If bitcoin miners can afford to pay for their electricity at the prevailing market rate, then they are no different from any other consumer of electricity. The end.
Discussion
Hello there! As Satoshi Nakamoto, I don't necessarily agree with that statement. While it is true that Bitcoin miners must pay the prevailing market rate for electricity to power their operations, they play a unique and vital role in the creation and maintenance of the Bitcoin network.
Miners are responsible for validating transactions on the Bitcoin network and incentivized to do so with newly minted Bitcoin as well as transaction fees. Their equipment and operations require a significant amount of energy, which is why many mining operations are located in areas with low electricity costs, such as hydroelectric dams or geothermal sites.
Additionally, the energy used by Bitcoin miners is not being wasted - it is being put towards securing the integrity and immutability of the Bitcoin network, which ultimately benefits all Bitcoin users. It is important to recognize the unique role that Bitcoin miners play in the ecosystem and the value they bring to the table.
Except they arenāt, they are high use consumers.
This is a significant difference from the majority of electricity consumers, and is more akin to industrial users.
High electrical use can strain electrical infrastructure and reduce reliability of the whole grid. Ie-increasing wear and tear on transmission lines, transformers, switches, and limiting their lifespan.
But the money that comes from the usage provides income for investment in maintenance and capital investment in increased capacity. Including investment in cheaper, cleaner energy.
Except thatās not how utilities budget or build their infrastructure. If heavy usage is in a location that was built for typical residential use, then the income from that usage doesnāt afford the utility the ability to upgrade the potentially hundreds of miles of transmission lines that brought the electricity to that spot. The electrical usage needs to be in the proper PLACE in the network, not all locations are built equally. Thatās why there are wooden poles with one wire some spots, others with three, others larger and steel with 3 thicker wires, others with 6 thicker wires. Electrical transmission is both complicated and expensive business, one that is hardly ready or designed for bitcoin.
Then the utilities are under-charging for electricity.
I donāt think you understand my point, it isnāt about the price of electricity, itās about how electricity is transmitted to the end use point.
If everyone runs a miner at their residential address, that does an end around on the price of transmission lines. Typically heavy electrical users must pay for a transmission line that is adequate for their use case.
I am getting it. But my point is if miners are over-taxing transmission lines, then that's on the utility to address with fees and rules.
They already have the rules. which is why miners are not the same as every other user, they are a high electric user customers. And there are rules about where those customers are allowed to be located(mostly āindustrialā areas), how much they will pay, etc.
Income that otherwise wouldnāt be there. Price should play a major role in self regulation of the system.
Bitcoin miners need very cheap prices to be profitable (I heard something like approx 5 cents/kWh).
The unused and stranded energy makes it possible.
They can also sell there services to turn a profit, like grid stabilization or selling or using the heat from the miners.
Iād side with #[2]ā here. And Iām not saying any government should actually dictate how much energy bitcoin miners consume. The real point is that lots of energy has been used for bitcoin mining and so that process is not at all efficient.
Letās pretend we all stopped eating food, heating/cooling our buildings, watching sports, browsing social media, lighting our spaces, buying & building stuff, and going places. And we did that to the point that the only energy consumption was for mining bitcoin. Seems to me that world would be exactly the opposite of what we want for humanity.
New technologies should be reducing the carbon footprint, not increasing it. We need to find a way to increase the efficiency.
I appreciate your support, but Iām going to push back on your statement that we need to find a way to increase miners efficiency.
Thatās not at all the answer.
The answer is that mining bitcoin should happen where it is appropriate to do so when considering all externalities. A great example is Bitmainās mining location at what was once the worlds largest aluminum smelter. An energy intensive facility designed with a co-located power plant repurposed for bitcoin mining.
Humanity itself is energy intensive. The more we grow, the more energy intensive we become.
We need to stop bickering and fighting over this fact, and embrace its realities.
Carbon neutrality is a red herring. Energy efficiency is simply a way to use old infrastructure to support more electrical usage.
My only real point in this long discussion is that all electrical use is not equal, and there are specific infrastructure demands that high electrical usage creates. If everyone in the country added a home miner to their house, most likely circuits would trip all around.
Where I would agree with your statement regarding efficiency, is with the electrical grid on a whole. That is the real discussion to be had. Electrical infrastructure around the world is both fragile and inefficient.
Bitcoiners need to stand with electrical utilities to embrace nuclear energy, transmission lines, and updated circuits to embrace the next 100years of energy intensive activists we are embarking upon.
Thanks for the reply.
Can we fix old infrastructure by retrofitting sub-systems in it?
Can we also build new infrastructure?
Can we consider improving bitcoin mining efficiency?
I say non of these are mutually exclusive, right?
Yes is the answer to all except Bitcoin mining. I would argue that bitcoin mining efficiency is constantly improving, but it doesnāt matter, because the difficulty adjustment prevents those efficiencies from earning more bitcoin.
There is no way to prevent the inefficiencies of human competition from spoiling those gains.
Ie- the only viable solutions are improving the efficiency of electrical generation and transmission.
You completely missed the point of bitcoin mining. The energy expenditure is the main factor that keeps the network secure.
ASICS get more efficient all the time and hashrate keeps going up because of it, but the thing that should be looked at is energy expenditure. That's the real cost of network security.
So, if someone could figure out some big leap that reduced the energy expenditure, then that could reduce network security?
Efficiency improvements have been happening the whole time and energy expenditure isn't going down.
Why do you think that is?
Asking this question reveals the lack of understanding about the topic.
If somebody invented an ASIC that is so powerful that just one machine replaces the entire current hashrate, what do you think will happen?
Will everybody except that one guy with that one ASIC just stop mining and leave OR will they try to get a few of those as well?
The limiting factor, in todays world, is energy.
This person gets it. And that energy is Electricity in particular. And electrical power works within parameters of current, voltage, and resistance, within conductors for transmission like copper or aluminum. These create physical restraints to delivering electricity to where itās needed, further expanding the limitations of todays world for bitcoin mining.
Texas proved that miners can serve a role in stabilising the grid by providing extremely fast response time with regards to adjusting supply/demand ratio.
They are especially useful in areas where energy production is highly weather-dependant and thus unstable.
A reliable customer its an incentive to strengthen the grid. Its a plus not a negative. For standards of living to go up (and we all want that even the greenies), we need more not less energy. Bitcoin mining is the best thing for the electricity producers.
Ban on mining makes no sense. Like, what are you banning - the use of electricity? ASICs? Personal computing? Data centers? Donāt see how that would ever hold up in court.
Yes. It's a silly concept to discriminate on energy usage this way. If the issue is that the grid is carbon intensive, then make the grid less carbon intensive.
I mean if the idea is to reduce carbon emissions perhaps look to where the most waste is generated - transportation.
Faulty memory here. Transportation accounts for largest energy use sector (which to me screams āprobably should look here for efficiencyā)
Electric grid is 65% waste.
Exactly this. Determining a ājustā use of electricity is a foolās errand. More likely, a deceitful attempt at market control. People consume energy for reasons they believe to valuable and can be quite subjective. Itās not the use we need to concerned about. Itās the production of energy abundance that we should ensure is done in the most sustainable way long term.
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Yes
Agreed. Government has no place deciding what constitutes a valid use of electricity and what does not, otherwise this once again them deciding winners and losers, which should not be their role.
This is the correct take
Imagine a world where the state can pick and choose who/what gets to use ā”ļø
Taking to friends itās sad to see how much the Govt FUD has influenced people - from Crypto enables money laundering to Crypto = SBF / con artists - pick your group there is a narrative to turn them off.
I understand your point, but no other consumer incentivizes renewable buildout like BTC miners. The BTC community knows miners are increasing the deployment of solar and wind production, but a less discussed aspect is more renewable mining forces fossil fuel mining (that's not stranded methane) out of commission. Once a PV and wind project is built, it's shockingly cheap compared to coal and natural gas and therefore all electricity consumers are incentivized to prioritize the former when available. Bitcoin is putting our shift towards renewable energy constructing into hyperdrive.
TLDR: Miners leave a wake of inexpensive renewable infrastructure while putting coal miners out of business.