back to article Dollar for dollar, crafting cryptocurrency sucks up 'more energy' than mining gold, copper, etc

Cryptocurrencies require as much, if not more, energy to mine as precious metals like copper, gold or platinum, according to some latest calculations. The figures were jotted down by Max Krause, a researcher at the Oak Ridge Institute for Science and Education, and Thabet Toloymat, an environmental engineer working in …

A Non e-mouse
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Why go out and get your hands dirty when you can sit at home at watch Netflix, etc.?

jmarked

That's where people started to live in the virtual world.

disgustedoftunbridgewells
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Tim Warstall covered this article more interestingly than "OMG". If only you hadn't fired him to make your move into leftism-and-storage.

Pascal Monett
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Virtual money has real-world consequences

Here's hoping that this lunacy will finally become totally uneconomic and currency mining will just die off, leaving malware scum with a big problem to extract bitcoin from their victims.

More realistically, bitcoin mining will die off and be replaced in volume by some other copycat - extant or to be created, so no change to the use of resources.

DrXym
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Re: Virtual money has real-world consequences

That's already happened to some degree. It's relatively easy to start up a new crypto currency, mine out the easy coins and then sucker people into "investing" in it. Cryptocurrency has shades of ponzi, pyramid and pump & dump schemes.

Anonymous Coward
Anonymous Coward

Re: Virtual money has real-world consequences

Quite. I mad a modest but not insignificant amount of cash mining bitcoin when it appeared on the horizon. More out of curiosity than anything else. Luckily (got me anyway) I do keep backups religiously. An hours of ferreting around and wondering, now when the hell did I do that and did I store the coins in a meaningful, rather than cunningly obscure directory paid dividends.

jmarked

Re: Virtual money has real-world consequences

Still many are getting into it nowadays.

adam 40

Re: Virtual money has real-world consequences

Surely this is just economics - the "cost" of the currency be it crypto pr precious metal based is dominated by the energy cost.

On a related note my parents dump their solar power into their immersion tank through a big resistor - and get paid for it too via the government subsidy. What if instead they put the energy into a water-cooled mining computer and dump the energy into the same tank? They'll get paid twice, and the heat generated is still the same except this time doing some useful "work".

Anonymous Coward
Anonymous Coward

as much, if not more, energy to mine

does it mean it's cheaper and much safer to go get a one-way ticket to SA, hire a geologist (ok, a corrupt one will do), get a few (hundred) security guards, a year's worth of food and water supply, plus a spade or two, for an average Joe? Never mind a PROPER gold mine, like them 1,000 m deep holes...

MonkeyCee
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Re: as much, if not more, energy to mine

If you want to mine gold yourself, then panning for gold is certainly viable in NZ and Oz. There are areas you can do it for free, and quite a lot of areas where you just need the permission of the landowner/renter.

It's not much cost to set up, and you can make roughly minimum wage for what is essentially outdoor work. If you can do a rough sort at your mining site, and can hump out the paydirt, then you can do maybe a third of the work under shelter.

You're also usually digging in riverbeds, and you can't usually do that during the melt or rainy seasons. Plus you need the usual safety provisions for being in the bush.

I found you could get more money by selling direct to a jeweler, as they can charge extra for it being "pure NZ" gold. You should be able to get a rings worth in 4-6 days worth of prospecting.

Ole Juul
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Re: as much, if not more, energy to mine

I live in an area where hand mining is still popular. Gold has been mined here for over 100 years and there are a few larger operations as well. So, I get to see how this business works, and it is clear that what they used to say in the old days when there was a much higher yield, is still true today: "for every dollar you take out of the ground, you put 10 dollars in." The fact of the matter is that most of the money involved is from investors who don't actually participate actively, and the money is all on the stock market. Most mines fail, and get reopened with new investors later until all the infrastructure is eventually paid for. I suggest that the numbers assumed in this article are likely out by a factor of ten to one.

It is fashionable to bash cryptocurrency for its energy use, and it does seem to be wasteful, but in reality it may well be that physical gold mining eats up more resources when you include the total financial costs.

bombastic bob
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Meh

Re: as much, if not more, energy to mine

"If you want to mine gold yourself, then panning for gold is certainly viable in NZ and Oz."

California and Alaska as well. Probably other places, too. But for fun, not so much profit.

Making actual money probably requires some real investment in equipment, sluicing, and whatnot. There are 'reality' TV shows on cable networks that show people actually doing this.

It might pay better to dredge a river delta, if you can afford tiny percentages of gold and silver and whatnot in the silt. that assumes it hasn't been over-dredged already.

maybe some day when space travel is more common, you'll see independent miners heading for asteroids and planets like Mercury where rocky stuff is more prevalent and it's still possible to access all of it if you're careful about the sun being up every 40 out of 80 days for a given location. [I'd think mobile equipment staying ahead of daybreak might do it].

But yeah, when the price of gold makes it profitable to go to extreme places to get it, people will. Or, just do it for fun on a weekend trip with the kids.

MonkeyCee
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Re: as much, if not more, energy to mine

Oz and NZ have rivers that carry a fair bit of gold in them, and there is quite a difference between the rivers in melt and in summer. You can actually do OK with a snorkel and mask and just pick up small nuggets in a river.

A sluice is pretty simple to build, mainly it's about how easy it is to shift in and out.

The main investment and improvement is in using a mechanical digger and a fairly large sluice or other sorting method.

It's not the worst way of making money, and it's not technically employment, which can be helpful if your visa doesn't allow it. About NZ$100-140 for 8 hours work, including 2 hours of walking.

"But yeah, when the price of gold makes it profitable to go to extreme places to get it"

Stork
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Gold etc at least can be used for something legitimate

It is hard to see the point of Bitcoin et al.

Also read here: https://www.johnkay.com/2018/03/05/bitcoin-boon-bubble/

jmch
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WTF?

Ending in 2140?

"It gets increasingly difficult and expensive to mine, and eventually the costs outweigh the reward. At this rate, it is estimated that 81 per cent of Bitcoins have been mined, and the last coins will be mined in approximately 2140"

Excuse my ignorance here, but my understanding is that what the Bitcoin 'mining' is actually doing is validating Bitcoin transactions on the network, and Bitcoins are 'issued' by the network as a reward for validating transactions. So if there is a limit on how many Bitcoins can be mined (and it gets progressively more difficult) does that not mean that it will get progressively more difficult to make any transactions on the network until there are more transactions that need to be processed than coins than can be mined? And once it's impossible to transact in a currency it basically becomes worthless?

What am I missing?

MonkeyBob

Re: Ending in 2140?

Miners are rewarded for each block they validate with a reward in bitcoins plus the transaction fees for the transactions recorded in the block.

The number of bitcoins awarded per mined blocked is on a decreasing scale, halving every 210,000 blocks. This will next happen in 2020. Eventually it will reach zero in about 2040 as part of the original design of the currentcy, at this point miners will only receive transaction fees for validating the blocks.

I ain't Spartacus
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Re: Ending in 2140?

jmch,

You're not missing anything. It's one of the (many) fundamental design flaws of Bitcoin.

Steam stopped accepting Bitcoin at the end of last year, because they said the transaction fees were hitting $20. Which is a bit bloody rubbish - if you're trying to buy a $10 game. I read in February this year (when Bitcoin hit the mad height of $20k per BTC) that transaction fees were hitting $60! I don't know if that's fallen off, since the bubble popped a bit.

Bitcoin fanbois then told us that this was OK. There was a company that would wrap a bunch of small transactions up into one big bundle - and then put that through as one tranasction on the Blockchain, so they could all share one transaction fee. Of course, what you've created there is yet another exchange - with the potential to steal your money. As well as destroying the whole simultaneous transaction schtick - that was supposed to be the point of online transactions in a low-trust environment.

Probably the sensible answer would be to lower the transaction requirements and make more Bitcoins available in future. And I suspect the miners will eventually take over whatever online committee runs Bitcoin - and do just that. But it's anathema to the economic illiterates and gold-bugs that make up so much of the Bitcoin community. So may well destroy the whole thing anyway.

One of the jobs of the Central Bank of a non-toytown currency is to try to match money supply growth to economic growth plus inflation. Get it wrong and you creat inflation - and it can be hard not to put the cart before the horse and do just that. But allow the money supply to stagnate in a situation of economic growth, and you get deflation. Which is appallingly destructive and worse than anything short of hyper-inflation.

rmason
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Re: Ending in 2140?

@I ain't Spartacus

Another reason it was dropped by steam et al was fluctuation in value and time taken,

As you mentioned not only did transactions hit too high a point but along with this (as the blockchain gets longer and more complex if you like, to over simplify) it was taking more and more time for the transactions to go through and be processed.

With a fluctuating value like with BTC etc this meant that by the time the transaction was "complete" and the pretend money was in their possession the value had changed from the time of purchase.

Sometimes this worked in their favour, sometimes they lost out.

Obviously they foresaw the potential of that "one day" when they'd take Xnumber of sales in bitcoin for them to suddenly become worth much closer to zero than when the lucky punters handed them over, and they didn't much fancy that.

Experiment over, call it a success as they now "own" however many of the various currencies they took and can see what happens to them, but not so much than when/if value hits approx 0 it won't hit the company too hard.

They've probably moved them all on already.

vtcodger
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Re: Ending in 2140?

"Probably the sensible answer would be to lower the transaction requirements and make more Bitcoins available in future."

In other markets, that is known as watering the stock. Purportedly the term derives from the practice of ranchers inducing their cattle to drink large amounts of water before selling them by weight. The problem is that watering financial stock tends to dilute the value of existing shares and thus is unlikely to be popular with current owners of the cryptocurrency.

On the other hand, it has yet to be demonstrated that owners of cryptocurrency have a whole lot of sense.

(It's my vague understanding that there is actually a provision in bitcoin at least to make mining easier when it becomes excessively difficult. But I may have that all wrong.)

Carpet Deal 'em
Holmes

The main reason Bitcoin transaction fees are so damn high

Is that only a ludicrously small number are permitted to be processed on the same block, not due to there being too few Bitcoins. The developers could easily send these fees plummeting by increasing the blocksize(and therefore the number of transactions that can be processed at once), but they've steadfastly refused to do so(which lead to the Bitcoin Cash fork).

DougS
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Re: Ending in 2140?

Probably the sensible answer would be to lower the transaction requirements and make more Bitcoins available in future.

No, the sensible thing is to abandon bitcoin. Trying to fix it is like trying if Microsoft had decided they could simply patch and improve Windows 3.x instead of throwing it out for NT. If there's a desire for a similar cryptocurrency, a more sustainable one can be designed from scratch taking into account all the failings and problems of bitcoin to do it right. There's nothing stopping the backers of bitcoin from designing bitcoin2 and providing a way to convert bitcoins to bitcoin2. Not everyone would follow, but it survived the fork of bitcoin and bitcoin cash.

Of course the holders of bitcoin don't want to see this happen, because the reason bitcoin is still insanely valued despite being useful for nothing aside from crime and speculation these days is because of its first mover advantage.

jmarked

Re: Ending in 2140?

Still a long way and years but might reach the limit sooner than 2040.

a_milan

What about the costs off transport, smelting, waste disposal?

*coin cost is all-inclusive - perhaps a full cost calculation, from raw ore thru refined metal is more relevant for comparison.

I ain't Spartacus
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I don't know if they've included transport costs. But they've definitely included refining. That's why the aluminium figure is so ludicrously high compared to all the other metals. Transport in bulk carriers costs pretty much bugger all nowadays anyway.

Interstingly Bitcoin and aluminium have something in common. A lot of both are made in Iceland. Because they've got lots of geothermal and hydro power there and the costs of smelting aluminium are so ludicrously high that transport from Iceland is worth paying.

Blank Reg
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Bitcoin transactions also have an energy cost, I may be mistaken but it's my understanding that this cost increases with the size of the blockchain.

#define INFINITY -1
Pint

First comment to compare Al with BTC -->

Some cursory searches suggest that 35kWh will cost $14 US in Iceland. Another tax-the-poor scheme?

bombastic bob
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Devil

cost of electricity to mine the bitcoins [varies around the world]

a co-generation system might make more money with bitcoin mining than selling the extra electricity to the utility...

same with solar panels. just sayin'

I suspect North Korea already takes this into consideration - the local cost of electricity vs profit of bitcoin. What, you think they're NOT mining lots of bitcoin? OK...

I ain't Spartacus
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Re: cost of electricity to mine the bitcoins [varies around the world]

Do North Korea have easy access to the processors needed to mine Bitcoin?

They've got reasonable pharmaceutical factories though. Which is why they made so much cash out of making fake viagra and selling it online.

jmarked

Re: cost of electricity to mine the bitcoins [varies around the world]

They are definitely making way more than the costs of materials and operations.

Anonymous Coward
Anonymous Coward

Proof of work vs. Proof of stake ..

is the key here. You don't need to mine - or have mined a currency - to operate a blockchain. Merely be able to prove to the chain your right to participate.

Having done quite a bit of research into blockchains, I'd say the shark to expert ratio is about the same as for "AI" and "Big Data".

I ain't Spartacus
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Re: Proof of work vs. Proof of stake ..

A colleague admitted to me yesterday that she'd joined one of those Bitcoin savings schemes. She's "invested" about £150. She stopped when the mainstream media stopped hyping the shitcoin sandwich quite so much...

She doesn't even know how to sell the Bitcoin she's got. I'm sure I'll end up having to sort it for her - although I wonder if it was just a pure scam and she doesn't own any anyway.

She assumes she's lost money, but doesn't even know what value she bought at.

My sympathy will be distinctly limited I think.

DougS
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Re: Proof of work vs. Proof of stake ..

I hadn't heard about such schemes but I'm not surprised. Anytime anything gets in the news as a way to "get rich" you'll have people preying on people's fear of "missing out". I remember during the dotcom boom when there were constant news stories in the US about people quitting their job and day trading full time, you couldn't turn the TV on for more than two minutes without seeing an ad for Etrade or similar companies. I'm sure countless people got into the market just in time to lose everything they put into it. I'm sure the story is the same with bitcoin.

jmarked

Re: Proof of work vs. Proof of stake ..

She was tricked, I think just like many others who are promised to gain good profit but doesn't really know how.

mark l 2
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If these countries that have surplus electricity used it for more environmentally friendly practices rather than just offering it for dirt cheap prices it would make mining these cryptocoins uneconomical.

They could be using that surplus power to extract CO2 from the atmosphere to help fight climate change or electrolysis of water to get hydrogen that could then be transported to countries with very little natural resources to use as fuel.

#define INFINITY -1

Amen brother--but you're speaking to the converted (no pun intended).

bombastic bob
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Stop

"They could be using that surplus power to extract CO2 from the atmosphere to help fight climate change"

HA HA HA that's funny! So altruistic, except for the premise upon which it is based. Using a means to make money to KEEP the electricity cheap sounds better, to me.

Now, extract CO2 from the air to provide for soda machines, dry ice, greenhouses, and air rifle cartridges? THAT sounds pretty good to me!

(yes, increasing CO2 in a greenhouse makes plants grow faster. If you expand this notion to the entire world, increasing CO2 in the atmosphere will make plants grow faster, and thereby deplete it faster, via a "biological equilibrium" and I happen to LIKE trees and plants, so I'd like more of them, thanks)

DavCrav
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"(yes, increasing CO2 in a greenhouse makes plants grow faster. If you expand this notion to the entire world, increasing CO2 in the atmosphere will make plants grow faster, and thereby deplete it faster, via a "biological equilibrium" and I happen to LIKE trees and plants, so I'd like more of them, thanks)"

I don't know what the fuck this is, but I can tell you one thing it isn't: remotely true.

DougS
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If increasing CO2 could all be absorbed by plants, we wouldn't see CO2 in the atmosphere going up and up. I hate to think how much vegetation would be required to soak up all that CO2 - our world would probably have to look like Pandora with dense jungle and 1000 ft trees.

jmarked

If the CO2 couldn't circulate back down to the ground, then the scientists and biologist should start taking plants in the atmosphere to absorb them. That should be a win-win for Earth and possible fresh food source for the people in the outer space.

Mike 16
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One difference between gold and crypto-coins

You generally have to pay the people with the spades, or at least a sufficiently nasty and well-armed set of slave-watchers. With crypto-coins, you can often get away with commandeering the resources of others. That's been the key to success for millennia.

EveryTime
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Why is energy cost a worthwhile comparison?

Physically mining ore has huge costs besides energy.

Mining bitcoins is primarily energy cost, plus the cost of rapidly depreciating hardware. Other costs are negligible in comparison.

DougS
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Depends on whether you decide to account for the resource extraction required to generate the "primarily energy cost" part. Especially with a lot of bitcoin mining happening in countries that generate much of their power via coal. Gold mining isn't exactly clean, but compared to the environmental damage done by dumping the radioactive heavy metal infested fly ash, gold mining is like working in a cleanroom by comparison.

Voland's right hand
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Some nitpicking

energy to mine as precious metals like copper,

Mine or purify? Mining copper requires relatively little energy. The problem is that the resulting copper is rather brittle and useless for nearly any use. You have to purify that (usually by electrolysis) which is the crazy energy eater.

DougS
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Re: Some nitpicking

The cost of resources tends to generally equal the energy cost to extract and purify them. Aluminum used to be insanely expensive, until better methods for processing the ore were found that required far less energy input. Titanium would be much cheaper than aluminum and used in place of steel for most things if a similar improvement could be made in its processing.

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