Isn't mining bad in a sense that it wastes energy

Published: 2018-12-06

 

Q: Do you think it's possible to have a blockchain that has the five pillars of a fair currency while there's no mining?

A: Possibly. Has no energy consumption? No. People misunderstand the energy consumption of systems like Bitcoin. First, people say it's a "waste" to use energy for Bitcoin, which is a subjective perspective. It is a "waste" to you, but obviously for the people using that energy and paying for it, it is not a waste. They call it an investment. What they're trying to say is, "I am going to inject my decision of what the market should do." There is a dangerous path there.

We are not talking about energy generation, but energy consumption, which are two very different things. Energy isn't a bad thing; energy produced from polluting sources is the bad thing. Consumption of energy from solar is a wonderful thing. You just invested in all these solar panels that can be used for other purposes. You reduced the unit cost of solar energy. That is magnanimously wonderful! It matters where energy is coming from; if we have a problem with where energy is coming from, let's address that problem. Let's start deciding that some forms of energy generation are harmful and some are not. That means the externalities of carbon and pricing them; depending on your political leanings, that is either the worst form of communism or it's the libertarian solution of creating markets for carbon. It doesn't matter. If the problem is carbon and climate change, address the problem, not Bitcoin.

It is a bit hypocritical to say, "This form of energy consumption, which I'm not using, is wasteful!" "But Christmas lights are pretty!" Christmas lights actually consume a significant percentage of U.S. energy every year, and for what? Maybe Christmas is "sacred" and we shouldn't really bash Christmas because the lights are pretty.

So I have a few other examples for you: How about war? How about the U.S. Department of Defense, the greatest polluter on the planet by far? How about crony capitalism and the amount of junk we dump into rivers to extract cobalt for your iPhone? Lithium, gold, or all of the other things that we are doing to our planet? Are going to start prescribing to markets what is a good or bad use of energy. The real problem is, who decides?

I will not even go into the energy cost of printing, shipping, and guarding paper money. Handling fraud protection for credit cards consumes a far greater amount of energy than Bitcoin, while at the same time, eating away at our democracy. I won't even go there. The real problem is, who decides? If you determine for everyone that "this use of energy is bad," "this use of energy is good," you are a dictator.

That is a decision that markets should make, particularly by the person consuming the energy. If you want to tell me that there are externalities for certain sources which have not been accounted for in the price and the market isn't working, great. Let's price those externalities. Let's bill for carbon. In which case, Bitcoin mining -- as the most fungible and transportable form of consumption -- would be incentivised to immediately migrate more to the low-cost alternatives. In many cases, you are scavenging energy that would otherwise be wasted because it cannot be transported effectively to other locations, especially alternative forms of energy. You are depreciating the capital cost of building that infrastructure in the first place.

They also said: "By the year 2020, the internet will consume 30% of U.S. energy." The actual percentage has dropped to less than 2%. It helped deliver a level of productivity and life improvement that far outweighs that consumption of energy. They did the math wrong. Or they just lied, to make sure that their parasitic bosses could keep sucking on that data pipe.

 

Filed Under: Andreas Antonopoulos