and the Chinese gov subsidizes electric costs, anyone outside China is getting a pretty good deal IMHO.

Uh, Wait ONE Freakin' Minute ! How does China subsidizing THEIR electric costs help ANYBODY OUTSIDE of China mine for bitcoin??

Your computer does NOT get electricity from China.

This is the kinda crap I kept trying to get an answer to years ago but just got a run-a-around, BS, answer.
You DO spend more money mining than any BitCoin is worth.

DON"T BELIEVE ME LOOK AT THAT PHOTO IN POST 19. That set-up and electric bill is not cheap ( but it is made in China).
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#34
Uh, Wait ONE Freakin' Minute ! How does China subsidizing THEIR electric costs help ANYBODY OUTSIDE of China mine for bitcoin??

Your computer does NOT get electricity from China.
Not saying that my computer gets electricity from China, but rather that it appears that the Chinese gov is subsidizing the cost of the miners that everyone else who owns btc relies upon for doing the transactions.
 

GOLDBRIX

God,Donald Trump,most in GIM2 I Trust. OTHERS-meh
Platinum Bling
Site Supporter ++
Joined
Apr 4, 2010
Messages
6,578
Likes
6,797
#35
... but rather that it appears that the Chinese gov is subsidizing the cost of the miners that everyone else who owns btc relies upon for doing the transactions.
o_O

THAT SHOULD READ:
"..that the Chinese gov is subsidizing the cost of THEIR miners".

I do not see how outsiders benefit from a Chinese miner mining. Do they sell "THEIR" bitcoins at a discount ?
Have you affiliated with or a partner of a Chinese Miner ?
:confused:
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#36
I do not see how outsiders benefit from a Chinese miner mining. Do they sell "THEIR" bitcoins at a discount ?
Have you affiliated with or a partner of a Chinese Miner ?
The point is that people here don't have spend even more in order to keep the miners going that our network relies upon. Anyone in btc relies on those miners doing what they do, and the Chinese gov graciously makes that cheaper to do. Therefor there are more miners than there otherwise would be. More miners is a good thing IMO.
 

Buck

Gold Member
Gold Chaser
Joined
Apr 13, 2011
Messages
3,217
Likes
2,730
#37
The point is that people here don't have spend even more in order to keep the miners going that our network relies upon. Anyone in btc relies on those miners doing what they do, and the Chinese gov graciously makes that cheaper to do. Therefor there are more miners than there otherwise would be. More miners is a good thing IMO.
This will only apply if any fee's are kept low due to the fact the miners are in China and utilizing cheap electricity
This won't happen due to the outside influences from the markets and greed

Otherwise, the only people who will benefit will be the Chinese
 

Joe King

Gold Member
Gold Chaser
Site Supporter
Joined
Mar 31, 2010
Messages
5,940
Likes
5,927
Location
Instant Gratification Land
#38
This will only apply if any fee's are kept low due to the fact the miners are in China and utilizing cheap electricity
This won't happen due to the outside influences from the markets and greed

Otherwise, the only people who will benefit will be the Chinese
That's just it, if all the miners had double the electric costs, the fees would already be higher. Chinese gov helping with the electric costs help to keep fees lower than they would otherwise have to be. IMHO, that benefits me.
 

Buck

Gold Member
Gold Chaser
Joined
Apr 13, 2011
Messages
3,217
Likes
2,730
#39
what I'm trying to allude to:

Like most of everything else
The Fee's are more than likely already higher than they need to be

This cheap electricity isn't helping anyone but the Chinese

IDK, when we're talking about profits of 1000% and higher, what's the price of fees matter?
 

GOLDBRIX

God,Donald Trump,most in GIM2 I Trust. OTHERS-meh
Platinum Bling
Site Supporter ++
Joined
Apr 4, 2010
Messages
6,578
Likes
6,797
#40
So there are also FEES along with the personal costs of equipment and energy costs ?

Man this just gets "worser and worser" - IMO