Author Topic: Bitcoin's Distinctive Downside: Energy and Equipment Costs  (Read 204 times)

The Gorn

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Bitcoin's Distinctive Downside: Energy and Equipment Costs
« on: January 01, 2018, 05:33:28 pm »
Bitcoin is distinctive for fiat currencies in that the cost to create one of the symbols of currency has a huge real world cost in computer equipment and electrical power.

The cost to create a unit of BTC currency approaches a large fraction of the current highly inflated market value of the unit. In some cases the bitcoin's minting cost approaches 50% of its market value.

THAT'S not an insane bubble? It would be like a $20 bill costing $10 to print.

https://www.marketwatch.com/story/in-one-chart-heres-how-much-it-costs-to-mine-bitcoin-in-your-state-2017-12-15

Quote
According to a new analysis compiled by the Crescent Electric Supply Company, Louisiana could be the most appealing state in the country, based on one unusual metric.

Why? It’s cheaper to mine bitcoin there than in any other state in the U.S., based on the different electricity rates in different regions of the country.

Mining a single bitcoin costs $3,224 in Louisiana, a relative bargain considering the digital currency BTCUSD, -1.54%   last traded at $17,652.30, up 6.8% on the day, which brings its year-to-date rise to a massive 1,723%.

The most expensive state, in contrast, is Hawaii, where the cost of electricity brings mining costs up to $9,483, meaning it is nearly three times more expensive to mine bitcoin in Honolulu than New Orleans.

www.zdnet.com/article/want-to-make-money-mining-bitcoins-criminals-have-you-beat/

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Rather than buying expensive bitcoin mining machines, criminals are seeding the computers the world-over with malware like "Fareit," which then implants bitcoin mining software on victim machines, sending the results of the mining process to intermediate transactional bitcoin wallets, which are harvested on a regular basis, moving bulk collections of bitcoin shards into anonymous bitcoin wallets not obviously connected to the intermediate harvesting wallets.

The result is criminals are able to extract the cost of production from the bitcoin mining process, making bitcoin mining almost infinitely more profitable for law-breakers than law-abiders.

How it can happen: I received a security alert email from "Wordfence", a popular security plugin for WordPress websites, that indicated that several plugins on Wordpress.org's site have been taken over (purchased usually, by new developer-owners) and modified  in order to do Bitcoin mining calculations. The plugins when recognized get banned immediately as malware. I'm assuming that if the plugin is contaminated, the web hosting account that serves someone's WP site starts performing distributed BTC calculations.

Finally, the immense waste:

https://futurism.com/mining-bitcoin-costs-more-energy-159-countries-consume-year/

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According to a research conducted by a U.K.-based energy comparison tariff service called PowerCompare, the average electricity used to mine bitcoin this year has surpassed the annual energy usage of some 159 countries. Specifically, the global average energy spent on bitcoin mining has far exceeded the electricity consumption in Ireland and most African nations.

I've gotten an impression that the computational effort to mine Bitcoin will increase asymptotically (IE, toward infinite or extremely large energy requirements) as the end of the possible BTC set is reached. So it will not get better.
« Last Edit: January 02, 2018, 07:59:51 am by Blockchain Gorn »
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The Gorn

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Re: Bitcoin's Distinctive Downside: Energy and Equipment Costs
« Reply #1 on: January 02, 2018, 08:03:00 am »
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unix

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Re: Bitcoin's Distinctive Downside: Energy and Equipment Costs
« Reply #2 on: January 02, 2018, 08:16:46 am »
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THAT'S not an insane bubble? It would be like a $20 bill costing $10 to print

Thats not a liability. Thats a feature. I want the cost to mine a bitcoin to be as high as possible. To ensure that some data center loaded with supercomputers does not devalue the currency in 48 hours.

If you look at a hard commodity like a precious metal, say palladium, it is expensive to mine. And if the cost of mining exceeds the cost of troy ounce of given metal on the market, mining stops.  Thus, platinum, palladium, iridium, silver after all, can never go to zero. It is an impossibility.

There is no build-in safety valve with btc and other cryptocurrencies. Not really.
Someday all these zeroes will be just that.

What if they make rapid gpu/cpu advances and mine the hell out of it?

A quantum leap in GPU power. Inspired by the btc. Why cant say No such Agency engage in this effort? They have acres of supercomputers and you pay for electricity.

Brawndo. It's got what plants crave.

unix

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Re: Bitcoin's Distinctive Downside: Energy and Equipment Costs
« Reply #3 on: January 02, 2018, 08:20:42 am »
Bitcoin mining equipment: (amazing...!)

https://www.google.com/search?q=bitcoin+miner&num=100&source=lnms&tbm=shop

I was thinking wheelbarrows and shovels and stuff. Lol
Brawndo. It's got what plants crave.

The Gorn

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Re: Bitcoin's Distinctive Downside: Energy and Equipment Costs
« Reply #4 on: January 02, 2018, 05:13:18 pm »
Quote
THAT'S not an insane bubble? It would be like a $20 bill costing $10 to print

Thats not a liability. Thats a feature. I want the cost to mine a bitcoin to be as high as possible. To ensure that some data center loaded with supercomputers does not devalue the currency in 48 hours.

If you look at a hard commodity like a precious metal, say palladium, it is expensive to mine. And if the cost of mining exceeds the cost of troy ounce of given metal on the market, mining stops.  Thus, platinum, palladium, iridium, silver after all, can never go to zero. It is an impossibility.

There is no build-in safety valve with btc and other cryptocurrencies. Not really.

OH.

Right you are. Unix, you illuminated things for me in that post. Seriously.

It really IS mining. I need to dig in and learn about this. Not that I'm in the market for mining BTC myself, but it's intriguing you can make $$$ out of thin air. It won't last.

Good man.

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