The Growing Energy Requirements of Bitcoin and Cryptocurrencies

If you read news about finance these days, it is impossible to miss the story of the massive run-up in value of Bitcoin over the last year. Its value has rise over 1000 per cent since the beginning of the year, and some people who have owned Bitcoin since its early creation have become multimillionaires.

There is a huge amount of Bitcoin related news coverage these days, mostly about its current value, and how much money some investors have made so far and whether the bubble is about to burst, but in the midst of the current Bitcoin frenzy one thing that stands out is the discussion about the enormous amount of energy that is required to sustain the system. Here are a few quotes from one recently published article on Grist:

Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day. And miners are constantly installing more and faster computers. Already, the aggregate computing power of the bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined.

The total energy use of this web of hardware is huge — an estimated 31 terawatt-hours per year. More than 150 individual countries in the world consume less energy annually. And that power-hungry network is currently increasing its energy use every day by about 450 gigawatt-hours, roughly the same amount of electricity the entire country of Haiti uses in a year.

That sort of electricity use is pulling energy from grids all over the world, where it could be charging electric vehicles and powering homes, to bitcoin-mining farms.

https://grist.org/article/bitcoin-could-cost-us-our-clean-energy-future/

This same article goes on to say that if Bitcoin growth continues at its current rate, by February 2020 it will use the same amount of electricity as the whole world uses today. Obviously that would be a massive problem that would be very difficult for support in terms of power generation capacity.

Of course, it is probable that the current growth of Bitcoin won’t continue on its current trajectory.

An article in Ars Technica takes a rather more sober look at the situation.

Will the network’s energy consumption continue to rise over the longer run? Under Bitcoin’s current design, this depends entirely on what happens to the price of Bitcoin. If Bitcoin’s price doubles to $25,000, we can expect the Bitcoin network’s energy consumption to roughly double as well. If Bitcoin’s price falls significantly, on the other hand, miners will find their operations unprofitable and will start to switch off their least efficient equipment, causing energy use to decline.

Right now, Digiconomist estimates that Bitcoin is consuming less than 1 percent as much energy as the US economy. This means that, for Bitcoin’s energy consumption to exceed that of the United States, Bitcoin’s price would have to rise by roughly 100-fold to more than $1 million.

Could that happen before 2020? It doesn’t seem likely. Of course, in early 2015, Bitcoin was worth only $200—hardly anyone expected a 50-fold increase over the last two years. But here we are.

https://arstechnica.com/tech-policy/2017/12/bitcoins-insane-energy-consumption-explained/?comments=1

Many people think that what they consider to be the Bitcoin bubble is bound to burst, but it’s by far not the only cryptocurrency around, and all of them require power generation to operate, so it does seem like a significant portion of total electrical generation going forward will go towards sustaining the cryptocurrency system. Add to this the power requirements of the internet, the internet of things, artificial intelligence, robotics, etc., and we can see how much we need a rapid increase in energy production. The question is, how best to meet that need.

  • Bob Greenyer

    Those that control the money will find any excuse to destroy any competition – if they had sensible interest rates in banks, say 12%, then after tax and inflation, there might be some value maintained – the people trying to stop this technology are the people responsible for giving it a reason to be and therefore are responsible for any deleterious effects.

    I have said before, that crypto-currencies are hated by those that wish to wage war – since you can’t just print them they have to be created through a lot of expensive computer power.

    Last time I checked, gold mining wasn’t particularly energy free.

    The REAL problem for the powers that be will be when Crypto currencies are powered by a form of energy that has no environmental cost. Then their arguments will have to rely on “its criminals/terrorists’ when of course, just a little thinking will let you know that most money is taken from citizens and most deaths are perpetrated by governments.

    Over 5 trillion dollars stolen from US citizens present and future pay packets to go and kill millions since 2001. Yet more trillions stolen to line the pockets of bad-bet-bankers, and yet more trillions printed to inflate the assets hey sucked up at the bottom of the market.

    Crypto currencies along with energy research is the solution to the the military industrial corporatism we are all currently being oppressed by.

    • georgehants

      Afternoon Bob, I have very little understanding of bitcoin, can it really help to destroy bankers and remove the parasitic rich?

      • Pekka Janhunen

        No but they have already created new parasites, according to the article.

        I predict that as long as any of the cryptocurrencies seems to increase in value, new ones are spawned, and when the number has grown large enough, they all lose their value. In other words, a cryptocurrency gets is speculative value from artificial scarcity, but when others copy the scheme, the scarcity disappears and with it the speculative value.

        • Omega Z

          Currently, Bitcoin is increasing in value by newbies jumping on the bandwagon. Not unlike the Chinese stock exchange. Also unlike the Chinese stock exchange, there will be nobody to freeze trading and pump in billions to support it when the Bubble bursts. A lot of people are going to get burned and it will have real world percussions. Tho slim, it could even trigger a real world recession.

          • Andreas Moraitis

            I am not sure if there would be a significant impact on worldwide economy, but I fully agree with the rest. As usual, the professionals will eat the amateurs – among the latter probably many ‘digital believers’ who do not know the ins and outs of the game.

          • Omega Z

            Note I said “Slim”

            Tho it is small change in reality, It could act as a trigger causing a panic that can get out of hand. Especially if financial institutions have a stake in it.

          • Albert D. Kallal

            I will state that caution is required. I mean, if you going to meet a friend to loan him say $5000, you would not convert the $5000 to gold to carry around in your pocket. Nor would you convert your money into say Venezuelan dollars (it is deprecating 30% or more per month as the country goes though a spectacular meltdown).

            BitCoin can and does serve a great purpose, but as a speculative currency (and non backed) is thus subject to many of the same issues as currency, and in fact perhaps worse due to lack of regulation. So there is those who wish to speculate in gold, or BitCoin, and there are those that use gold or BitCoin for its intended purpose.

            And yes, this bubble can pop – so while there is tons of hype, and I think this form of exchange of money is going to stay – it not all a happy bed of roses. Caution is required here. I would not put all my eggs in one basket.

            For example, in my other comments I mentioned PayPal. PayPal is more like a bank account then it is like BitCoin. And in fact I don’t put money into my PayPal (but have it connected to my credit card that gets billed for any paypal purchase I make).

            One of the “main” issues is that of the BitCoin exchanges – they have to exchange BitCoin for real money. If these exchanges screw up, or take that money, then in effect your means to convert BitCoin back to your currency/cash can be broken (unless you pulled the BitCoin out into a local wallet). Some exchanges are in theory backed by the same means that protects real bank accounts (FDIC insurance that covers funds in a bank account is an example). So that exchange provider should be insured, or at least a exchange from a country with a good track record in terms of banking and securities (and even in places like the USA, we seen Bernie Madoff and many cases of fraud in regards to stock and securities offerings).

            So there is more threat to BitCoin from “bad” exchanges. And if a country were to try and stop bit coin, they simply could close down the exchange that converts BitCoin into the local currency. If that occurs then that country simply just regulated BitCoin out of existence – and you not be able to convert BitCoin back to your currency. So these “gateway” providers are VERY important.

            And depending on where your BitCoin account is, you may not well be able to get your money back.

            What is “key” and critical to these cryptocurrencies is these exchanges (and when I say exchange, I don’t mean the Chicago exchange, but the company that provides a gateway into the regular banking system that allows conversion of BitCoin to/from real cash/local currency).

            Switzerland for example most regulations view BitCoin as a “asset” as opposed to a security. This is good or bad. The good part is the regulations are FAR less for “assent” accounts vs that of companies offering a securities account (securities = stocks, speculative things, and needs for example in the USA FTC approval etc.).

            Then there are asset accounts in which say the account holds real gold or holds an account on your behalf. You thus for example see late nigh commercials for companies that will hold real gold or something else as a “service” for you. Such companies need and meet far less regulations then a company that issues stocks, or buy/sells stocks/securities on your behalf (and this is because they actually always hold the actual value of your real cash you put into that provider in an account).

            R
            Albert

          • Omega Z

            A recurring theme of Bitcoin is people thinking they will avoid taxes as well as processing fees such as banks and such. I believe they are in for a rude awakening.

            In the U.S., even bartering(goods or services) is both technically and legally taxable and hidden assets abroad are seriously frowned on. Taking out loans regardless of currency will also have very similar costs. It’s all just a continuation of rebelling against the man. If they have an EV or LENR powered vehicle, the may avoid the gas tax, but states are already putting mileage taxes on the books.. The more things change, the more they stay the same.

          • Albert D. Kallal

            Well, it is hard to tax something that you don’t place in a regular bank account. And if you look at places like Argentina that had a currency meltdown, you find a number of places using BitCoin.
            In fact some hotels etc. do this. Since if users pay with a credit card, then get local currency pushed into a local bank account.
            If they accept bitcoin, then the money goes into a BitCoin account. Thus as the currency melts down, then their value is protected. And they can wire this money out to someone that converts the BitCoin into say US dollars.
            If you look at the cost of say silver, and compare it to typical minimum wages in US cities, then that wage in “real” values would now be at about $26 as compared to the 14-15. Remember, if we had a “fixed” number of dollars for our economy, then the value of your bank account would go up substantial in value as the economy grows – and this would occur without interest. So the constant need to raise wages would not be required – since your purchasing power would always be increasing. However, right now because they print money, then what you can buy now is about 1/3 of what that dollar purchased in 1980. So the current system does “rob” people.
            So that Hotel taking BitCoin allows them to get around VERY strict laws on importing foreign currency. And even more interesting is the rise of “free lancers” that have a smartphone, and wads of local cash. They spend their day running around converting BitCoin into local cash (and vice versa). So he is a “mini” walking bank exchange!
            I was reading a article about use of BittCoin in Argentina. A local musician gets paid by a local bar in BitCoin. However, he can’t buy everything he needs, so he calls up a freelance fellow that rides around town on a bicycle (he has a cell phone, and will deliver you cash for BitCoin. Or take local cash and convert it into BitCoins. So with that phone he can transfer money into your account!
            So this fellow rides around like a pizza delivery guy, but it for BitCoin (and you have to email/deposit the BitCoin amount, and he only carries that small amount of cash to you). For larger amounts, he meet you at a secure location or office.

            I mention this article, since EVEN if the government shuts down the official banking gateways for local currency to BitCoin, then entrepreneurs will pop up, and take that business that the banks could have had anyway.

            So the banks either don’t play game with BitCoins, but if they don’t, then this will be MUCH WORSE then places where 3 out of 4 corners are Cash/money mart places that offer money services like wire transfer, and check cashing services. They don’t want to lose this business.
            So the banks are in a bit of pickle. They really don’t want BitCoin, but if they don’t offer services, then some dude riding around the neighborhood on a bicycle will offer that service.
            Most amazing is this technology can bring banking to the VERY poorest people in areas, and the costs of such systems are next to nothing for them to use.
            Regards,
            Albert D. Kallal
            Edmonton, Alberta

        • LarryJ

          It’s true that any number of crypto currencies can be created but Bitcoin is the Coca-Cola of crpto currencies. Into which of the thousands of colas would Warren Buffet put his money and which version of sugar, water and artificial flavour do most people prefer.

          • Albert D. Kallal

            Great observation – I posted before reading this – but yes, this is a “race” like PayPal, or FaceBook, or cola’s in the marketplace.
            +1 for you!
            Regards,
            Albert K

        • Albert D. Kallal

          No, that’s not how this will play out.

          I mean, why is the American dollar so much used as a currency of choice around the world? Well, the reason not a lot different than that of the success of Android as a choice
          for your phone (or iOS).

          The rest of the world was re-building from WWII, and the best currency to use at the time was
          the American dollar, and it remains so today. So it kind of like “windows” for the
          desktop – it make it into that “space” first. Today you can download a great Linux
          desktop system for your computer – and it is free, but most still use windows (because
          everyone else does!!). Just like everyone else using Android os, or American dollars.

          Or coke or Pepsi? Anyone can come out with a new cola – we would not then conclude that the value of Pepsi and Coke is going away anytime soon.

          Take for example internet payment gateways. Kids in their basements were starting such companies, but just because EVERYONE could do so, what actually occurred?

          Well, all the above “choices” involve what is called “networking factor”. And I don’t mean computer networks, but networking factor in terms of adopter rates. So like windows, the
          American dollar, Coke/Pepsi, we usually find one or two “winners” in the
          marketplace.

          So back to the internet payment gateway company? Who won this war (everyone reading this knows the answer and can guess this answer?)

          wait . . . (make your guess)

          wait . . .

          wait ….

          Why of course it was PayPal!
          (did you all guess correct??).

          And THEN eBay purchased PayPal. That quite much sealed the deal for PayPal to win.

          So now when you shop on-line you find Visa, Master card and PayPal (and by the way, we see the two credit card company’s also an example of winners – why not 20 or 50 credit
          card companies? Because people choose the one with the most ease of use and the
          most people accepting that credit card, or windows OS, or American dollar for
          trading.

          So we not going to see 20 or 40 bit coin companies win (but like video rental stores, there must
          have been 30 in town, then block buster came alone and there was 2 or 3 vendors
          lift in the marketplace).

          So in the cryptocurrency race, the winner we see will be VERY much like PayPal.

          Given that BitCoin at JC Penny, the Gap, subway, Virgin airlines and many more, then they are
          looking like the front runner right now.

          So we not see 40 brands of Cola any more than 40 brands of PayPal, or 40 credit card companies – we see a winner come out on top. And in ALL OF the above examples are “great”
          examples of that “networking” effect.

          More people adopting = more adopting = winner in marketplace.

          We don’t see 5 different Facebooks. Whatever happened to Friendster?

          So the market for such “things” rare results in 40 winners – you see 1 or 2.

          Regards,
          Albert D. Kallal
          Edmonton, Alberta Canada

      • Albert D. Kallal

        Well, it “can”, but like anything else, efforts will be made to control this new form of currency.

        So just like “many” governments around the world (especially the left ones oppressing conservative
        ideas like owing property) are VERY much seeking to restrict free speech on the
        internet, we see the same for BitCoin – they also hate this.

        Both governments, and the banks HATE BitCoin.

        Governments? –
        well, they can’t seize your bitcoins (actually, an account they can but if you
        pull the money out into a wallet, then no, they can’t grab it anymore then say
        grabbing cash from your real wallet). You can then pop your SD card into say
        a camera, and they would have to find that SD card to get that money.

        Banks? – Well, I can electronic wire money to someone half way around the world in Australia –
        and I don’t’ have to the use the banks, banking system or even pay their fees. This
        is a huge issue in regards to tracking funds that zoom around the world outside
        of the banking system, and the electronic funds transfer system. So banks loosing
        control over the ability to collect fees for you using your money? Yes, this is a great
        aspect of BitCoin.

        As noted by severalhere, the Chicago exchange is going to start trading bitcoins. This means that
        the financial industry has “woke up” and willing to spend large sums of money
        to grab, or gain control of BitCoin.

        What the Chicago exchange does is allow those in the financial industry (those with money) to control the value of BitCoin, but that not the same thing as tracking or controlling the bitcoin
        system itself.
        Since that “act” of Bitcoins futures being traded on the Chicago
        exchange will NOT by magic give banks or the governments control of this currency,
        and NOR will it allow them to track it with any degrees of ease, then I not worried in
        this regards (but the exchange will introduce the ability to manipulate the price of
        BitCoin, and that is bad).

        So above will not change the fact that you can NOW use BitCoin say at subway (subs, sandwiches),
        or Expedia (travel, hotels, plane tickets), or with Virgin Airlines (and the virgin
        group also includes their cell phone division – so you can pay your cell phone bill
        if you on Virgin phones).

        So yes, this is much like what Napster did to the music industry – it is a significant change
        and threat to the banking system.

        It also a threat to most socialist governments– since they seek more and more power to grab money from peoples bank accounts, if not outright take these accounts (such as we saw in
        Greece – they not only restricted your ability to take out money, but ALSO implemented a one time national emergency fee in which they simply took a % amount from EVERY account in the country). In fact what occurred in Greece was the VERY day that BitCoins and crypto currency started to be taken seriously since everyone realized that governments simply grabbing money from your bank account is a rather scary occurrence.

        Regards,
        Albert D. Kallal
        Edmonton, Alberta Canada

    • Eyedoc

      Nice assessment Bob, so true

    • Fernando Almeida

      maybe researchers can find in crypto currencys a way to be finnanced

      • Bob Greenyer

        It has been something we have been considering for 8 months

    • TVulgaris

      We REALLY need to be careful using the “F” word, Bob, (“Free”)- it tends to make us lazy. We’ll never get to “no environmental cost” energy use- all we can do is minimize, and THAT’S not free, and usually extremely difficult- we need to cultivate a consciousness of willingness for positive action. So, maybe we need to come up with the kind of solutions that grant equal advantage to anyone with a smartphone (globally, it’s got to be getting near 50%) as those with access to an entire server farm.

      I haven’t checked Steemit this week yet, let’s see what that can do…

  • Gerard McEk

    I wasn’t aware of this. It should pose some serious questions in how this can be maintained. The enormous amount of energy must be payed as the computer and networks services are. That is now payed by the numerous numbers of new people that buy these coins.
    At the moment that growth starts to slow-down people will sell them and you will see an equal steep (if not steeper) slope downward. These millions of transactions causing this instantaious selling must be payed (energy + IT) and that will have to be done by a much leaner organization. You must hope they have reserved money for that, otherwise they go bankrupt.
    So please secure at least your initial money in normal currency (or with a huge profit) now, while you still can.

    • Andreas Moraitis

      “So please secure at least your initial money in normal currency”

      Always a good idea. On Sunday, trading of bitcoin futures will commence at CBOE (CME will follow a few days later). I would not be surprised to see some spectacular price movements in the upcoming weeks.

  • Instead of Proof of Work (CPU/GPU power) which takes a lot of energy, there are superior methods to prove a digital currency / smart contract transaction. These requires a minimal amount of energy usage – example PoS (Proof of Stake)

    Bitcoin which is dominating on Market Capitalisation relies on PoW …. there will probably be a big growing market for a few more years for CPU/GPU mining – a veritable cash machine for energy producers who can have the lowest possible energy costs for electricity and cooling.

    • Barbierir

      PoS is interesting but still not as well proven as PoW, there is ongoing research that could give results in future. The economics are also very different, with PoW you need continued investment and research to stay on top, capital alone can’t help if you leave it sitting idle. With PoS you only need to invest once and your share of blocks generation is forever estabilished.

    • Andre Blum

      I came here to tell this. Blockchain technology is built on a consensus mechanism. One way or another, enough people need to put their blessing behind a transaction to make it accepted in the chain. Computing power is just one implementation of that concept. Proof of Stake (where people put a financial stake on the validity of the block) is another. The guy behind bittorrent recently published a whitepaper suggesting proof of space, where the amount of disk space couples to a block is providing the consensus.

  • Barbierir

    The concerns for energy consumption of Bitcoin mining should be weighted against the consumption of other economic sectors that will be replaced by it and the overall benefits of this innovations. It’s far from being a waste. https://blog.bitcoin.org.hk/bitcoin-mining-and-energy-consumption-4526d4b56186

  • sam
  • Harvey Hamel

    Has anyone really looked at the source of all these energy consumption claims? The Ars Technica article states that the methodology for “estimating” this power consumption comes from https://digiconomist.net/bitcoin-energy-consumption. When you look at the chart “How does it work?” in this article, it is absolutely loaded with the words “estimate”, and “assumes”. There is no real hard data on which these estimates or assumptions were based. The two primary assumptions are that miners spend 60% of their revenue on energy consumption????…and further that “for every 5 cents they spend on operational costs, one kilowatt-hour (kWh) was consumed”. The article also has a footnote: “Source:http://bitcoinenergyconsumption.com/” I have not been able to find this website in my searches. I’m not saying that the estimates in these articles aren’t valid, but I would like to see more real data before I panic.

  • Anon2012_2014

    Bitcoin is both a black marketeer’s, kidnapper’s and speculator’s dream. For everyone else it is a nightmare.

    Do the math — 31e12 watts/365/24 = 3.5 GW 24×7. Most of it comes from Chinese coal fired electric plans. This is unconscionable.

    As Bob below points out, if the central banks would stop surreptitiously robbing from the people by printing money (which lowers interest rates on fiat money to zero), this finite supply money would not be necessary. Because the central banks are themselves run by political systems that have bad governance and because the criminal element doesn’t care who they kill as long as they make money, we are left with Bitcoin. Tragedy.

    • Alain Samoun

      Hum… And where are you getting the energy to create hydrogen by electrolysis?

      • Anon2012_2014

        Solar, wind, water/dam hydro, nuclear, or LENR ideally. Until we get the atmospheric/oceanic CO2 sink back to a level that won’t heat the planet or threaten the sea life we need to cut back on the carbon deposited by burning coal, petroleum, and natural gas (in that order as is the percentage of carbon to hydrogen in the fuel). The planetary ecosystem is at long term risk due to the extremely large amounts of CO2 that have been dumped into these systems in the past century. We are essentially turning the planet back towards its state before the emergence of photosynthesis. This is bad for us animals.

    • Bitcoin isn’t really interesting for criminals because it is NOT anonymous, but only synonymous.
      You can track the cashflow.

      There are other crypto currencies which are developed especially to be anonymous like monero, zcash or xvg (verge).

      • Anon2012_2014

        If someone gives you a hash to some bitcoins isn’t that hash anonymous?

        Then you can go to a friendly bitcoin exchange in say Venezuela, China, Chechnya, or Iran (any place where the banks don’t report back to the FBI/Interpol), deposit the coin hash, and get someone to anonymously trade with you. Could even be a paper transaction with some other black marketeer at a Hookah/coffee shop. They then take your hash and get the non-reporting exchange to give you say Rubles, Rials, or CNY; and no one knows the better. You can also hold onto your coin hash in your private vault for generations. Step me though why using Moneros or Zcash is better for this black marketeer or kidnapper?

        Are you stating that the bitcoin hash, although valid, is like a marked $100 bill, and therefore when it shows up at a crypto exchange in a non-reporting country, somehow the FBI/Interpol can track the transaction back to the criminal or at least the black marketeer that provided the primary criminal liquidity??

        I am worried about the social cost of giving sociopathic criminals a way to earn money.

  • Jerry Soloman

    Who is buying bitcoin – ME, and others I know, i bought more two weeks ago 20k 2.3 coins. reason for the buy
    is to buy into other ICOs

    trading BitCoin starts on US markets next week:

    http://www.nasdaq.com/article/this-is-when-you-can-start-trading-bitcoin-futures-cm885310

  • Alain Samoun

    “Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day.”
    If I believe this,my pack of chewing gum paid in bitcoin is using a lot of energy! I don’t think that it is sustainable..((.-:)

    • Albert D. Kallal

      No, that is not quite right. The creating of the bitcoin, and the wallets that result take huge amounts of computers + electricity. General transactions do not that much power at all.

      Right now, Subway (sandwiches), Expedia (travel, hotels, car rentals) accepts bit coin.

      Virgin Galactic – Richard Branson’s company that includes Virgin Mobile and Virgin Airline.

      So does Gap, Jc-Penney, and gamestop (but they only allow purchase of gift cards, which you then use like a credit card at their stores – but it still a means to convert BitCoins into hard goods).

      Those transactions occur just as fast when you pay with your bank card, or whatever.

      As I stated, as more and more places accept BitCoin, then the value and use will take off. This is kind of like Netflix when it was worth a few dollars – now “billions”.

      This is a big deal – and it one of the next “big” things.
      So right now we just coming out of the Apple garage – and only “funny” people use computers – now today, everyone does. Of course right after hobby folks came “consumers” that discovered computers. So BitCoin has not yet experienced that MASSIVE 3rd wave where will tons of millionaires will be made.
      Regards,
      Albert D. Kallal
      Edmonton, Alberta Canada

      • Albert D. Kallal

        I going to follow up here, because this issue can be confusing.

        What would happen if I told you the electric cost to read THIS message is 50,000 watts? You would say, wow, how on earth can the internet scale to allow people to read just MY post at ECW?

        Well, in fact the cost is 50,000+ watts.

        Assume your computer draws 50 watts (that’s about a laptop – perhaps a bit less, but then a desktop computer a bit more). Lets go with 50 watts. Ok, that sounds not much, is it?

        Well if 1000 people (a 1000 computers) come here to read this post each of their computers are drawing 50 watts, and thus the total power draw to read this simpy stupid post of mine is in fact 50,000 watts of power being drawed to read this message.

        and if you look at some you-tube videos, they have 20 million views – want to start adding up the power draw? – it is MASSIVE!!!

        So yes, in theory the draw of power for a bitcoin transaction is high, but it spread over the computer network. The scaling out of the internet’s ability that allows “many” to read this post is still a 50,000 watt power draw – and that is RATHER amazing!
        However it is spread out across the internet, then it not a huge issue or problem.

        So yes, if you add up power requirements for bitcoin, it is rather huge, but it similar in fashion to people simply browsing to a web site – each computer that hits a web site is drawing about 50 watts of power.
        So for a popular web site that gets 1 million hits, then you had a cost of 50 million whopping watts of power draw! In fact that power draw is 50 times the typical power output of a 1mw nuclear power plant.

        Kind of boggles the mind to think how much power is used to read this silly post of mine!!
        I sincerely hope the power you used to read this post of mine was worth the electric cost!!

        Regards,
        Albert D. Kallal
        Edmonton, Alberta Canada

        • HS61AF91

          Many thanks for that perspective.

  • HS61AF91

    ” … the aggregate computing power of the bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined. … ” that’s one heck of a lot of computational power. How does a human brain compare? I’d really like to learn. And then contemplate what one does with all that computational prowess, once the luster of bitcoin fades away.

  • Adam Lepczak

    Its a scam. The crytos are not really used for anything – other that to provide payments for criminal activity and money laundering. The success of the coin is very much based around its price in the USD.
    Someone wants to buy my “pet rock” currency? The exchange is 1 PRX to $1000.00; but with PRX at least you”ll have something to hold on to, versus make believe.
    While we are at it I also have 100 acres of prime land to sell in “2nd life” game… Any takers?

    • Albert D. Kallal

      Well, it not really any different than most currencies. The value of a currency is really ONLY what
      you can use that currency for. So if you country does not produce anything,
      then the currency they make will be of little value.

      So the “real” value say of a US dollar is the fact that they have a productive economy, and thus
      you can buy a computer, a plane, or a tractor to plow fields and make money.

      So the basic question is what is the value of bitcoin, and WHY would you use it? If the
      currency has no intrinsic value, then it most certainly like some tulip bubble.

      So if the rest of the world dumped the US dollar, or refused its value, then yes, the dollar
      would have no value. However, as noted as long as the country has an active economy
      producing things, then the currency can be used for that exchange of labor and
      value – then the currency still has value. It only until such time that the “country”
      or backing of that currency has no value then does the currency have no value.

      Could we use round rocks as a currency? Sure, you can. However a currency needs specific attributes
      to be used as an exchange system of labor and value. If you can easy find round
      rocks laying around, then that’s not a good currency choice. You can’t find gold laying around – so it is good!

      Bitcoin “fits” these criteria rather well. First up, is there is a limited number to be issued
      (I believe as I write this, about 17 million coins have been issued, but the limit
      is 21 million). So they not going to make more of these coins – they are limited.

      So for a currency to be valuable, it needs security in the sense that you can’t just go to some
      river and pick up some round rocks. And while the famous “tulip” bubble reached a
      point in which one tulip could buy a WHOLE house, the problem was lack of permanent,
      and lack of division. (You can exchange a dollar for 4 quarters, or 20
      nickels). So that is the division part – you need this part!
      And tulips were not permanent (too fragile – who’s going to sell their house and exchange it for a tulip that can
      rot, decay, and easily be destroyed. So tulips failed on both “permanent” and could not be divided.

      Bitcoin is as big as a revolution as what Napster was to the music industry. Eventually the Apple
      music model arose and that model kept both the music industry happy, and those
      wanting and willing to pay for portable music.

      Bitcoin is a revolution, and it has VALUE for several reasons. Perhaps the greatest value is I can put
      100,000 on a SD card, pop into my camera, and then jump on a plane and fly
      anywhere in the world – and no one can take, or touch that money. In the past
      to transport such wealth you had to use diamonds, gold (too bulky), or perhaps paintings
      of great value.

      And better then transport, is I can send someone in Australia $5000 for near zero cost, and
      again not be subject to the internal wire transfer system (and the fees to
      support that system). And this includes the tax man too.

      Bitcoin is lacking ONE significant aspect of a currency right now, and that is EASE of exchange. I
      can’t walk into a store, or can’t go shopping on eBay or Amazon with bitcoins.
      However, if this occurs, then the current price of Bitcoin will seem low – very
      low! And we seeing movement in that direction. So your payment gateway used to
      take your debut/bank card, credit card when you buy lunch – if that gateway
      allows use of BitCoin then that will be the REAL day that BitCoin hits prime
      time. That will be the “magic” point for BitCoin.

      For example, if a country has a currency meltdown, and BitCoin becomes “more” common, then some
      counties will start using BitCoin for such transactions. And yes, this includes
      a HUGE crime aspect. I mean, you can transfer large sums to an arms dealer and
      the government can’t track or grab or even know about the transfer? Yes, that
      alone has HUGE value.

      However, it might be your country wants to sell wheat or
      some tractors – but with a country meltdown, then MASSIVE bank restrictions
      occur (look what occurred in Greece – you could only take out small sums per
      day – that means you can’t buy a bunch of turkeys for your restaurant for the upcoming
      holiday – and that screws your business big time). This again means that BitCoin would
      easy see 100,000+ per coin no problem.

      The key concept here is “intrinsic” value. As I stated, any paper money is not worth the paper it’s
      printed on UNLESS it can be used for exchange of value. (And cannot be easily duplicated).

      BitCoin is a threat to the established banking system.

      So as a currency, BitCoin has all the correct features of a currency, except that “ease” of
      exchange for goods, or conversion into a local currency for cash. However,
      everyday this “last” bridge for BitCoin to cross is getting better and better.

      So while BitCoin is simply another form of money, it has MANY features that make it far superiors
      to cash (portability, and division ability). A sack of 500 1000 dollar bills is
      great because of the “amount” of value fits in such a small sack.

      However, you can’t buy a cup of coffee until you get “change” for smaller amounts (no coffee shop,
      will take that large bill). BitCoin can be divided up to as many decimal points
      as you need or want at the given point in time.

      The crazy jumps ($4000 in one day) recently is simply due to some traders wanting to START
      trading BitCoin futures on the Chicago exchange. (This is not a good idea by
      the way).

      And I did not think that each transaction cost is that high in terms of electric – the mining and introduction
      of each coin is MOST certainly the result of stupid amounts of computing power.

      The only real threat to BitCoin would be breaking of the encrypting. This would amount to
      someone finding a bunch of round rocks in the river (if round rocks is your currency),
      or someone printing paper money with a printing press. Note that the “recent”
      breach of bit coin was not the encryption, but computers being hacked and the coins
      stolen (this is thus not so bad, since it amounts to someone stealing some gold
      bars from that company).

      So BitCoin does solve problems, and has “many” great aspects of what a currency requires.
      Because of this issue, cryptocurrency is here to stay.

      However, a bunch of speculators on the Chicago exchange will likely increase volatility of the currency
      – so while starting to trade BitCoin on the exchange is good news in terms of “credibility”
      of BitCoin, it going to increase speculation and volatility of BitCoin.

      And to trade coins on the exchange, they have to BUY them first – that’s why we seen this STUPID rise in the last month or so.

      It also depends how much volume the Chicago exchange can get their hands on. If they buy large
      amounts of the coin, then that exchange will control significant amounts of the
      BitCoin market, and you be forced to go that exchange to get your hands on
      coins, just like you do now for sugar, oranges, pork belly, or oil.

      Regards,
      Albert D. Kallal
      Edmonton, Alberta Canada

    • Eyedoc

      Speaking of energy use, I find it quite interesting that the IRS has been devoting a LOT of energy defining how the BC will be taxed. Quite the reaction to a worthless fiction , huh ??

      • Omega Z

        In the U.S., it is already taxable. Technically and legally, even bartering is taxable whether that be goods or services. Contrary to what some think, Bitcoin is also traceable. Electronic trails are as good as paper trails if only a little harder. Just as the U.S. has went after undeclared overseas assets, it can also do with bitcoin.

        The hardest thing to track is cash in hand. Which is why the Government is gradually pushing everything towards a non cash society. Even that 50 cent candy bar will eventually not be purchased with cash.

        I wonder if Bitcoin isn’t actually the Government at work. Developing a Crypto system on the very cheap. All costs are pushed onto the public.

        • Eyedoc

          At what rate is it taxed? As earnings? Is it considered a commodity , a capital asset , or a currency, or something else ?

          • Omega Z

            “At what rate is it taxed?”

            There are several ways it can be taxed dependent on circumstances.
            For instance, If I pay you with Bitcoin for labor/services, it would be taxed as wages. It may also be taxed as an investment of which the rate can vary by how long you have it in possession.

            Example as an investment- My girlfriend collects dolls. She had 1 that was valued & sold for $150K. Had she sold it the year she came into possession, Tax rate was 30%. Having had it longer then a year it was taxed at 15%.

            Ultimately, it will be taxed just as any other currency. The rate will be determined according to the taxing body(IRS) as to how it was used.

          • Eyedoc

            Is currency taxed ?? …..if I have a Euro100 bill that I got last year, that is now worth $119USD, and I use it to buy groceries, do I pay a IRS tax on that? For that matter , a $100 bill is worth less and less every year, can I take a loss on that, if I use it to buy a stronger currency ? ( don’t really expect answers, just spouting off)

  • Albert D. Kallal

    Agree – and the Chicago exchange does not have a bunch of pigs running around when they trade pork belly futures either.

    • Alan DeAngelis

      Would this make gold more precious?

  • Jerry Soloman

    This is what BitCoin is about:

    Bitcoin is financing the BlockChain Technology a new Banking System – Transaction System – New way to transfer money in effect.

    Bitcoin is how you BUY into new ICOs = initial Coin Offering or companies developing new Blockchain technology.

    ** Thousands ** of new companies are being financed through ICOs, some will make it others will not.

    This is where you can start using any bank in the USA to buy Coins – https://www.coinbase.com/signin

    here is an example of ICOs projects – https://www.coinsilium.com/portfolio-projects/

    • For our interests IOTA is most interesting.

  • Bob Greenyer

    Getting things in perspective.

    https://www.bloomberg.com/view/articles/2017-12-07/bitcoin-is-greener-than-its-critics-think

    “Bitcoin miners will consume an estimated 8.27 terawatt-hours per year.”

    “Global production of cash and coins consumes an estimated 11 terawatt-hours per year, while gold mining burns the equivalent of 132 terawatt-hours.”

    • Omega Z

      To put things in to perspective, Cash, coins and gold are all physical objects. Gold is actually very instrumental in computers and medical uses aside from just jewelry.

      Bitcoin is just binary digits in the cloud. A vast number of computers (including unknowing hijacked computers of individuals at their expense) are engaged to produce encryption of which only 1 pays off.

      • Bob Greenyer

        Actually, you can make Bitcoin Physical by taking it off-line. This hash / key can be then handed around like a promissory note – say 100000 times before being inputted into a persons wallet. This is as good if not better than ‘cash’

        https://en.bitcoin.it/wiki/Paper_wallet

  • Bob Greenyer

    You can transmute elements to gold. You can just issue more 1s and 0s for the Dollar say – but bitcoin is limited.

    What will kill bitcoin is if the public find out that NSA is Satoshi and they hold 8million BTC. (not saying that is the case).

  • SG

    A few important items to consider:

    1) The present value of Bitcoin is driven based on its utility as a confiscation-resistant store of value. Similar to gold, but which can be more easily transported and harder to counterfeit. Above-ground gold is worth nearly $8 trillion. The current market cap of Bitcoin is “only” about $300 billion. The long-term trajectory of the price of one Bitcoin is up. You can own a fraction of a Bitcoin. Bitcoin does not need to necessarily succeed as a currency/medium of exchange to be useful and succeed. In other words, even if businesses don’t adopt Bitcoin as a means of payment, Bitcoin will still have tremendous value.

    2) The Bitcoin network today is primarily powered by clean hydro power. Most large Bitcoin mines are situated right next to a hydro power station. Soon, large solar deployments will be made to power industrial Bitcoin mines. Bitcoin will also be the main driver behind LENR adoption. I predict that the first major LENR power installation will be for the purposes of powering an industrial Bitcoin mine.

    3) Bitcoin is not the only game in the cryptocurrency town. For example, Ethereum is poised to capture a significant share of the cryptocurrency market space. While Ethereum presently uses an energy-intensive proof-of-work (POW) algorithm to secure the network in a similar fashion to Bitcoin, this is set to change in 2018. Ethereum is transitioning to a proof-of-state (POS) consensus algorithm, which is far less energy-intensive.

  • Albert D. Kallal

    And in my example of that Hotel accepting BitCoin, or even now SubWay, in most cases the people using BitCoin are being forced to due to local currency regulations that would cause their business to shut down. Greece and Argentina are two examples that REALLY increased BitCoin use. The case in Greece was especially bad, since the government “simply” decree and decided to take a % amount out of every existing bank account. Governments always could do this, but they never did for fear of their people THEN rejecting the idea of a bank account that the government simply could then come along and gab a chunk out of that account due to some national emergency.
    So Argentina forcing people to the hands of BitCoin – this is not being done to avoid taxes, and I don’t think it pushes this tax evasion much more then any business that accepts cash. However, I willing to bet this is causing large amounts of people to avoid the tax man.
    The problem is if that cash is losing value, then that’s more of a push then advoiding the taxes issue. If you take a country like Italy, then advoiding taxes is quite much a way of life and they not having a currency melt down. However, I suspect BitCoin would and should be popular in Italy due to their business culture that avoids taxes.
    However, this cryptocurrency “system” really is amazing due to no centralized control by the given government – and that is a real threat to such governments. Like water and food, banking is really a basic requirement for any society, and the fees and services are major out of control.
    This is why you see on 3 out of 4 corners in poor districts now have some kind of “check cashing” store or some kind of money mart – these people are willing to pay rather high services to get a check cashed or a payday loan since their regular bank fees have increased so much. And there less hassle to use that place over regular banks!! Some states have even introduced regulations to force regular banks to cash government checks – even for those without a bank account (this was to stem the tide of those money mart check cashing stores). However, now days, near all those government assistance checks are electronic deposited, so that’s cut into those money mart type of retail stores.
    I think the cost issue is the real revolution part. I mean, email is what we call a “killer” application – everyone uses it. The alternative is to print a letter, place it into a envelope, and then place a stamp on that letter. And then a massive post office system takes over, and a human delivers that letter. You can email for less then a penny – and this new banking model has much the same effect – the old postman, or old bank really cannot compete with this new business model.
    R
    Albert

  • SG

    Even if the cost of energy was near to zero (as LENR might some day bring about), Bitcoin will maintain a huge value, because the utility of Bitcoin is not directly tied to the cost of energy. Bitcoin has value because 1) it enjoys a network effect with demand for a scarce digital asset (i.e., some say that cryptocurrencies have infinite supply, but those who make that claim fail to understand that there is only one Bitcoin, and one Bitcoin network) and 2) it presently serves as a confiscation-resistant, easily transportable, non-counterfeitable store of value.

  • wpj

    Currently 16.7m Bitcoins.

    Maximum allowed 21m.

    Not long before no energy is consumed.

    • Albert D. Kallal

      Not true. After all coins have been created, then they are going to give miners a fee for transaction processing.

      I believe the fee will be up to 1 cent for transactions they process. So they still be able to make good money with their mining equipment. So this means a transaction fee will appear, but it going to be so small that few will care.

      So this issue is covered – and given this is a decentralized system, then again this means no central bank system exists to keep this system going.

      Regards
      Albert D. Kallal
      Edmonton, Alberta Canada

  • Albert D. Kallal

    Unfortantly, currencies today are not backed by gold. So fiat currency is always devaluing, and more of it is being printed all the time. There is no set conversion rate between paper money and say gold.
    However, I would 100% agree if the country issuing the currency is producing useful things, then that is in fact a backing of paper money.
    However, because BitCoin is not backed by a government like that fiat paper money is, then I would certainly accept that such a currency is subject to more fluctuations and speculation.
    R
    Albert

  • Albert D. Kallal

    Well, while I stated the above, the bit coin farms are huge, and massive and suck huge amounts of energy. So some of the points about the processing are in fact true and ARE an issue.

    Some of these “farms” are really large, and they are full of rows and rows of computers. So I don’t want to suggest that power requirements of cryptocurrency is to be ignored. These warnings and issues about power consumption ARE an real issue.
    However, due to the disturbed nature of the internet, then I don’t think the problem is as large as many fear.
    R
    Albert

  • Albert D. Kallal

    It is more volatile, but not in the “same” regards. So a limited number of coins exist to be issued. (a limit of 21 million – about 17 million have been issued now). So it is different in the sense that a limited number of “units” (coins) will be issued. As a result, it not subject to devaluation due to more of them being printed. (at least once all been issued).

    However while this fact means that you not watering down the currency like paper money does not mean that speculation can introduce volatility.
    So I would concede that more volatility exists, but it still unlike most paper currency that is always being devaluated due to more dollars being printed.
    R
    Albert

    • Omega Z

      They have a license to create more bitcoin through a backdoor. Currently devisable to 8 decimal points(0.00000001), but can be increased if needed by consensus. Huh. Just like printing money… Note 1000 people hold 40% of Bitcoin and the U.S. Government is among the top 10 holders of bitcoin.

      • Albert D. Kallal

        The division issue is not like printing money. Because a bitcoin is now about $17,000, then to buy coffee, you use quite a few decimal points. Changing a dollar into 20 nickels is not a currency devaluation. Now in classic currency meltdown, because the government is printing so much money, they often come out with new bills with “many” more zeros, or even “decree” that some $100 bill can be exchanged for say 10x a number of bills.

        So “division” of a currency into smaller units is not creating more currency. Saying a particular type of bill can be exchanged for “more” units is most certainty a form of devaluation or printing/creating more currency.

        So in the case of BitCoin, the “more” decimals provision is not a “act” of creating more BitCoin, but only allowing more smaller units of a given amount – that is not a devaluation or creating more units of a given amount, but only allowing more smaller units of a given amount – hence not a devaluation.

        Regards,
        Albert D. Kallal
        Edmonton, Alberta Canada

  • Albert D. Kallal

    Yes, accounts etc. can be ordered to be taken like most accounts. I mean, if you transfer money from a bank account, then a trail does exist. (follow the money is the rule here).

    However, if you transfer a regular bank account into regular cash, then the account can’t be grabbed (or if it is, then no money going to be in that account). If you are ordered to fork over your cash then you of course must comply (assuming you still have the cash).

    And in some drug raid occurring, then they OFTEN find wads of cash.

    So you have to “define” confiscation here. In many crime cases, gold, cash, cars, bank accounts are confiscated.

    And thus the same applies to bitcoin. If you have some on-line account, they are subject to this process like anything else. However, it is often FAR more easy to grab or freeze a bank account then it is to take gold or cash. And it far more easy to grab a regular account then it is a bitcoin account.

    So like gold or cash, or a bitcoin wallet, such a value store is not some bank account that can be confiscated or frozen with ease. As noted, in Greece they made a national decree that the government will take a “one time” % chop out of each and every bank account to pay debts.

    Such a widespread confiscation is not possible if you have gold, cash, or a bitcoin wallet.

    So you can place money into a wallet that is not some actual “account” that can be frozen. So in this regards, such a value store becomes as hard to confiscate as gold or cash. However a huge pile of cash (or gold) can’t be placed on your SD card as you jump on a plane.

    So since you have the ability to have some digital value store, and have one without a on-line account, then they have to find your SD card, or even a piece of paper that you printed the crypto keys on.

    So everything is able to be confiscated these days. And like cars, boats etc. that are confiscated and put up for auction, the very same process has occurred for bitcoin. So those auctions that sell things like cars, gold or other items confiscated most certainly include bitcoins they confiscated also.

    However, such a digital money store does not require a actual account at a bank. This is thus a currency owned and operated by the people, and for the people. No government created this currency, and no bank issued it either. So this is a people currency, and not one issued by government or some central bank system.

    So this is something that can’t be frozen like a regular bank account. And given the portability of such a store, one can well see how superior such a value store is to piles of cash, or gold.

    You get all the use and benefits of electronic banking, but without the ability of some means for someone else to freeze or confiscate that account. You can confiscate gold or cash, but you have to get your hands on that physical money store.

    So in the case of bitcoin, the main difference is how much harder it is to get your hands on a digital store when it not some regulated account at some institution that subject to local laws, including that of freezing or confiscation of such accounts.

    R
    Albert

  • SG

    None of your links demonstrate that Bitcoin has ever been counterfeited. Because Bitcoin has never been counterfeited. That is the primary innovation with Bitcoin: a fix to the double-spend problem and the first scarce digital asset ever created.

    Bitcoin cash is a fork from Bitcoin. Bitcoin cash will have its place in the cryptocurrency ecosystem as a transactional currency, while Bitcoin will remain as a store of value, not unlike gold.

  • Andreas Moraitis

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