Technology: University of New Mexico researchers find Bitcoin mining is environmentally unsustainable
www.eurekalert.orgTaken as a share of the market price, the climate change impacts of mining the digital cryptocurrency Bitcoin is more comparable to the impacts of extracting and refining crude oil than mining gold, according to an analysis published in Scientific Reports by researchers at The University of New Mexico.
The authors suggest that rather than being considered akin to âdigital goldâ, Bitcoin should instead be compared to much more energy-intensive products such as beef, natural gas, and crude oil.
Each coin mined in 2021 caused $11,314 of climate damage, adding to the total global damages that exceeded $12 billion between 2016 and 2021.
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It would be interestibg to see how BTC mining compares to the large data centres of big tech. Thereâs not much reliable data on that.
It would be interesting, but not particularly meaningful. Big tech is producing a service. BTC is producing a bubble.
The bubble is made by humans. I feel that complementary currency systems could have a huge positive impact on local and regional societies (as it was often the case in history), and the blockchain technology could help us to get there. The vast majority of crypto projects appear to aim at something else, unfortunately.
The problem with the dominant cryptocurrencies is that they arenât backed by anything. For all of the issues with the US dollar, it is backed by a strong central bank that keeps the currency extremely dependable and a gigantic economy. Thus yes, I see crypto as being best as a complementary system rather than a standalone system.
I respectfully disagree with the notion of a âstrongâ central bank. The vast majority of the total money supply (~90%) is created by commercial banks by lending money to companies and individuals. Central banks can influence the total amount lent by reserve ratio requirements, but in our fractional reserve banking system where commercial banks hold only a small fraction of their deposits in reserves, each commercial bank loan creates about 10 times more money than its initial volume. This is just book money literally created out of thin air, it âexistsâ only as the sum of agreements between the commercial banks and their debitors rather than as notes and coins, and the central bank is by no means involved in this process.
So donât get me wrong, I donât say we should get rid of fiat money. I just argue that we need much more complementary currency systems that we have now. Whether or not these systems are blockchain-based is a different question altogether (that doesnât really matter imo, although I consider blockchain a good technology for this). Communities should be free to create new means of exchange. Each of these new systems will have their own drawbacks, too. So let different systems compete with each other.
The US dollar is a Ponzi scheme. Blockchain allows transfers without the need of central banks (less costs, bureaucracy). Most cryptocurrencies are virtually deflationary, so they hold their value well, like gold. âBad money drives out goodâ.
The key word youâre missing here is âThe full faith and credit of the United Statesâ. As in, there is a central bank sitting there with a bunch of levers where its #1 purpose is to keep the dollar stable. That bank is, in turn, backed by the taxation powers of the US government over the vast US economy. Every factory, every worker, every office. And theyâve kept the dollar remarkably stable for the past almost one hundred years. Meanwhile BTCâs value is governed solely on the hopes and dreams of people buying into it. If that ever falters, there will be nothing to stop BTC from sliding into oblivion.
If they want to keep it stable, why do they print lots of money, which creates a huge inflation? Itâs fake money.
Yeah, $660 from 1900 have a relative inflated worth of $24,013.86 as of today. Remarkably stable!
Just like the Denarius. Eventually all fiat currencies fail.
Well, it has banks from all over the world, countries, individuals, etc. using it, so youâre wrong. Not that I like Bitcoin, I prefer Monero.
Iâd be happy if Bitcoin fails, and Monero and other better cryptocurrencies do well.
They donât, and there isnât huge inflation. A nice, steady, low inflation encourages people not to hold onto currency for investment purposes. Currency is for moving goods and services within the economy, not as an investment in itself. Thatâs why deflation is such a drag on an economy. People start holding onto their money instead of either using it or investing it, thereby putting it to work.
First, the Denarius lasted for half a millennia. Not too shabby. Second, it was only because of mismanagement that it failed. Witness the oldest currency, Britainâs pound sterling, which has been in continuous use since 600 AD. We canât tell what the future of the US dollar will bring, but its success will likely be tied to the US economy as a whole.
Theyâre tentatively dipping their toes in the water, and for the most part not holding onto it as a dependable store of value. There are no economies based on a cryptocurrency. You canât go out and buy a car. People donât typically get paid. Itâs just too volatile.
Okay, then what are they backed by? Nothing, so itâs too volatile to use as a dependable store of value. Any currency without a strong backing will be susceptible to fluctuating at the whims of buyers.
Not huge? âThey observed that in November 2021 inflation for durable goods was 14.9%, compared to 10.7% for consumable goods and just 3.8% for services in the United Statesâ. There is even a Wikipedia article.
Then it wonât have a bright future.
Of course not, âBad money drives out goodâ.
Math, people using it, value it provides (for example, with Monero I can buy weapons without revealing my identity, transfer money between to and from sanctioned countries, move money online without paying taxesâŚ), its scarcity. Personally, I trust bitcoin more than I trust the government #shorts". Also gold and silver are a good store of value. But, of course, there are many bullshit cryptocurrencies that donât provide any significant value.
First, thatâs likely annualized, so itâs not 14.9%, 10.7%, and 3.6% over the course of just one month. Itâs also way better than how Bitcoin has fared, having lost 50% of its value against the dollar between July 6 and 18 alone. In total, thatâs a long slide from 64k USD on November 12, 2021 to 18k USD today. Monero shows no signs of being different.
Despite what this echo chamber is telling you, the US is unlikely to go anywhere anytime soon. A US$21 trillion economy doesnât disappear overnight, even if it does have some bumpy spots ahead.
Could you explain the relevance? Neither crypto nor fiat currency rely on the currency being made of a commodity metal.
This is the problem. It is based on a breath of wind. No one backs it, no one attempts to maintain it. Itâs based entirely on feelings. If people feel less than confident that the currency will maintain value, POP, the bubble bursts, and no more value.
Ask yourself this. The Fed is tasked with keeping the dollar stable and dependable. Who is looking out for bitcoin users? For Monero users? Who is trying to keep your retirement savings from being effectively worthless? No one. Then compare that to the dollar. Put your retirement money into a Vanguard fund over the course of a few decades and it will grow dependably. That man can talk a big game about Wall Street conspiracies, but he really has no idea what heâs doing.
People keep gold and crypto (âgood moneyâ), because they maintain their value, and people spend euros, dollar, etc. (âbad moneyâ), because they keep losing value. But crypto has another advantage, you can transfer money very easily without a banking system, without sanctions from US freezing your money, like it happened with to Russian people keeping money âsafeâ in a bank account.
You can more easily store a simple crypto wallet that doesnât take as much space as gold.
Okay, but under the good money/bad money hypothesis, good money maintains its worth from what it is made of, usually commodity metals. Crypto isnât made of anything but an entry on the blockchain, so how can it be good money?
Crypto is a network of computers working together to support a network, transactions, electricity, Internet connections, itâs not simply an entry on a blockchain. Rare metals are mostly valuable because they are scarce. Same with crypto. Of course, if the crypto doesnât provide any value, itâs useless, many cryptos are useless speculative shit, a little part of them provide something valuable. Gold and silver also have some industry uses, but mostly they are and were valuable because they were scarce.
Goldâs value is ultimately a social construction: it is valuable because we all agree it has been and will be in the future. The same with crypto.
Last 5 year Monero growth relative to the dollar: 142.28 USD +48.05 (+50.74%). Of course, if you only focus on the bubbles⌠In short, Monero is becoming more valuable than the dollar⌠Bitcoin (+227.92%) last five years, but I wouldnât bet on Bitcoin. I think Bitcoin is overvalued. I recommend this video to understand why the dollar will lose lots of value in the not so distant future.
OK, you donât get how blockchain works. Miners and servers all around the world maintain the network. The more people use it, the more valuable and resilient it is. The dollar is not backed by any commodity like gold or silver, itâs fiat money.
This is what happened to the Deutsche mark, backed by Germany.
The US Ponzi scheme is not immune to this, specially without oil to back the value of the dollarâŚ
LOL, that man is Robert Kiyosaki has a net worth of $100 million and teaches financial education. You donât get that rich by luck.
Stock marketâs fall has wiped out $3 trillion in retirement savings this year. Those people lost money⌠If they need to retire the money now, theyâve lost money. Also add that loss to the current huge inflation lossâŚ
Cool. Bitcoin also had periods of extreme growth, and it has had times recently where the value collapsed.
No, I know quite well how blockchains work. I know enough to see that itâs not backed by any source of value whatsoever. Commodity-backed currency has its value in the commodity, fiat money has its value in the economy of the issuing country. âThe more people use itâ canât magically form a backing, so it is backed fully on faith. If that faith ever falters, it will collapse.
Ok, you donât get how a Ponzi scheme works.
The mark in the Weimar Republic was fabulously mismanaged. The critical problem was that they issued money to pay massive war debts without a corresponding economy to back it.
Iâm aware of him, and Iâve heard some of his advice. Itâs⌠questionable and his books have been criticized as full of nonsense. As for his net worth, heâs sold 30 million books and Iâm sure does other things. Of course he has bundles of money. Doesnât mean that he has good advice.
Thatâs why you donât judge based on one year. What is important is the trend over decades of investment. At the beginning of the pandemic, the stock market briefly cratered and my retirement account when below the amount I had put in. Then a month later, the market recovered and I had gained again. Also, retirement isnât a one time liquidation where one year could make or break you. You pull retirement money out slowly over the course of your retirement.
If no one trusts the fiat money it has no value, no matter how big the economy. Remember German money before WW2? If nobody believes the currency has value, itâs worthless. Itâs worth a thing because people have faith in the government. If that faith ever falters, it will collapse.
US Dollars are Created by a Debt-Based Pyramid Scheme, Fronted by an Investment-Based Ponzi Scheme With Extra Steps. Is the Fed running a Ponzi scheme?
Well, Iâve read some of them, and they arenât full of nonsense.
If heâs made and kept more money than you, maybe he manages money better than you. Whatâs your net worth? I mean, itâs easy to speakâŚ
Youâre being faithful, man. Markets can take decades to recover, just like it happened to the Japanese market.
COVID money print, Ukraine warâŚ
Thatâs 122 years though!
Exactly. Bitcoin, meanwhile, has been on a roller coaster ride since its inception. If I was trying to write a union labor contract for 5 years out, complete with salary ranges and schedules of raises, it would be nearly impossible.
Big tech is also producing ads
That is a common business model, yes. But BTC is literally just producing entries on a block chain that are of questionable value.
Ads are of questionable value as well
No disagreement from me, but they at least are a revenue model that funds providing a service. Mining BTC is just rewarding people for wasting energy, either theirs or someone elseâs.
Big tech companies route loads of data through their data centers that could either be processed on the end usersâ devices, or that arenât needed at all for the services that help the end users. A comparison between the climate impact of all the big tech data center processing that is done for the sole purpose of the big tech companies and other factors relevant to climate would be both interesting and meaningful.
Edit: Funny to see downvoting without making a point. Regarding the latter mentioned source of serviceless resource wasting of big tech, see https://www.inkandswitch.com/slow-software/ (under âuser-hostile workâ). Regarding the former one, think about why your average smartphone keyboard implementation needs to phone home to the tech companyâs data center, while there are implementations that work right on the device. Removing all this stuff could most likely greatly reduce the resource usage of todayâs end user devices, and does not provide any useful service to the end users.
I hate both.
Proof of Work is robust and secure but pays a heavy price for it. Given that working alternative consensus models exist, I see no reason to support PoW coins.
I agree. I see Bitcoin as an incredibly valuable step in the research of decentralized consensus and running it as a network with such high stakes is a great prover. However it is clear that it is time for us to move on onto the generations of cryptocurrencies that have built on top of what we have learned from Bitcoin with further improvements such as privacy in Monero and efficiency with the Proof of Stake coins. Of course I donât think this is the end, for example the biggest Proof of Stake coins arenât private yet. So I look forward to generations of coins yet to come.
Proof-of-stake incentivizes the hoarding of coins, which can lead to centralization. Given that PoS coins arenât private, unlike Monero, I see no reason to support them.
Counterargument (that Proof of Work is not inherently better, IMHO worse, mostly because of environmental concerns):
Proof of Work incentivizes hoarding of useless electrical waste (long-term at least), the more you mine, the more youâll want to invest into this useless hardware, to mine even more.
PoW only displaces the problem of wealth distribution. Most of the Proof of Stake currencies reward less (in % per block) than PoW currencies, thus they probably lead to less centralization. Additionally itâs just slower and doesnât scale in comparison to PoSâŚ
Also, itâs more secure.
âOne of Moneroâs philosophies is to maintain egalitarian mining, so that everyone can have the possibility to mine. To achieve this, Monero uses a particular algorithm ideated and developed by members of the Monero community: RandomX. This PoW algorithm is ASIC resistant, which means itâs impossible to build specialized hardware to mine Monero. Miners must use consumer-grade hardware and compete fairlyâ.
https://www.getmonero.org/get-started/mining/
Those are valid concerns. If I were to burn electricity for simple transactions, it would be Monero or some of its derivatives for sure. There at least youâre getting something in return, namely privacy.
However I think that environmental aspects overrule in the vast majority of cases.
You can make private Proof-of-stake coins (see: Particl), but Monero simply has too much going for it for people to make a switch