Indeed, as I mentioned in a sibling comment, to put those numbers in context, Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers [1].
To be sure, it's the growth rate of that consumption that is more concerning. But at the same time, there are lots of reasons to believe that Bitcoin's electricity consumption will naturally moderate and flatten over time.
If you think Bitcoin has even a 1% chance of changing the world for the better e.g. via increased financial inclusion for lower-income populations, I think that amount of electricity is a reasonable "investment" to make (for now).
If there is one percent chance of bitcoin making world somehow better place, I wonder what are the odds bitcoin makes world somehow worse place ( e.g. fostering criminal endeavours, pseudolegal scams,failed monetary policy and environmental problems) and how does those odds change the equation?
The same could be said for any new technology – they are always a double-sword, and it's our responsibility as technologists to do what we can to maximize the upside and minimize the downside.
The internet has changed society for the better in innumerable ways, but it's also robbed us of privacy and freedoms. Cars allow greater access to economic opportunities for people living outside urban centers, but they are also responsible for most of the world’s air pollution, and millions of people are killed each year as a result of traffic collisions.
This is the reality we have to face as people who work in technology.
1% chance of changing the world for the better says nothing unless you also specify how much better.
Local bakery makes world a bit better, but not really worth if you needed a whole power plant to run it (intentionally ridiculously extreme for demonstration purposes).
That is impossible for anyone to say with any certainty, because the future impact of new technologies are, by their nature, impossible to predict.
The oft-cited statistic is that 2 billion adults worldwide are still completely “unbanked” and don’t even have a basic checking or savings account. One percent of 2 billion is 20 million people (roughly the population of a mid-size country), many of them living in poverty.
A global decentralized currency like Bitcoin could eventually allow what happened with M-Pesa in Kenya to happen more easily in any country in the world.
I've written about this as well. You can skip to the section titled "How Bitcoin can help the poor and unbanked" to read data on how m-Pesa has improved life for many poor and rural Kenyans.
A global decentralized currency like Bitcoin could eventually allow what happened with a global decentralized currency like Bitcoin to happen to the 2 billion unbanked too. I'm not convinced that foisting 50% weekly price swings, MtGox-calibre ecosystem security and Bitfinex-style creative accounting upon poorly educated people who rely on those savings to not die is a net positive for society.
Aside from the obvious downsides, Bitcoin doesn't even do any of the good bits of m-Pesa (local currency denominations, works on dumbphone, instant transactions, intuitive because it's basically mobile credit, loans and repayments)
To put the "single large power plant" whose output exceeds Bitcoin usage in context, it's one so big that 1.3 million people were displaced to build it...
If one wanted to help lower income populations, it could be difficult to conceive a solution less likely to help them than bidding up energy prices to safeguard the proceeds of wealthy hackers' speculation. I'm going to go out on a limb and say that Bitcoin neither provides nor ever will provide as much utility to the world as, say, Ireland.
> so big that 1.3 million people were displaced to build it.
The fact that China built a large hydroelectric power plant (Three Gorges Dam) that displaced a lot of people, shouldn't be an argument against Bitcoin. There are ways to provide electricity for Bitcoin mining that are green and don't displace people.
> safeguard the proceeds of wealthy hackers' speculation
The people who get richest from the stock market are those who are already wealthier to begin with. Are you against the stock market and securities in general?
> nor ever will provide as much utility to the world as, say, Ireland.
Apples to oranges comparisons aside, a better comparison would be Bitcoin eventually becoming a popular alternative for gold investment, and/or an alternative to Western Union.
Gold mining causes direct physical destruction of landscapes and ecosystems [1]. I think Bitcoin mining largely displacing gold mining is a good thing.
Western Union charges as much as $95 to send $1,000 [2], and their customers are generally poorer working-class people. M-Pesa in Kenya has already demonstrated that mobile money services can lift hundreds of thousands of people out of poverty [3]. The Bitcoin protocol doesn't have a corporate profit motive and can become a cheaper and more globally scalable version of Western Union or M-Pesa.
> The fact that China built a large hydroelectric power plant (Three Gorges Dam) that displaced a lot of people, shouldn't be an argument against Bitcoin.
It was an observation about how much of an understatement "a single power station" was, not a suggestion large scale hydroelectric was the world's only power source. I mean, another way of putting it would be 10+ large coal fired power stations which is probably a more accurate reflection of how the additional power generating capacity is supplied...
> The people who get richest from the stock market are those who are already wealthier to begin with. Are you against the stock market and securities in general?
No, but I'd never pretend that, say, an HFT trading shop was going to save the poor, still less that it had such potential to liberate the poor it would be worth using the same amount of electricity as Ireland to run their trading algorithms
> a better comparison would be Bitcoin eventually becoming a popular alternative for gold investment, and/or an alternative to Western Union.
Whether you love gold or find its appeal faintly ludicrous, its demand has survived over several thousand years of increasingly advanced alternative investments, and continued to increase after the end of a gold standard, so arguments that the existence of Bitcoin might seriously dent gold mining are hard to take seriously even before we get to the stage where the actual litmus test is dent gold mining to the extent it cancels out the energy use consequences of Bitcoin
I've used Western Union to send myself amounts in the $1k range to a developing country before. Cost including currency conversion was nowhere near $95 (people have paid more than I did for BTC-BTC transactions!) and I got cash I could actually spend. And I don't think a better Western Union (everything in the history of Bitcoin suggests catastrophically worse Western Union) would be a good use for more energy resources than a typical developing world country either, and am confident relatively few remittance-recipients in those developing world countries would agree. For the tech and price savvy, cheaper options already exist.
Bitcoin's absolute power consumption isn't at a critical level yet — Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers.
However, I agree that its rapid and consistent growth rate is concerning and can't be ignored.
It's an area I'm really interested in and have been reading a lot about, because most of the news and "analysis" of the issue on both sides has been obnoxiously biased.
I tried to write a balanced summary article of the situation (below). Long-term, Bitcoin's electricity consumption could really go either way i.e. flatten or continue growing indefinitely. There are some causal factors like price that are out of our control, but there are others like the Lightning Network that are both feasible and in our control, and could significantly moderate Bitcoin's electricity consumption.
> Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers
Well first of all, according to your own blog post, it is not as much power as a single large power plant, but as much power as the single largest power plant in the entire US. And thats just an estimate. It potentially uses twice that amount.
And 10% of the power of all the worlds data centers is absolutely bonkers. That isn't a small number, its spectacularly large.
And all of this for something that has yet to be adopted by 99.9% of the people on the planet.
I think your point about US power plants is a nitpick – The largest power plants in the world are not located in the US, and either way my point still stands because it's meant to be a rough approximation.
Unlike data centers where electricity consumption is directly correlated with internet usage, Bitcoin's electricity consumption is instead directly correlated with its price (which attracts more miners), and is very indirectly correlated with the number of users or transactions.
It's very possible that Bitcoin could be adopted by a significant (e.g. 10% or more) percentage of the world population even as its price remains fairly consistent, which would mean its total electricity consumption would remain fairly consistent as well.
As mining is an economic investment, they want cheap electricity. Cheap electricity is where there is excess that is not being used and would be otherwise wasted. That's why there aren't many large mining operations in NYC but there are in upstate NY near hydro.
Re: Bitcoin's electricity consumption, I wasn't satisfied with how one-sided or incomplete a lot of the articles written about this topic are, so I tried writing my own* that (hopefully) more fully and objectively encapsulates the data and facts of the matter.
TL;DR – We all need to stop ignoring Bitcoin's rapidly-growing electricity consumption and making flawed "What about _____?"† arguments. The Bitcoin community (myself included) needs to start facing reality and be able to demonstrate four things:
1) Bitcoin’s energy usage is actually reasonable, when viewed in proper context
2) All that electricity is actually serving a useful purpose
3) Bitcoin’s growing energy needs can be brought under control
4) Over time, the electricity for Bitcoin will increasingly come from renewable sources
I personally believe that #1 and #4 are already true and will continue to trend in the right direction over time. As for #2 and #3, those can become true in the near future, but right now it's all hypothetical and Bitcoin needs to start delivering on its (unfulfilled) potential soon.
To add to this point, M-Pesa has been a huge success in Kenya, but has had trouble expanding to other countries because of some inherent limitations of M-Pesa's model.
A cryptocurrency could enable the next evolution of mobile payment services like M-Pesa. I touched on this in a past blog post:
That kind of thing is often said by people who are merely lucky enough not to have fucked up so far, or to not have been fucked over. Individual success is not a proof.
I see Donald Trump running for president as being nothing more than a glorified PR campaign to build his own brand. I don't think he even cares if he wins or loses, and I think it's possible he might not even accept the presidency if he were to win it as it's not worth the headache - He's a businessman first and foremost whose primary interest is in amassing wealth.
However, I do think there is one "side benefit" to his absurd, self-serving presidential campaign, and that is he is making a mockery of the US's political process and pushing it to its logical extremes, which I think is long overdue. A good democratic process should be able to prevent potential fascists from gaining power, and the fact that Trump even got this far shows the deficiencies of the system and that it needs reform. There is literally nothing stopping popular and influential celebrities like Kanye West and Kim Kardashian from running for president and winning. In fact, they've even announced their intentions to do so[1].
I'd argue that, ironically, Trump is achieving the same ends that Larry Lessig[2] hoped to achieve, albeit through very different means.
I think Trump may have started out with the plan to run for the publicity and to promote his brand but at this point I think he really wants to win the presidency. At this point in his life he has enough money that an extra couple billion won't do much to change his lifestyle or legacy.
But if he were to become president, he would be only the 44th person to be president, would have a definite mark on history, etc. For someone who puts his name up on the buildings he builds, I think the legacy and fame aspect of the presidency would be more attractive that whatever money he would make by forgoing the presidency and continuing in business.
Edit: There have been 44 presidencies, 43 presidents
What interesting timing - I'm organizing an Immigration-themed hackathon[1] this weekend in SF, and on Saturday morning we'll have a speaking panel called "Immigrant Founder Stories" where founders from 4 startups (big to small) will share about their struggles to gain permanent status in the US, and how it affected them as entrepreneurs.
- Laks Srini, Co-founder & CTO at Zenefits [2]
- Tri Tran, Co-founder & CEO at Munchery [3]
- Silver Keskküla, Co-founder at Teleport (ex-Skype) [4]
You could say the same thing for any "on-demand" startup out there. It's this kind of intellectual laziness ("It failed in the past so it couldn't possibly succeed now.") that prevented electric cars from happening sooner.
Some on-demand startups will work out magnificently and many others will not because the economics just don't make sense. In the case of Munchery, I think their valuation is very reasonable when you consider it's an order of magnitude less than that of one of their indirect competitors Blue Apron who is seeking a $2 billion valuation (as mentioned in the article).
To be sure, it's the growth rate of that consumption that is more concerning. But at the same time, there are lots of reasons to believe that Bitcoin's electricity consumption will naturally moderate and flatten over time.
If you think Bitcoin has even a 1% chance of changing the world for the better e.g. via increased financial inclusion for lower-income populations, I think that amount of electricity is a reasonable "investment" to make (for now).
[1] https://medium.com/@petershin45/bitcoin-is-killing-the-plane...