They mention in the article that as there is a limited amount of coins that can be mined the mining activity will eventually die down, but as I understand it the verification and validation of transactions happens along with mining.
How will verification work if mining stops? Or will the mining just stop producing new coins but continue being profitable with just the transaction fees?
> ...mining just stop producing new coins but continue being profitable with just the transaction fees?
The profitability of mining never really changes. When rewards for mining increase, profitability briefly increases, but then more miners join, the hash rate goes up, increasing the cost of mining and bringing mining profits back to equilibrium. And vice versa: if rewards for mining were to go down (for example as the block reward reduces according to schedule), the least profitable miners leave, the hash rate goes down, decreasing mining costs and bringing mining profits back to equilibrium.
The hash rate follows total mining rewards (the sum of block rewards and transaction fees). Mining costs follow the hash rate. Mining profitability is the difference between mining costs and mining rewards.
Yes, it is assumed that mining will continue based just on transaction fees. In fact Bitcoin Core almost reached this goal recently due to their hard limit on block size, the percentage of fees in the total Bitcoin Core block reward reached as high as 40% according to the statistics: https://fork.lol/reward/feepct
So with the hard limit there's a set amount of transactions that fit into a block? And whoever wants to get their transaction validated faster can bid a higher fee?
Yes, that is why the transaction fee for BTC has increased in the past (see https://fork.lol/tx/fee), which some people didn't like and argued for a larger block size.
It's astounding how much concern there is about the relatively(!) small impact of bitcoin mining on the environment while we have immense adverse effects on the global environment from things like cargo ships without so much as a peep from anyone.
How do you expect to solve the bitcoin problem? Stop mining?
> At least the utility of cargo ships is pretty tangible
Is it? I've heard that cargo ships are a bubble. They are used only by drug dealers and money launderers. There is no utility of a cargo ship and people who invest in cargo ships are doing that because they believe they will be millionaires. Lol, like moving stuff between places could be worth money!
> things like cargo ships without so much as a peep from anyone
Do you have any idea how much debate and research there is in the shipping industry to reduce the environmental impact? Meanwhile in the Bitcoin community, apparently no one reads anything other than crypto news and white papers.
Bitcoin market is overall a very new market. If you do analysis, it looks a lot like fiat market at the time when there was no computers. There is a flat simple reason. Most of the cryptocurrency market just doesn't have enough education in finance. Not even enough to know what is "bulls and bears", and why putting attention on major news source to things like "bitcoin has terrific environmental impact", "bitcoin is a Ponzi scheme" and "the rapid increase of exchange rate is due to some scheme with Tether that we won't properly explain to you" is a hugely profitable thing.
Dollars require infrastructure too. Thousands of banks and other institutions are required to operate it. They have offices (that take energy) and employees (that take energy and also have households that take energy). Most of that energy comes from fossil fuel. I'm pretty sure operation of dollar costs much more than operation of Bitcoin. Let's ban dollar.
High price of bitcoin resulted in surge of "bitcoin is a fraud" kind of articles to HN. Who wants to play bears on Bitcoin market that much?
That's a strawman I'm afraid, the real question is the relative energy per-transaction costs between Bitcoin and traditional currencies. Bitcoin just doesn't scale.
I actually think this is a really interesting argument. Here's some quick napkin math that shows a large enough difference that, I think, you can't just shut this down as a strawman:
17.7M barrels of oil annually by bitcoin mining operations
8.16B barrels of oil by US banking sector employees
These numbers don't count the physical infrastructure, servers, and other plant that these businesses own, operate, heat, keep the lights on in.
Here are my sources:
One stat I just read says that the top 20 North American banks employ 1.2 million people. That's 1.2M people eating and commuting 5 days a week for the purpose of supporting fiat.
With a quick investigation:
-US per capita annual barrels of oil: 6800 (1)
-Bitcoin annual Terrawatt hours: 30.1 (2)
-6800 * 1.2M = 8.16B barrels of oil by US banking sector employees (3)
> That's 1.2M people eating and commuting 5 days a week for the purpose of supporting fiat.
They aren't really "supporting fiat" as you say, they do things that (presumably) have value like storing money, making loans and...whatever else it is that banks do.
If all the world's central banks decided tomorrow to stop the printing presses banks would still have a function in society independent of "supporting fiat" as they have had for a long time.
Mmm, those people would continue to exist even if they didn't need to work to support fiat. And I don't buy the fact that not having banking jobs would affect the overall population all that much. If you really want an apples to apples comparison you'd need to find numbers for:
- Energy required to harvest and process hard currency
- Energy required to run the servers that support electronic transactions for fiat
Then divide that by the overall value of fiat vs bitcoin to see how costly they are per unit of value
The costs in mining Bitcoin are not really per transaction. They are per block, and a block can include many transactions. The technology is also changing. It is wrong to assume more transactions imply more energy usage.
> High price of bitcoin resulted in surge of "bitcoin is a fraud" kind of articles to HN.
The higher the price, the more energy miners can profitably use. The environmental aspect of bitcoin is getting attention because the carbon footprint is no longer hypothetical.
Let's look at previous May. So you're sure the reason of the "bitcoin is a fraud" surge is x5 increase in hash rate, and not x10 increase in exchange rate? Look, it got twice as efficient in half a year, and yet they go with their hypocrisy on bad environmental impact!
Bitcoin is not going to be replacing dollars in any foreseeable future, so any (environmental) costs of bitcoins are purely additive to the existing infrastructure costs.
Are there any reasonable alternatives to Bitcoin which are more environmentally friendly and therefore more long term viable? While still being serious contenders. I know Ethereum is working on Proof of Stake but it still sounds far off and uncertain.
Even if it is clean energy (and assuming this is mining without any valuable processing like verifying transactions):
1. Waste is waste and there's only a finite amount of clean energy that can be used. The sun only outputs so much usable energy per day and daming rivers does not happen without consequence.
2. This generates alot of heat. People aren't mining in their house so this is concentrated areas of heat pollution. It may be negligible but environmental hotspots wreak havoc on local ecosystems, especially when dispersed in aquatic ecosystems.
When electricity is generated by burning fossil fuel or garbage, waste heat is fed to centralized heating systems. In this way efficiency of over 90% is achieved. Probably it's time for the next stage of this idea: electricity should be immediately fed to mining facility, which preheats water that goes to the furnace. In the end all computers are just hi-tech heaters.
Also, there is always a hidden opportunity cost. Bitcoin using green energy would still increase worldwide energy consumption, and simply push other energy consumers onto more dirty sources.
Does flying somehow reduce the energy consumption of Bitcoin, or how is that relevant?
But you are correct, we should not be flying as much, and many people advocate reduced subsidies and increased taxes on flying. Maybe a mining tax would be a good idea.
By this article's logic, developing and deploying more electric cars will put a strain on the enviornment as well, as most energy still comes from fossil fuels.
How will verification work if mining stops? Or will the mining just stop producing new coins but continue being profitable with just the transaction fees?