Energy cost of mining crypto more than the cost of mining precious metals

[wraith808]

Energy cost of 'mining' bitcoin more than twice that of copper or gold (via The Guardian)

Article based on the following research: Quantification of energy and carbon costs for mining cryptocurrencies (note: URL so long because of entitlements- if you remove part of the URL, you will only get a preview)

One dollar’s worth of bitcoin takes about 17 megajoules of energy to mine, according to researchers from the Oak Ridge Institute in Cincinnati, Ohio, compared with four, five and seven megajoules for copper, gold and platinum.

I've been sort of on the fence in regards to this whole cryptocurrency movement, and haven't gotten involved out of mostly impetus to do so.  I've thought that the other arguments against it were spurious, however.  But this...  I don't see how you come back from this if true.  I didn't look deeply into the methodology behind the findings, however.

Any thoughts?

[mouser]

insanity

[Curt]

Shocking.

The problem will probably be ignored, because it is too big to understand.

[Stoic Joker]

TBH I don't have time at the moment to even skim the articles, but just a first impression - knee jerk reaction - to the titles:

Cost to start a Bitcoin mining operations is about $500 for equipment, and ~$100 a month for electricity.
Time effort put into the mining process: Pick a pool and done, so none really.

Cost to start precious mining operation is well into the 6 figure mark just for the equipment.
Time and effort put into mining operation: All consuming + payroll for staff to run equipment.

And either way the chance of a big payoff is a total crap shoot.

[Shades]

Mining for new BitCoin (not trading in existing BitCoin) is expensive in every way. Yes, you can put up a simple 500 USD system and start mining with it, but don't expect to find new BitCoin any time soon. BitCoin is notoriously inefficient to "mine" and this is by design. More or less all the "low hanging fruit" has already been picked.

A system that gives you a reasonable shot at gaining new BitCoin is going to cost you. You still need many GPUs, preferably a motherboard with enough PCI lanes to properly support these GPUs, a processor that can support those lanes as well, a power supply that can support this setup, a case that allows for all this equipment to be mounted in and you will be needing an airconditioned room to put this contraption in. Several thousands of USD such a system will cost you. Still nothing compared with actual mining equipment.

Depending on your geographical location and your power source, you will keep spending a varying amount for the monthly electricity bill. Here in Paraguay, which has hydro source of electricity (and a shitty grid in most of the country), such a system would easily cost you around 300 USD a month (with the current exchange rate). Electricity is quite cheap here.

Even with a rig like that, getting new BitCoin will take quite some time. And with the wildly varying value of BitCoin, it could either be very profitable or a big loss leader for you. Might as well buy a lottery ticket. A lot less effort on your end, admittedly a lot less chance of getting lucky, but the payout can be massive. The environment will appreciate the lottery route more.

[wraith808]

BitCoin is notoriously inefficient to "mine" and this is by design.

-Shades (November 06, 2018, 07:46 AM)

And this is understood.  But if the cost to mine in terms of planetary resources puts more strain on the rest of the planet, doesn't that have to be considered?  Especially if it's by design?

[IainB]

@mouser:

insanity

-mouser (November 05, 2018, 09:40 PM)

Is that a relatively new realisation or had you previously (a year or so back, say) not already arrived at that conclusion?

[Stoic Joker]

A system that gives you a reasonable shot at gaining new BitCoin is going to cost you.

-Shades (November 06, 2018, 07:46 AM)

Bitcoin mining is SHA256/ASIC only. And the current 14.5TH ASIC miners are running $400-600US at Bitmain.com.

Now granted at the current difficulty/USD price they're only good enough for about $3 a day … But the intent was for the transaction payments to increase as the BTC production dropped off. However the transaction payments (e.g. cost...) part has turned into a rather total shit show that nobody is happy about.

Also, IIUC the BTC difficulty can be adjusted, if enough of the right people agree to it. BCH difficulty is dynamically adjustable based on hashing power available.

[Deozaan]

There's a difference between the amount of energy "required" to mine Bitcoin and the amount of energy being spent to mine Bitcoin.

There's currently a "gold rush" in Bitcoin (and cryptocurrency in general) where there is a lot of energy being spent in the hopes of striking it rich.

As Stoic Joker mentioned, it is relatively inexpensive to get starting mining Bitcoin, so the economics of it naturally results in a fairly balanced system where costs to mine nearly equal profits earned. When it becomes more profitable, then more people start doing it. When it becomes less profitable, some people shut down their miners. It's simple supply and demand, with relatively little cost of entry or exit.

There is nothing in Bitcoin that requires energy consumption mining it to be so high. That is just a natural side effect of the current (or prospective) profitability, fueled by the greed inherent to human nature.

Technically speaking, one could mine Bitcoin on a Raspberry Pi. The proof of that is the fact that when it first began, it was just a few people running the software on their old laptops nearly 10 years ago. And indeed, under the right circumstances, the network could easily survive on a network of hundreds of RPis (or less) instead of the huge multi-million dollar ASIC operations we currently have.

A system that gives you a reasonable shot at gaining new BitCoin is going to cost you. You still need many GPUs, preferably a motherboard with enough PCI lanes to properly support these GPUs, a processor that can support those lanes as well, a power supply that can support this setup, a case that allows for all this equipment to be mounted in and you will be needing an airconditioned room to put this contraption in. Several thousands of USD such a system will cost you. Still nothing compared with actual mining equipment.

-Shades (November 06, 2018, 07:46 AM)

This is a few years out of date. It's senseless trying to mine bitcoin with GPUs (just as it is senseless to try mining bitcoin with a RPi). The Bitcoin world has moved on to ASIC mining.

[tomos]

But the intent was for the transaction payments to increase as the BTC production dropped off. However the transaction payments (e.g. cost...) part has turned into a rather total shit show that nobody is happy about.

-Stoic Joker (November 06, 2018, 03:59 PM)

I thought the promise was low-cost (and fast) transactions ... maybe that's why nobody's happy about it.

[Stoic Joker]

But the intent was for the transaction payments to increase as the BTC production dropped off. However the transaction payments (e.g. cost...) part has turned into a rather total shit show that nobody is happy about.

-Stoic Joker (November 06, 2018, 03:59 PM)

I thought the promise was low-cost (and fast) transactions ... maybe that's why nobody's happy about it.

-tomos (November 07, 2018, 04:24 AM)

Yeah, it's pretty much a karma ran over dogma type of scenario. Trans fees sounded great until folks started noticing them … And then shit hit the fan.

I spent almost a month trying to get coin to move off an old wallet back last December.

[Deozaan]

Yeah, it's pretty much a karma ran over dogma type of scenario. Trans fees sounded great until folks started noticing them … And then shit hit the fan.

-Stoic Joker (November 07, 2018, 04:00 PM)

I think the idea most people had was that 1) the "miner subsidy" (i.e. new coins being mined via the block reward) would more than pay for mining costs for at least a couple more decades, and 2) that transaction fees would always be very cheap individually, but because adoption of Bitcoin would be so high, cumulatively the transaction fees from hundreds of thousands--if not millions--of people using Bitcoin regularly would be quite lucrative for miners.

But then the Bitcoin Core team crippled Bitcoin, which slowed (and regressed) adoption, while driving transaction fees through the roof. And now Bitcoin (Core) has gone from 90%+ of the crypto market share to something in the 40-60% range, IIRC.

[app103]

Consider this: Malware writers figured out a long time ago that the best way to mine BTC was not to pay for the hardware or electricity, themselves, and that's why they made, and continue to make, the most profit.

[Stoic Joker]

But then the Bitcoin Core team crippled Bitcoin, which slowed (and regressed) adoption, while driving transaction fees through the roof

-Deozaan (November 07, 2018, 10:27 PM)

Yes, multiple forks (what are they up to, like 4 now?) have been driven by the internal conflict about trans fees, security, and how to scale the network properly.

I'm chronically pressed for time these days, so can only make rushed quips … But thanks for translating for me.