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[OA] de Vries A. Bitcoin's Growing Energy Problem. Joule 2018;2:801-5. Redirecting
The electricity that is expended in the process of mining Bitcoin has become a topic of heavy debate over the past few years. It is a process that makes Bitcoin extremely energy-hungry by design, as the currency requires a huge amount of hash calculations for its ultimate goal of processing financial transactions without intermediaries (peer-to-peer).
The primary fuel for each of these calculations is electricity. The Bitcoin network can be estimated to consume at least 2.55 gigawatts of electricity currently, and potentially 7.67 gigawatts in the future, making it comparable with countries such as Ireland (3.1 gigawatts) and Austria (8.2 gigawatts). Economic models tell us that Bitcoin's electricity consumption will gravitate toward the latter number. A look at Bitcoin miner production estimates suggests that this number could already be reached in 2018.
The electricity that is expended in the process of mining Bitcoin has become a topic of heavy debate over the past few years. It is a process that makes Bitcoin extremely energy-hungry by design, as the currency requires a huge amount of hash calculations for its ultimate goal of processing financial transactions without intermediaries (peer-to-peer).
The primary fuel for each of these calculations is electricity. The Bitcoin network can be estimated to consume at least 2.55 gigawatts of electricity currently, and potentially 7.67 gigawatts in the future, making it comparable with countries such as Ireland (3.1 gigawatts) and Austria (8.2 gigawatts). Economic models tell us that Bitcoin's electricity consumption will gravitate toward the latter number. A look at Bitcoin miner production estimates suggests that this number could already be reached in 2018.
Swiper
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The key innovation in Bitcoin, compared to other forms of cryptographic cash (Chaum 1983) or virtual currencies (European Central Bank 2012), is its decentralized core technologies. Early adopters praised decentralization and by all indications chose Bitcoin because they wanted to use a decentralized system (Raskin 2013). Decentralization offers certain advantages. It avoids concentrations of power that could let a single person or organization take control. It often promotes availability and resiliency of a computer system, avoiding a central point of failure.
It offers at least the appearance of greater privacy for users (and perhaps greater genuine privacy) because in theory an eavesdropping adversary cannot observe transactions across the system by targeting any single point or any single server. (However, as we discuss below, significant privacy concerns remain.)
Nonetheless, the decentralization touted by Bitcoin has not fully come to fruition. While the Bitcoin protocol supports complete decentralization (including the possibility of all participants acting as miners), significant economic forces push towards de facto centralization and concentration among a small number of intermediaries at various levels of the Bitcoin ecosystem.
We review four key categories of intermediaries that have shaped Bitcoin’s evolution: currency exchanges, digital wallet services, mixers, and mining pools. A fifth type of intermediary, payment processors, is discussed further below.
Böhme, Rainer, Nicolas Christin, Benjamin Edelman, and Tyler Moore. 2015. "Bitcoin: Economics, Technology, and Governance." Journal of Economic Perspectives, 29 (2): 213-38. American Economic Association
Bitcoin is an online communication protocol that facilitates the use of a virtual currency, including electronic payments. Bitcoin's rules were designed by engineers with no apparent influence from lawyers or regulators.
Bitcoin is built on a transaction log that is distributed across a network of participating computers. It includes mechanisms to reward honest participation, to bootstrap acceptance by early adopters, and to guard against concentrations of power.
Bitcoin's design allows for irreversible transactions, a prescribed path of money creation over time, and a public transaction history. Anyone can create a Bitcoin account, without charge and without any centralized vetting procedure—or even a requirement to provide a real name.
Collectively, these rules yield a system that is understood to be more flexible, more private, and less amenable to regulatory oversight than other forms of payment—though as we discuss, all these benefits face important limits. Bitcoin is of interest to economists as a virtual currency with potential to disrupt existing payment systems and perhaps even monetary systems.
This article presents the platform's design principles and properties for a nontechnical audience; reviews its past, present, and future uses; and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.
It offers at least the appearance of greater privacy for users (and perhaps greater genuine privacy) because in theory an eavesdropping adversary cannot observe transactions across the system by targeting any single point or any single server. (However, as we discuss below, significant privacy concerns remain.)
Nonetheless, the decentralization touted by Bitcoin has not fully come to fruition. While the Bitcoin protocol supports complete decentralization (including the possibility of all participants acting as miners), significant economic forces push towards de facto centralization and concentration among a small number of intermediaries at various levels of the Bitcoin ecosystem.
We review four key categories of intermediaries that have shaped Bitcoin’s evolution: currency exchanges, digital wallet services, mixers, and mining pools. A fifth type of intermediary, payment processors, is discussed further below.
Böhme, Rainer, Nicolas Christin, Benjamin Edelman, and Tyler Moore. 2015. "Bitcoin: Economics, Technology, and Governance." Journal of Economic Perspectives, 29 (2): 213-38. American Economic Association
Bitcoin is an online communication protocol that facilitates the use of a virtual currency, including electronic payments. Bitcoin's rules were designed by engineers with no apparent influence from lawyers or regulators.
Bitcoin is built on a transaction log that is distributed across a network of participating computers. It includes mechanisms to reward honest participation, to bootstrap acceptance by early adopters, and to guard against concentrations of power.
Bitcoin's design allows for irreversible transactions, a prescribed path of money creation over time, and a public transaction history. Anyone can create a Bitcoin account, without charge and without any centralized vetting procedure—or even a requirement to provide a real name.
Collectively, these rules yield a system that is understood to be more flexible, more private, and less amenable to regulatory oversight than other forms of payment—though as we discuss, all these benefits face important limits. Bitcoin is of interest to economists as a virtual currency with potential to disrupt existing payment systems and perhaps even monetary systems.
This article presents the platform's design principles and properties for a nontechnical audience; reviews its past, present, and future uses; and points out risks and regulatory issues as Bitcoin interacts with the conventional financial system and the real economy.
We always seem to find the far right in bed with the cryptoid thugs. They both would like to dismantle our monetary system (muh gold!). What a funny coincidence. I wonder what else they have in common?
Sparkyp
Member
How Many Nazis Are There in America, Really?
You guys give the white supremicsts to much credit. This article says theres about 5000-8000 white Sup/Nazis in the US currently. In ther 1920s there were over 4 million. I think we mostly won the battle over white supremacy. Why must everything always go political or now “Racist”? Can’t do anything nowadays without agitators that constantly fan the flames
Great point to keep in mind. Thank you
sinewave3
Member
All the “too big to fail” banks are involved in money laundering including Wells Fargo, HSBC, more. Scandals all the time here is the latest:
The Biggest Bank in Denmark Just Admitted to Laundering Billions of Dollars in Russian Money
Anything to do with money is going to be caught up in money laundering.
For one of the biggest names in Central Washington’s bitcoin boom, 12 months has made a world of difference.
Last October, Giga Watt was on a scorching upward trajectory. With prices for bitcoin and other cryptocurrencies soaring and international investors clamoring for a piece of the digital action, the East Wenatchee-based company had expanded to 62 employees and raised tens of millions of dollars for what it hoped would be a game-changing project: a sprawling campus of 24 prefabricated buildings where would-be crypto “miners” could run their own computers and solve the complicated mathematical algorithms that yield the digital gold.
As the pods arose from a muddy site near the Douglas County airport, local government officials talked excitedly about the emergence of a new, 21st-century industry based on the complex “blockchain” technologies that enable bitcoin and other cryptocurrency. Giga Watt and its founder, a former Seattle-area programmer named Dave Carlson, saw themselves on that revolution’s cutting edge.
Now it’s a starkly different picture. Last month, beset by millions of dollars in debt, ongoing legal problems and questions about its unconventional financing, Giga Watt laid off 80 percent of its staff and suspended all construction. Carlson himself stepped down in August.
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