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267

US Government Launches New Attempt to Gather Data on Electricity Usage of Bitcoin Mining (insideclimatenews.org)

submitted 4 months ago by [email protected] to c/[email protected]

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[–] [email protected] 5 points 4 months ago (1 children)

The economics of Bitcoin mining at scale force it to find an equilibrium where the cost of mining a Bitcoin is just a bit less than the current market value of a Bitcoin.

Electricity is the only significant variable cost at scale so the amount of electricity needed to mine a bitcoin ends up being a little less than however much a bitcoin can buy.

Thus one can estimate the total amount of electricity very accurately by simply taking the block rate (6/hr) times the block reward (~6.25 BTC) times the current price of a bitcoin divided by the wholesale price of electricity. You’ll get the upper bound for the amount of electricity being consumed.

Which by the way works out to around a TWh costing tens of millions of USD every single day. Which is more electricity than a small country

The only thing that will stop the waste is if the price of bitcoin drops. You can legislate it away, that won’t stop it, it will just move when it’s happening.

[–] [email protected] 1 points 4 months ago (1 children)

the current price of a bitcoin divided by the wholesale price of electricity.

Doesn't this formula assume that electricity costs the same everywhere at that particular moment? The wholesale price of electricity can vary significantly across different parts of national grids, and certainly can vary significantly between countries, especially countries whose electricity prices are denominated in different currencies.

And then the actual end user price of the electricity can be hedged with futures and other options/contracts/securities, to where two people using power from the same grid are paying very different prices. And once you introduce financial instruments, the bottom line cost might depend on stuff like interest rates or other financial/economic conditions local to that place.

[–] [email protected] 1 points 4 months ago (1 children)

Yes somewhat.. the formula has several factors that are constantly in flux, Bitcoin mining is a random process the value can be off entirely by chance. But it’s designed to self-adjust over the long run towards that formula, individual fluctuations cancel out in the long run.

For electricity price specifically, wholesale prices of electricity tend to be fairly close everywhere bitcoin is mined. Bitcoin mining is more profitable where electricity is the cheapest and is uneconomic in places where the price of electricity is above average. So it only happens where the wholesale price is globally competitive.

[–] [email protected] 1 points 4 months ago (1 children)

But wholesale prices shift significantly by time of day, especially in the spring and fall. California's wholesale prices dipped to the negatives during the days this past spring, hitting -$26/MWh at one point in April. One can imagine projects that only mine when energy is cheap or Bitcoin is expensive, in places that can take advantage of that price volatility.

There are also a few projects that don't rely on grid electricity because they've provisioned their own energy sources (one creative solution is a shipping container with a data center powered by waste flaring of natural gas at oil wells).

So I'd think the price volatility would make it hard to derive a meaningful calculation of energy use from real-time electricity pricing, rather than real-time computational complexity.

[–] [email protected] 1 points 4 months ago

You’re not wrong.

Wholesale prices do bounce around significantly in a day, occasionally even going negative. And some miners do shutdown for brief periods during high demand due to a high electricity price. Some miners aren’t buying electricity from the grid, and have their own generation sources with different economic inputs. And there’s lots of day to day volatility in mining rates that has nothing to do with economics.

There’s no formula or methodology that could tell you how much energy is being wasted at any given moment. That impossible. There’s no way of knowing how many miners are operating globally at any given point in time. We can’t even reliably tell which country a block was mined in. We can only make reasonable estimates of global averages over the last few weeks.

You can get closer with more detailed modelling, but the equation I gave using global averages for bitcoin and electricity prices in the last few weeks will get you to an accurate estimate.

[–] [email protected] 1 points 4 months ago

Should gather data on how many useless and overbugeted government agencies exist, and how to return that money to the taxpayer.

[–] [email protected] 3 points 4 months ago

We all know the answer - too damn much.

[–] [email protected] 6 points 4 months ago (2 children)

I know people that leave FO76 open just to farm click in game tokens that are worthless.

Is that the same thing? Because a lot of people do that type of energy waste.

He’s on 1300 hours rn. He paid for it. Totally weird tho. Dude is over 40.

[–] [email protected] 2 points 4 months ago (1 children)

Tangent to leaving FO76 open...

Makes me wonder how much energy is wasted by people just leaving their desktop computers on.

I know I used to be bad about that and eventually made a concerted effort to always sleep or turn it off.

I'm also glad LED lights are a thing now. I'm a lot better at turning lights off now as well, but at least if one gets forgotten on now it's like 10x less waste.

[–] [email protected] 1 points 4 months ago

I know people who just leave games running in the background for a whole day while they're gone. I honestly have no idea why someone would do that

[–] [email protected] 6 points 4 months ago

It's not. A single miner often has like 4 GPUs running at 100% load, 24/7 and I doubt someone will build a 100 Megawatt facility with thousands of computers to get fallout tokens.

Though it is the same thing in the sense of running computer to generate worthless digital tokens. The main difference in that sense is that fallout tokens do actually have a use(in game)!

[+] [email protected] -18 points 4 months ago (2 children)

Why? If people paid for the electricity then what’s the problem?

[–] [email protected] 2 points 4 months ago (1 children)

"what do you mean environmental impact, if people paid for the gasoline then what's the problem?"

[–] [email protected] 0 points 4 months ago

Why police how people use electricity? That’s not the problem, the people burning coal and natural gas are the problem.

[–] [email protected] 29 points 4 months ago (1 children)

Drives up costs, causes brownouts, keeps fossil fuel plants open longer, etc.

[–] [email protected] -1 points 4 months ago* (last edited 4 months ago) (2 children)

It should be the opposite. Crypto mining only makes sense if you're getting a good deal on electricity, which means they're probably running on off-peak hours. What that does is encourage electricity generation to increase the base level supply, which should decrease brownouts.

Brownouts are caused by unexpected peak electricity demand or some kind of equipment malfunction (e.g. inclement weather). It's not caused by a consistent increase in base level demand, which is what crypto mining would do.

Keeping fossil fuel plant open longer is a valid concern though, but since solar and other green energies tend to be cheaper over time, I don't think that's a significant concern. I could absolutely be wrong though, I don't work in energy generation.

[–] [email protected] 3 points 4 months ago (1 children)

Crypto miners aren't generally turning themselves off to just get the off peak rates. The hardware is expensive and only has a short lifespan before the next hardware that's 5x better comes out rendering theirs obsolete as the hash rate spikes and they can't make ends meet anymore.

Generally speaking, it does drive them towards cheaper electricity, which is often renewable or finding places that have excess and getting good rates on it.

Sometimes, that turns out to be dirty electricity like coal, and in some places its kept some coal plants alive and stopped others from being shut down.

But it doesn't matter if they are 100% renewable because the people that hate crypto, don't understand it at all, think it's a scam with absolutely 0 use cases. So all those solar panels or windmills that they buy are resources being taken from other people and slowing down the adoption of renewables, because crypto is a waste.

[–] [email protected] 1 points 4 months ago (1 children)

Right, but they're not going to build out in a high electricity cost area, they'll build where energy is cheap, which is often where renewables are abundant.

But like you pointed out, the real issue isn't energy use, but perception of value. Any amount of energy used to do something with no value is wasted.

I see value in specific cryptocurrencies (esp. Monero XMR), but I don't know how to effectively communicate that.

[–] [email protected] 0 points 4 months ago (1 children)

esp. Monero XMR

Its hard enough to sell people on using VPNs to protect their internet privacy, trying to convince them to use this fancy thing 'only criminals' use to have financial privacy is definitely going to be harder.

[–] [email protected] 1 points 4 months ago

Yup, but the most effective way to explain it is that it's just like cash. Criminals use cash, and criminals use Monero, and largely for the same reasons. For non-criminals like myself, the benefits are:

low transaction fees
fast transactions
pretty stable values

Or in other words, it works like cash, just digital. Like cash:

businesses can't track me
governments can't track me
there are no foreign transaction fees

Monero is our best option for a digital, non-government issued currency. It's as close as we'll get to digital cash.

[–] [email protected] 1 points 4 months ago* (last edited 4 months ago) (1 children)

Datacenters pay less for electricity. Way less.

[–] [email protected] 1 points 4 months ago (1 children)

Sure, because they're predictable bulk customers, so it's a lot easier for energy companies to plan around.

[–] [email protected] 1 points 4 months ago

No its because of government regulations that prohibit profit from electricity itself

[–] [email protected] 35 points 4 months ago (1 children)

Better late than never, I suppose.

[–] [email protected] 17 points 4 months ago (2 children)

This singles out a single industry. Why not data centers in general or also add in AI?

[–] [email protected] 6 points 4 months ago (2 children)

The military is one of the larger stakeholders in AI advancement, and generally doesn’t care about the environment. There will not be a probe that could stifle future advancement in military applications.

[–] [email protected] -2 points 4 months ago

The only military "advancements" are genocide and the destruction of the planet.

Ofc the state is going after bitcoin instead.

[–] [email protected] 7 points 4 months ago (1 children)

I'm pretty sure the military cares, at least to the extent that it will cause instability. I'm 99% sure there's something from the Pentagon to support that. I wanna say Pentagon wants us to address it before it starts making them do their job a whole lot more.

[–] [email protected] 1 points 4 months ago (1 children)

For one particular example, the military is currently funding a program to research techniques to use AI for automated vulnerability discovery and exploitation. The info is public here: https://aicyberchallenge.com/

[–] [email protected] 1 points 4 months ago

I'm not disputing that they want to use AI. I'm disputing the idea that the military doesn't care about climate change. Climate change will cause instability and greatly increase the odds of them having to actually fight. As much as the military enjoys a good flex now and then, they generally prefer to win without fighting.

[–] [email protected] 28 points 4 months ago (2 children)

I wouldn't consider cryptocurrency an industry. At best, it's unregulated stocks whose value is backed by speculation. At worst, it's a waste of resources and a low-risk way for malware authors to profit off of victims.

Don't get me wrong, though. AI is also deserving of the same treatment.

[–] [email protected] -1 points 4 months ago (1 children)

Would you consider finance to be an industry? Because crypto is the same thing without the legalized grift.

[–] [email protected] 0 points 4 months ago

For years crypto investors were warned that it was the wild west, and after everything that’s now happened do people still actually believe this?

[–] [email protected] 18 points 4 months ago (1 children)

Note that the second-largest cryptocurrency, Ethereum, no longer uses proof-of-work to validate its chain. So any regulations or data on electricity usage will be basically irrelevant to it.

[–] [email protected] 8 points 4 months ago

Hopefully other crypto follows suit.