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Title

There was an attempt to justify Bitcoin's power-consumption

Description

Many months ago, I watched the first segment in Track 1, called <a href="https://www.thebword.org/c/track-1-demystifying-bitcoin" author="Nic Carter" source="The B-Word">Debunking "Bitcoin Wastes Energy"</a>. Below are my notes and thoughts about it. He started off by asserting, <bq>As a neutral, global monetary network, Bitcoin has a valid claim on some of society's resources.</bq> Does it, though? You can try to make this axiomatic, but I'm going to respectfully ask for justification. As someone speaking at a Bitcoin conference, you obviously have to claim that. It's good that he did. That means that if I don't accept that premise, then any energy used by Bitcoin is wasted. Is the utility it provides to <iq>tens of millions of people</iq> enough to justify its energy use? There aren't even that many people using Bitcoin---really, for anything other than HODLing it---and it's already using as much energy as Argentina. That doesn't bode well as a scalable solution. It currently consumes an enormous amount of energy and does nothing useful. The claim is that we should move <i>everything</i> to this technology and ... profit? This guy's logic is descriptive. He thinks that details of Bitcoin's process are justifications for its existence. I think that the question is: can the service provided by Bitcoin be done more efficiently? The proof-of-work is required to prevents central banks from taking over the network, defeating decentralization. But the mining is already heavily centralized (and will continue to become more so). He claims that the major part of the energy usage is not in maintaining the blockchain, it's in initial creation. That would at least mean that once all the Bitcoin has been created, that it use much less power to keep running. Still, I'd like to see numbers (or hear them). Why does he keep comparing it gold? How does that actually compare? Why are numbers only estimates? .25% of the world's electricity? For 10s of millions of people? That is very inefficient. It uses power. It produces heat. It must be justified. A lot of this guy's numbers are vague and <iq>unknowable</iq> and <iq>best estimates</iq>, which is worrying...because he doesn't seem to be worried about drawing conclusions from shifty numbers. He discusses how tumble driers use 1.6x as much energy as Bitcoin. I assume that's for the whole world. Then he says that, <bq>Of course, a tumble drier is a discretionary thing -- you can dry your clothes on the line, if you want</bq> And, of course, Bitcoin, is <i>not</i> discretionary because that value that it adds is so far above and beyond that of billions of people having dry clothes. None of this makes any sense if you're not already wearing the rose-colored crypto-glasses. But copper and zinc and gold mining produce useful materials that are used to build other things. Bitcoin just produces ... Bitcoin. It's self-fulfilling. <bq>The perceived merit of an application's energy consumption is a function of one's subjective view of that application's utility.</bq> He has, so far, said nothing about Bitcoin's actual utility, except for some hand-waving and vague mentions of its distributed and decentralized nature and lack of <i>overt</i> control by nation-states and their central banks (it's not a fiat currency). The <i>de-facto</i> control by central banks and large financial institutions seems unavoidable as Bitcoin achieves its goal of being more mainstream, which leads to it being absorbed by everyday capitalists. Much of his reasoning is circular, begging the question. Even if Bitcoin's energy were to come from green sources, that still means that we're producing more energy just to support it. The utility of it has not been proven---this guy hasn't even mentioned it once. He's once noted that you're going to be skeptical if you think Bitcoin is useless, but not said why Bitcoin is useful. So Bitcoin's location-independence allows it to use otherwise wasted energy? What happens if the value of Bitcoin collapses? Then it is no longer profitable to do this --- and it will stop. Why would Bitcoin miners voluntarily spin down when demand gets too high? Even though it would be feasible for them to do so, there is no realistic scenario where they would do so. He describes Bitcoin miners as socially aware altruists who will only use energy when it is not otherwise societally detrimental. But that's hogwash. No-one does that. The only way anything happens on that level is through the cudgel of regulation <i>and</i> enforcement or through pricing, which is rarely dynamic enough to stop Bitcoin mining. If the price of Bitcoin is high enough, then many, many other more societally essential services will become unaffordable before Bitcoin mining does. This is also ignoring that over 90% of Bitcoin production was outside of the U.S. anyway. It was mostly in China. 60% of the hashrate has left China. He argues that coal-based mining is therefore reduced. But most of the mining has since moved to Russia and India and Kazakhstan, where the energy sources are anything but clean. According to a recent article, China's coal-based energy is actually much cleaner than that in other locations. His argument that the U.S. grid is <iq>much more sustainable</iq> than China's is not really borne out by data (he doesn't provide anything to back up that claim). Buying offsets doesn't help the planet; it's a kludge available to the wealthy to assuage their consciences. I would imagine that the recent price surge in Bitcoin is also due to media attention and subsequent popularity combined with the relative scarcity of new Bitcoin. I wrote that last bit in August of 2021. The recent drop in Bitcoin's value will probably also make it impossible for many to be able to afford to keep mining it. But the demise of Bitcoin has been predicted many times. There seems to be no reason for it to exist, but many people are nonetheless convinced that it should---even if they can't articulate why.