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The black hole cost of mining Bitcoin that no one is talking about

Discussion in 'Digital Currencies' started by Goldhedge, Nov 25, 2017.



  1. Goldhedge

    Goldhedge Moderator Site Mgr Site Supporter

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    The black hole cost of mining Bitcoin that no one is talking about

    10:00 AM

    One of the more lucrative businesses that have sprung up in 2017 is that of Bitcoin, and other cryptocurrency mining. In fact in areas where governments subsidize cheap electricity (Russia, China, and Venezuela), these mining operations have grown and multiplied substantially.

    However as most of us know regarding Bitcoin, as the volume of produced coins increase, the time and duration to mine the remaining coins lengthens. And in an interesting study out on Nov. 23, the current electricity use incurred for Bitcoin mining operations now exceeds the total combined output of 161 nations, and by February of 2020 could exceed the entire amount currently produced by the entire world.


    [​IMG]

    Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.

    However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins. According to Digiconomist’s Bitcoin Energy Consumption Index, as of Monday November 20th, 2017 Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh. That’s the equivalent of 0.13% of total global electricity consumption. While that may not sound like a lot, it means Bitcoin mining is now using more electricity than 159 individual countries (as you can see from the map above). More than Ireland or Nigeria.

    If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption. – Power Compare UKTo keep up with this demand, alternative forms of energy would be needed to fuel cryptocurrency mining, possibly within just a years time. Because if not then sovereign governments would surely need to get involved as the current global grid system is inadequate to facilitate a doubling of its electricity output.
     
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  2. Buck

    Buck Gold Member Gold Chaser

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    Don't forget the power required to charge our electric cars

    Happy Happy
    Joy Joy
     
  3. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Lotta black holes all over the time and place no one wants to talk about.

    Funny how that works...
     
  4. Joe King

    Joe King Gold Member Gold Chaser

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    Perhaps at some point in the future, this is what could end up allowing another crypto to supplant bitcoin. The free market will ultimately decide.
     
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  5. Gun Ban Extremist

    Gun Ban Extremist Seeker Seeker

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    No one is talking about it? Everyone paying attention to bitcoin is talking about it (or should be). Every bitcoin transaction (not a block or a bitcoin itself) now costs over $100 in electricity -- even if you're just sending a buck or two.
     
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  6. Joe King

    Joe King Gold Member Gold Chaser

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    Yet btc is $9059.06
     
  7. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    It's crazy and defies logic notwithstanding fiat currency. When the chickens come home to roost on BTC there will be many sore butts.
     
  8. Joe King

    Joe King Gold Member Gold Chaser

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    Crazy perhaps, yet it marches on.

    $9161 Sorry, I meant $9204
     
    Last edited: Nov 26, 2017
  9. anywoundedduck

    anywoundedduck Gold Member Gold Chaser

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    I never witnessed such a lucrative scam ever. The King of all Scams.
    And the payoff for the Perps will be quick and dirty, as they will have cashed out the day before, and turned their ill gotten gains into silver and gold.
    So what safeguards exist for Bitcoin to keep the dump end of the pump from happening?
    None you say?
    Oh.
     
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  10. Joe King

    Joe King Gold Member Gold Chaser

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    $9296
     
  11. Someone_else

    Someone_else Gold Member Gold Chaser

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    Okay, I am going to think out loud on this...

    First, all transactions are public.
    Second, a "big" sale would mean the seller would probably have to find a big buyer first.
    How to advertise the desire to dump a large number without disturbing the market?
    Or maybe the seller could dump a huge number of Btc on an exchange and let many small buyers eat it up.
    If I had a thousand Btc, could I sell them for $$$ in a reasonable time? Are there enough eager buyers?
    What if a hundred other big sellers were also deciding to sell at the same time?
    How many buyers will keep buying on the dips, how many will stop and say, "Okay, I'm good"?
    How many will think, "With all these sellers dumping, it's probably going down to $1000 and I can get another chance to invest at the bottom"?

    And to repeat the first point, everyone can see all transactions. Everyone will see the signals.

    Supply and demand can be fickle.

    Last question: Has any actually sold a thousand Btc in one transaction? I mean in the last few years.
     
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  12. Joe King

    Joe King Gold Member Gold Chaser

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    What you are asking are the same questions one could about any market. How do you dump X amount of gold, or silver, or houses, or bushels of wheat or anything else that you owned enough of to alter the market when doing so? Why wouldn't the same answers apply to btc?
    ...and anyone who was swift enough to still have many thousands of btc they bought for .005cents each, wouldn't want to or need to sell it all. Why would they? Just selling small amounts continuously no matter the price would could net thousands per Month. Being in such a position, what more could you ask for?

    It'd be like if Ag had kept going up in 2011 and was by now $1000/ounce and you were sitting on 10 monster boxes you bought when Ag was $4/ounce. You could sell 2 a week and live rather nicely for the next 40+ years. Sell it all and you're back in inflationary dollars. What good is that?
     
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  13. southfork

    southfork Mother Lode Found Mother Lode

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    A scam of epic proportions, makes me wonder if .gov is involved in this.
     
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  14. Mujahideen

    Mujahideen Black Member Midas Member

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    Exactly how is bitcoin a scam? Please explain.
     
  15. andial

    andial Sir Midas Member Site Supporter ++

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    WTF Bitcoin cost more to make than it worth?
     
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  16. Someone_else

    Someone_else Gold Member Gold Chaser

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    From what I understand, new "coins" appear at fixed intervals, and the "miners" are competing to get the fixed number of coins. To compete, you have to spend computing power, which costs energy. There are so many miners competing for those few coins, and they are using tremendous amounts of energy doing so. Apparently, the cost of that energy is somewhere around the price of the new coins.

    An analogy might be that you use your computer to write a business contract, but the cost of the computer resources is so high that it is roughly equal to your expected business profit.
     
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  17. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    That's an oversimplification of how bitcoin mining subsidies are rewarded, but essentially accurate. What is completely ignored in what you said is that the miners are also the ones processing transactions. For a proof-of-work algorithm like bitcoin to function as a currency there has to be mining.

    Most of these stories make it sound as though the energy being used to mine bitcoin is expended only to produce new bitcoin, and that's not the case.
    Because...reasons. Same as how/why bitcoin is a ponzi. Reasons.
     
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  18. Buck

    Buck Gold Member Gold Chaser

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    IIRC, in order for the security of each transaction to be complete, miners create algorithms which act as the security for each transaction
    without the miners, there would be no security

    It all makes no sense to me, once the last Bitcoin is mined, there will have to be fee's attached, which will be used to pay for the miners, who will now burn up electricity, to solve algorithms, which in turn act as the security for the block-chain, i.e., for the individual Bitcoin transactions

    Now, scale that up into a real currency and it can't be done economically

    Fad
    Make the money while you can but be vigilant as someone will end up holding an empty bag

    IMHO, of course but the simple facts appear to fit
     
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  19. Joe King

    Joe King Gold Member Gold Chaser

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    Keep in mind that the last bitcoin will not be mined until sometime next Century.

    Last btc.PNG


    I think we've got a while to go yet.
     
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  20. Buck

    Buck Gold Member Gold Chaser

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    that's a lot of power

    Good thing we got the coal mines opened again
    :blond:
     
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  21. Joe King

    Joe King Gold Member Gold Chaser

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    Yep.
    ...but if most mining is being done in China and the Chinese gov subsidizes electric costs, anyone outside China is getting a pretty good deal IMHO.
     
  22. Buck

    Buck Gold Member Gold Chaser

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    Good Point now shhhhh
    Watch the Boobies

    :blond:

    Bitcoin is good
    China is alright
    :blond:
    Bitcoin is good
    China is alright
    :blond:
     
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  23. Joe King

    Joe King Gold Member Gold Chaser

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    Hey, it's about time the Chinese gov did something good for us, right?
    ....and all this time they just thought they were helping their own citizens. lol
     
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  24. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    Right...in 2140 when the last bitcoins are mined. ...and there are already fees attached to bitcoin transactions. Those fees already go to miners.
    A sentiment that has been repeated over and over for the past 9 years and has been wrong each and every time.
     
  25. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Until it happens, and reaches it's natural fiat value, zero, and worse. And it will. Enjoy playing with your imaginations or should I say, their machinations, folks.
     
  26. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    How can you be so certain of that, when we all know the history of fiat currencies? ...fiat currencies that provide zero accountability and zero transparency.

    While I am not a huge fan of the proof-of-work model, I would say bitcoin has a far greater chance of surviving long term than does any government issued fiat currency...and we all use those. The USD in its current form has only existed for 46 years and it's already overdue to be rebuilt/replaced...bitcoin's performance the past 9 years is making it obvious that people are ready for something outside of government control that competes with fiat.
     
  27. Joe King

    Joe King Gold Member Gold Chaser

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    IMHO, what needs to happen is for btc (or some other crypto that is proven to be a better choice) to eventually be used for all international transactions.
     
  28. Gun Ban Extremist

    Gun Ban Extremist Seeker Seeker

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    If we do the math, at least given the current trending figures, the answer appears to be yes. Someone check my arithmetick here, but it seems reasonable:

    • The current reward for mining a block is 12.5 BTC, so we'll call it $125,000 with BTC at nearly $10,000 right now.

    • The number of transactions per block varies from a few hundred to a couple thousand, depending on day-to-day conditions and trends, but let's call it 1500.

    • Ignoring transaction fees additionally paid to the miners, that works out to around $83.33 profit per transaction, as compared to $100 in electricity cost.

    • Miners are also perfectly free to "prefer" transactions with fat fees attached to them, so that might make up the difference and even add a little extra to sweeten the pot.
     
  29. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    It's interesting maths, but there are problems.

    Bitcoin miners are doing more than "just" competing for a mining subsidy, they're processing transactions. Your maths applies a value of zero to this even while you're throwing out transaction fees paid to miners. This despite the fact that transactions are the entire reason bitcoin exists. I mean if it(bitcoin) couldn't be used for transactions, why would anyone care about bitcoin mining subsidies?

    Also how do you arrive at $100 in electricity costs? Electricity rates vary wildly all over the globe as does the efficiency of the ASICs that do the maths. Those with inefficient gear and/or high electricity costs are eventually forced to shut down.

    Here's a chart of the average transactions/block for the past 1 year. Your estimate of 1500 looks low.
    https://blockchain.info/charts/n-transactions-per-block?timespan=1year
     
  30. arminius

    arminius Gold Member Gold Chaser Site Supporter ++

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    Is the fact that it requires electricity to function at all not it's most fatal weakness.
     
  31. solarion

    solarion Gold Member Gold Chaser Site Supporter

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    Not really. Nearly all modern commerce requires electricity...really think those snowflakes with apple pay are toting around a bunch of soon to be eliminated cash?
     
  32. Joe King

    Joe King Gold Member Gold Chaser

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    Exactly. If there's ever a fo' real "grid down" scenario where it goes down for the foreseeable future, it'll be foodismoney. lol
     
  33. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    Uh, Wait ONE Freakin' Minute ! How does China subsidizing THEIR electric costs help ANYBODY OUTSIDE of China mine for bitcoin??

    Your computer does NOT get electricity from China.

    This is the kinda crap I kept trying to get an answer to years ago but just got a run-a-around, BS, answer.
    You DO spend more money mining than any BitCoin is worth.

    DON"T BELIEVE ME LOOK AT THAT PHOTO IN POST 19. That set-up and electric bill is not cheap ( but it is made in China).
     
  34. Joe King

    Joe King Gold Member Gold Chaser

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    Not saying that my computer gets electricity from China, but rather that it appears that the Chinese gov is subsidizing the cost of the miners that everyone else who owns btc relies upon for doing the transactions.
     
  35. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    o_O

    THAT SHOULD READ:
    "..that the Chinese gov is subsidizing the cost of THEIR miners".

    I do not see how outsiders benefit from a Chinese miner mining. Do they sell "THEIR" bitcoins at a discount ?
    Have you affiliated with or a partner of a Chinese Miner ?
    :confused:
     
  36. Joe King

    Joe King Gold Member Gold Chaser

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    The point is that people here don't have spend even more in order to keep the miners going that our network relies upon. Anyone in btc relies on those miners doing what they do, and the Chinese gov graciously makes that cheaper to do. Therefor there are more miners than there otherwise would be. More miners is a good thing IMO.
     
  37. Buck

    Buck Gold Member Gold Chaser

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    This will only apply if any fee's are kept low due to the fact the miners are in China and utilizing cheap electricity
    This won't happen due to the outside influences from the markets and greed

    Otherwise, the only people who will benefit will be the Chinese
     
  38. Joe King

    Joe King Gold Member Gold Chaser

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    That's just it, if all the miners had double the electric costs, the fees would already be higher. Chinese gov helping with the electric costs help to keep fees lower than they would otherwise have to be. IMHO, that benefits me.
     
  39. Buck

    Buck Gold Member Gold Chaser

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    what I'm trying to allude to:

    Like most of everything else
    The Fee's are more than likely already higher than they need to be

    This cheap electricity isn't helping anyone but the Chinese

    IDK, when we're talking about profits of 1000% and higher, what's the price of fees matter?
     
  40. GOLDBRIX

    GOLDBRIX God,Donald Trump,most in GIM2 I Trust. OTHERS-meh Site Supporter Platinum Bling

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    So there are also FEES along with the personal costs of equipment and energy costs ?

    Man this just gets "worser and worser" - IMO
     

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