[Cryptography] One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week

[Karl]

On Tue, Nov 7, 2017 at 4:56 PM Benjamin Kreuter <brk7bx at virginia.edu> wrote:

> On Mon, 2017-11-06 at 12:28 -0800, Jameson Lopp wrote:
> > I don't think it's a useful abstraction, but rather a distraction.
> > Transactions don't "use" mining energy - this is a skewed perspective
> > of how Bitcoin's thermodynamic security operates.
>
> For a payment system, the energy needed to process a payment is the
> metric that matters; the simple way to compute this is to divide the
> total energy consumption of the system in a given time period by the
> number of transactions processed in that period.


I’m sorry, but this report of energy use is not the metric you are
referring to.  Mining energy is used to secure the entire bitcoin network.
It would be exactly the same if there were no transactions at all as if
there were a quintillion transactions per second.  Dividing it by the
number of transactions and comparing it to conventional transactions is
incredibly misleading.

Rather, this quantity should be compared to the combined energy usage of
all the financial security systems of the world combined.  All the security
cameras.  All the guards, bank tellers, and PoS machines.  All the armored
trucks moving cash around: manufacturing, driving, fueling, and maintaining
them.  All the 24/7 ATMs running.  All the constant financial
infrastructure that you can think of, and all the energy involved in
sourcing and processing the materials for it, running it, maintaining it,
and repairing it.  Not just the transactions.

The energy used by bitcoin mining is directly related to the price of
bitcoin divided by the price of electricity.  As electricity becomes
scarce, the energy requirements of the bitcoin network fall in synchrony.
They rise only when bitcoin has enough demand to warrant paying for them.
These things are not true of conventional financial systems.

Bitcoin does have a per-transaction energy cost, and this is unrelated to
the hashrate.  It is the cost only of distributing the transaction data
across the internet and storing it on hard drives.

Karl
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