I guess we need a proper CO2 tax to encourage better technology than proof of work
The cost of electricity does impact the cost per transaction on the network, does it not?
The only thing that impacts transaction costs is how many other people are trying to clear their own transactions and bidding up the sat/vbyte rate.
TotalCost = DirectCost + ProportionalAllocationOfBlockReward
So yes, the transaction cost does scale with consumption of resources, albeit in a tail-wagging-the-dog kind of way, because the price of the block reward changes with price allowing more resources to be consumed.
Currently the actual cost of a Bitcoin transaction is $2.44 in direct costs + (6.25 * 41000)/2750 = $93 in indirect costs, so right around $95.44 - and that's using I believe the maximum possible transactions per block, the reality is it's more expensive still.
Move over Bank of America, there's a new king in town.
ESG people are trying to solve something that is already solved. POW is here to stay and will scale tremendously well as we all move to layer 2.
You completely synthesized $93/1000000 obviously, and as we discussed it would take 75 years to open a channel for everyone alive today and $300,000,000,000.
More mining → higher difficulty → higher electricity usage per block.
The transaction costs paid are independent of difficulty or number of miners. Transaction cost depends on the demand. A block has a limited size in bytes. If more people want to send transactions than there is room in the current block, the miner that mines that block will include the transactions that include the highest fee.
When sending a transaction, you can choose that fee. Higher fee → higher chance of being included. Bitcoin clients will usually calculate a reasonable fee for you, based on the demand.
So its scenario #2 in your comment.
As long as there is free space in the blocks, average transaction fees will remain low. If there are a lot of transactions in the mempool waiting to be included in a block, users will need to submit transactions with higher related fees to ensure they get picked to be included in a block soon.
Remember, miners don't necessarily set transaction fees. Users choose what they're willing to pay for their transactions, essentially placing a bid. Miners choose the transactions that maximize the fees per block. Miners always want as full of blocks as possible because there will only be a block roughly every 10 minutes.
That said, not every cryptocurrency is reliant upon brute forcing hashing algorithms to verify.
We don't make seatbelts out of titanium 8 inches thick with their own airbags when they're mounted in a go-kart.
When the hash rate dropped what, 75%, off the back of the China exodus literally nothing happened.
tl;dr: Same transaction throughput, same security, just less efficient.
[1] This stackexchange question dates back to 2016, the earliest evidence I could find of ETH proposing PoS. https://ethereum.stackexchange.com/questions/9/why-does-ethe...
"The Ethereum proof of stake date has been set for December 1, 2020. While the proof of stake Ethereum date was originally set for January 2020, this deadline was missed."
Some HN users are staking Eth and earning on Eth 2.0 contract, which functions on the Beacon Chain.
Both chains have not been merged yet, far from vaporware so I guess last decade called and wants its arguments back.
Proof of Work doesn't waste energy. It uses energy to secure a distributed ledger.
And with that ledger instead of all the wars and waste generated by manipulatable central bank ledgers it’s a win.
2. The needs of central banks don't start wars, the needs of politicians, warhawk nationalists, and the needs of modern industrial economies do. [1] Unless BTC somehow magically gets rid of politicians, nationalism, or of our addiction to oil, that's not going to change.
[1] The US didn't invade Grenada because of the Fed. The USSR didn't invade Afghanistan on behalf of Gosbank. China didn't invade Tibet to fix the balance sheet of the PBC. Vietnam didn't fight a war with its occupiers, and then a civil war, and then a war with Cambodia, and then a war with China, because it was unhappy with the Dong to USD exchange rate. The US participated in that civil war because of domino theory, not because of its departure from the gold standard. The list goes on and on. [2]
[2] Wars aren't fought over currencies, wars are fought over territory, pan-ethnic nationalism, to increase the internal popularity of a warhawk, to maintain a hegemony, to impose one's religion on another, to expel unwanted people from a territory, etc, etc, etc. Bitcoin solves none of these problems.
The US does and will go to war if it feels its dollar/oil hedgemony is threatened. if the dollar demand/circulation outside US falls for any reason, it will cause hyperinflation within the US economy. So they have to constantly threaten/intimidate other countries.
Wet streets don't cause rain, and wars aren't started in order to collect taxes. Wars are started to pursue particular goals, many of which I have listed in my prior post.
> The US does and will go to war if it feels its dollar/oil hedgemony is threatened.
This is an interesting, and oft-repeated theory, that, unfortunately does not survive contact with history. It's not a strong explanation for the majority of the conflicts that the US has been involved in. It is not remotely an explanation for the majority of the conflicts that other countries are involved in.
Which dollar/oil hegemony is Russia trying to maintain in Crimea? China in Tibet? USSR in Afghanistan? Argentina in the Falklands? Sudan in Darfur? Israel in Lebanon? Saudi Arabia in Yemen? ISIS in Syria?
Never mind that BTC doesn't do a thing about the dependency of industrialized sociaties on oil, minerals, fresh water, and other limited material resources.
You would have to do literally millions per on chain transaction using bitcoin to match ACH, visa or a proof of stake chain.
This is of course after you consider opening a single LN channel for every human on earth would take 75 years and 300 billion dollars if the chain did nothing else. Like putting in a request for a Soviet phone line. LN has quadratic routing efficiency and is boat anchored to garbage.
A CO2 tax is only fair if it's paired with progressive tax breaks in other areas and/or subsidies for transition to renewable energy. An example would be a progressive subsidy for electric vehicle purchases and for upgrades to CO2-heavy (coal) electricity generation infrastructure in poorer areas.
The statement replied to does not mention "rebate."
> But the biggest CO2 users would pay way more than they receive back.
This statement does not seem believable given the recent stories about tax avoidance strategies of the wealthy.
Which rarely happens in practice, and we're so far from accurately taxing all these processes that it isn't even a dream of a dream. It's mostly tackling big targets, since that's where a ton of the impact-per-dollar-and-per-outrage can be found.
Obviously it seems they are going in the exact opposite direction on this, though...
It seems pretty clearly like income to me.
Cryptocurrency earners have to report ordinary income taxes as well as capital gain/loss taxes.
Its not that hard, less than ideal, its also easy to immediately convert to USDC or fiat automatically, or find other deductions to reduce or eliminate the tax burden.
- At current levels, bitcoin uses very roughly 0.1% of global electricity but electricity only represents 25% of fossil fuels emissions so current PoW contribution to global emissions = 0.025%, ie a rounding error. This issue is currently a total red herring. Now let's project into the future.
- bitcoin total addressable market cap if it took over the entire global monetary world (full global monetary premium): ~ 250tn or 300x from here implying a worst case outcome of 7.5% of global emissions, IF this happened TODAY and hashpower linearly tracked price. This is impossible off the bat because building out that infrastructure would take at least a decade. But more importantly it will take a decade or two for price to get there, by which time...
- The block subsidy will have gotten cut by ~ 10 (three halving cycles). Transaction fees might grow of course so let's say 5x lower which gets us back to 1.5% of global emissions.
- Add to that the following:
- 30% of CURRENT electricity production is stranded / wasted. All terminal bitcoin energy usage needs to do is tap into 5% of that to be emissions neutral. And it's heavily skewed towards tapping into that exclusively as that's the cheapest source and PoW is location neutral.
- the proof of work energy mix skews towards not only wasted / stranded but renewable which is trending towards being the cheapest form of energy.
- green power production is on an exponential adoption curve and enough sunlight hits the earth to power humanity for a year. Clean energy is there in amounts dwarfing societal needs, it's just a matter of harnessing it. This doesn't even include geothermal or nuclear.
- At an even higher level, if you got to this point, you would have replaced all the fiat systems in the world thereby: - eliminating the energy spent on maintaining the fiat system which is easily more than 1.5% of global emissions - flipping the world into a hard money world that is no longer incentivized to consume at all costs (read misallocate capital) ergo hugely reducing conspicuous consumption / GDP growth at all costs which is arguably the biggest driver of unnecessary emissions
- This final line of thought would have you conclude flipping to PoW would be emissions negative in the long run, but you don't really need to go there though, the energy numbers alone make this at best a chronically misunderstood narrative.
Absolutely. It's impossible to accurately account for, but a significant part of why the US Military Industrial Complex is so over-provisioned is to maintain dollar hegemony. 800 international US military bases, the Iraq war, invasion of Libya, force projection exercises by the navy, etc. Being the world police is expensive (in both dollars and CO2), and we wouldn't need to be if we weren't trying to tenuously maintain our status as world reserve currency.
"the DOD is the world's largest institutional user of petroleum and correspondingly, the single largest institutional producer of greenhouse gases (GHG) in the world. 5 From FY1975 to FY2018, total DOD greenhouse gas emissions were more than 3,685 Million Metric Tons of CO2 equivalent."
https://watson.brown.edu/costsofwar/files/cow/imce/papers/Pe...
Certainly the US military has other goals besides maintaining dollar hegemony, but if the dollar wasn't the world reserve currency there would be less need and funds for maintaining such a bloated amount of power.
Citation needed.
You really think that other countries, and businesses and individuals in these countries store their savings and denominate their contracts in US dollars at gunpoint?
Ridiculous.
Whenever a country tries to move commodity trades away from the dollar (iraq oil, iran oil, libya gold, venezuela oil) coincidentally pretexts for military operations against them start being manufactured.
How does this argument make sense? Let's split up the world's energy consumption into 0.025% emission sized chunks in some arbitrary way we choose. Does nothing then make any difference, since everything is just a rounding error? The question is, does bitcoin provide value for the emissions it generates? For what it's worth, estimates seem to put the current usage at around 0.6% of total worldwide energy consumption.
I don't personally think you should be making moral judgements about energy use though. Let the market decide what's a good use of energy. If you have a carbon problem, tax / regulate that, PoW won't care. It will adjust through difficulty adjustments.
But if you are worried about PoW boiling the oceans if left unchecked, the numbers should comfort you it's at worst going to tap mostly into wasted energy / mostly renewable and probably not have a noticeable impact even extrapolated to a peak outcome (and probably even be a net positive).
Are there any big miners who are known to be using stranded/wasted energy that would be produced anyway, as opposed to operating stranded plants that would otherwise be shut down or have capacity reduced? I only really follow the publicly traded miners (and with a bearish thesis), and I've seen a lot of miners getting dedicated coal/natural gas capacity but very little in terms of recapturing wasted energy.
And these are (mostly) US-based public companies, so they have the most to gain by projecting an ESG image.