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    I have no doubt that the author of this article has done their research, but it’s really hard to follow because of what I perceive to be his personal animosity to the author of the original claim of Bitcoin’s environmental damage.

    However I must take issue with this statement, in the last paragraph:

    [Bitcoin’s] energy efficiency gets better every day.

    This is not how the proof of work idea functions. If a process is invented that calculate hashes more efficiently, the difficulty will adjust to ensure that the rate of block creation is fixed (at one every 10 minutes, in Bitcoin’s case). There is literally no way to mine bitcoin or any other PoW based cryptocurrency more efficiently, in the sense that the unit cost decreases with the application of a new process.

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      This point is consistently left out of these discussions and it annoys me no end. Thanks for bringing it up.

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        Doesn’t that mean the energy usage can be more or less consistent at a point?

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          If the price is stable, yes. If there’s money to be made by mining, expect people to pour energy into it until it stops being profitable.

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            Not necessarily, the energy usage is determined by transaction volume * compute cost, roughly speaking. The compute cost may stay roughly the same but volume won’t.

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          There is literally no way to mine bitcoin or any other PoW based cryptocurrency more efficiently, in the sense that the unit cost decreases with the application of a new process.

          My economics are rusty, and to be honest I couldn’t get through the angry tone of the linked article but I think that may not be entirely true, let me explain why: There is an interesting analogy here which I will put forward, although it may be flawed: the cash for clunkers program. The idea is to make the market undesirable for inefficient systems to operate in. Suppose a new process is discovered, but not made widely available. With the bitcoin network, this seems possible. Now, suppose the new actors are able to drive up the hashrate considerably using the new process. Other, less efficient systems become less profitable to operate, and are turned off. The PoW retargets, and the difficulty goes up. But the system as a whole is more efficient. He mentions falling exchange rates and competing cryptocurrencies. If you add all of these factors together, total system power consumption could legitimately go down. We think of this market as being relatively efficient, but I don’t think that’s accurate. The barriers to entry and complex political elements could come into play to result in a more efficient bitcoin irrespective of the retargeted PoW.

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            There are different ways to view efficiency, and it’s possible the author of the linked post means the view you have outlined.

            I personally view efficiency in this way: Bitcoin’s job is to provide transactions between addresses. As it stands, Bitcoin is fundamentally constrained by the number of blocks generated per time unit, and the space allotted within each block for transactions.[1].

            There is no way to get more transactions per second by using an improved method (faster hardware or smarter algorithms). This is by design.

            This is a design choice that makes sense considering Bitcoin’s goal of decentralization. Limiting efficiency is one of the ways of preventing an entity of amassing enough hash power to take control of the network.

            [1] An obvious way to alleviate this issue is to increase the size of the block - and this is the approach taken by the alternative chains Bitcoin Cash and Bitcoin SV. But each block must have a chance to propagate enough through the network so there is a practical size limit based on the combination of block size and average network speed.

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              I think it is pretty clear that the article is about the impact of bitcoin power usage on the environment. So treating transactions per second as the efficiency the article is talking about seems misled. I think the article is talking about transactions per watt, which can actually change significantly with different methods and as the bitcoin community grows or shrinks.

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          +1 to the idea that it was hard to read because of the personal animosity to a single individual and their specific claims. I’m no stranger to passion, but it can get hard to find the meat of things when every statement is prefaced with bile.

          My understanding has always been that most of the mining is happening from underutilized, already-built hydro plants in China. However, even if it’s 60% (or 75%, or 80%; it kind of jumps around) of mining happening via renewable sources, we still have to account for the rest. 40% (or 25%, or 20%) of an increasing energy cost per transaction is still something to monitor! Each of those numbers that say something like “every transaction costs more energy than [some city]” may be way off-base, but even if it were “every transaction costs 20% of [some city]” I still think it’s worth putting attention towards.

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            This is increasingly not the case - as those plants are hooked to the national grid, the People’s Bank of China - which really doesn’t like crypto, they thnk it’s useless speculation that risks damaging the productive economiy - has been pushing miners out.

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            The digiconomist guy wrote a rebuttal: https://digiconomist.net/verify-dont-trust/

            I don’t care enough about any of this to examine it in-depth, so this is not an endorsement. Just FYI.

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              Everyone remember that Bitcoin relies on the existing financial system. See paragraph toward bottom with David Gerard’s name. It interacts with a number of financial systems, too. So, its energy use is actually theirs plus its.

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                Why is the article not titled “the reports of bitcoin environmental damage are greatly exaggerated”?