Just to double down on the ESG point, as I'd welcome your take.
Let's first separate ESG, which is a loaded term, from some basic facts.
Fact 1) majority of climate scientists believe carbon emissions to be a major contributor to man made climate change.
Fact 2) Bitcoin uses a deliberately energy intensive consensus mechanism. At least 50% of that energy is not coming from renewables so is contributing to carbon emissions.
Fact 3) a relatively small % of the global financial system involves BTC
Take these together. There's no guarantee in my head that BTC scales its energy use in a common sense way. Rationally, it'll eat up exactly as much energy from fossil fuels as is profitable given block rewards, tx fees and the price, then it will source hash rates from cheaper sources.
This probably WILL mean BTC uses a decent chunk of renewables but:
a) this will only happen AFTER it exhausts power consumption at marginal cost from non renewables
b) will consequently drive up said prices
c) will likely crowd out other energy uses during bull runs, as BTC can temporarily shift back into otherwise unprofitable energy sectors.
On top of that, how exactly does this scale? We don't know. BTC secures itself with an ungodly amount of energy consumption per Tx and this is with the tiny use we have in crypto today. How do we expect this to behave if BTC replaces the global financial system?
I'm not 100% set in stone here, but I sometimes feel we're setting aside basic common sense with mental gymnastics around PoW.
"1) Majority of climate scientists believe carbon emissions to be a major contributor to man made climate change"
This is true that the majority believe this, but it isn't a settled science and there are many credible scientists who don't take this view. Even amongst those who do, there is disagreement about the extent to which this happens.
At the crux of this, many take the view that more energy use is worse for the planet, and this is where I'd strongly disagree with the MSM and the majority of scientists. We consume a lot more energy than we did in the past, and our lives are much better. It's possible that we've contributed to adverse weather, but even if that were certain, we'd still have a moral imperative to harness more energy to improve the quality of our lives. Also, the more energy we use, the less vulnerable we are to adverse weather: in the last 100 years, deaths from natural disasters and weather phenomena have fallen by 99% (https://www.sciencedirect.com/science/article/pii/S0040162520304157#:~:text=Global%20death%20risk%20from%20extreme,which%20will%20reduce%20vulnerability%20dramatically.)
"2) Bitcoin uses a deliberately energy intensive consensus mechanism. At least 50% of that energy is not coming from renewables so is contributing to carbon emissions."
"a) this will only happen AFTER it exhausts power consumption at marginal cost from non renewables
b) will consequently drive up said prices
c) will likely crowd out other energy uses during bull runs, as BTC can temporarily shift back into otherwise unprofitable energy sectors."
Yes, I think this is all true, but I don't necessarily think of it as net negative. Miners may choose to use renewables after fossil fuels because "green energy" isn't as financially viable, so that's what we may expect -- its far cheaper to generate a lot of energy from oil than from wind turbines.
In terms of driving up energy prices, miners are incentivised to use the cheapest energy possible anywhere on the planet, so we shouldn't worry about it adding to the energy price problems in the UK (https://www.visualcapitalist.com/mapped-global-energy-prices-by-country-in-2022/). There is an issue that in very poor countries, it might be viable for multinationals to come and mine using energy that prices out the native population (I vaguely remember something like this happening in Iran). This is a political issue, and not one that directly effects the UK. One could imagine a scenario where Venezuelans, for example, can't afford electricity because their natural resources are being used by foreign companies to mine, and these companies are able to pay higher prices -- on the other hand, such a thing *would* generate revenue for the country that wouldn't have otherwise been possible, and bring in investment from abroad that wouldn't otherwise have come.
Also, miners intentionally harnessing all this energy means that in times of emergency they can reallocate their resources to help those in need, as demonstrated by the miners in Texas during the floods last year (or was it 2021?), when miners reapportioned their energy back towards the grid to keep Texans' energy afloat.
I'd accept that Bitcoin will consume more and more energy over time, but my main point of contention would be that I'm of the mind that this is a good thing and we should welcome it. The fact that Bitcoin can incentivise renewables is a plus, but not the main focus for me
Thanks, well articulated response. Thank you for citing sources, that speaks to your integrity and good faith. I also appreciate that this wasn't your main point, so thanks for indulging me. I am personally concerned about the climate, and so this is my biggest concern about PoW blockchains.
(1) is a fair response. I am not a climate scientist, and have no interest in learning about climate science at the moment, so I just defer to the majority here. I consider this to be a reasonable heuristic that's served me well enough so far so I'll leave it at that.
I agree with you that 'more energy use == bad' is not a good narrative.
I think the better narrative is: "we can see a potential risk of adverse weather, (likely) caused by global energy policy. If we can make sensible adjustments to energy policy to reduce the risk, we should make such adjustments". If we can agree on the above statement, then we can focus upon debating what is 'sensible'.
On (2) I continue to be surprised by BTCs renewables. Seems to always be higher every time I check. Very interesting. I was trying to find some non-crypto news sources and sure enough:
(3) I think the key thing to consider still is scaling. BTC is sitting at $0.5T, which nicely squares to about 0.5% of GDP. If we really do want to seriously consider BTC as a global reserve currency, then we need to think about how a 10x, 100x, and even a long term 1000x usage of the technology scales. We need to see how the Lido thing plays out over the next few years but if PoS does manage to stay decentralised, I'd consider it a superior consensus mechanism over PoW, as it will have achieved the same ends as the BTC network, at vastly lower cost.
Just to double down on the ESG point, as I'd welcome your take.
Let's first separate ESG, which is a loaded term, from some basic facts.
Fact 1) majority of climate scientists believe carbon emissions to be a major contributor to man made climate change.
Fact 2) Bitcoin uses a deliberately energy intensive consensus mechanism. At least 50% of that energy is not coming from renewables so is contributing to carbon emissions.
Fact 3) a relatively small % of the global financial system involves BTC
Take these together. There's no guarantee in my head that BTC scales its energy use in a common sense way. Rationally, it'll eat up exactly as much energy from fossil fuels as is profitable given block rewards, tx fees and the price, then it will source hash rates from cheaper sources.
This probably WILL mean BTC uses a decent chunk of renewables but:
a) this will only happen AFTER it exhausts power consumption at marginal cost from non renewables
b) will consequently drive up said prices
c) will likely crowd out other energy uses during bull runs, as BTC can temporarily shift back into otherwise unprofitable energy sectors.
On top of that, how exactly does this scale? We don't know. BTC secures itself with an ungodly amount of energy consumption per Tx and this is with the tiny use we have in crypto today. How do we expect this to behave if BTC replaces the global financial system?
I'm not 100% set in stone here, but I sometimes feel we're setting aside basic common sense with mental gymnastics around PoW.
Thanks Jordan! Few things here...
"1) Majority of climate scientists believe carbon emissions to be a major contributor to man made climate change"
This is true that the majority believe this, but it isn't a settled science and there are many credible scientists who don't take this view. Even amongst those who do, there is disagreement about the extent to which this happens.
At the crux of this, many take the view that more energy use is worse for the planet, and this is where I'd strongly disagree with the MSM and the majority of scientists. We consume a lot more energy than we did in the past, and our lives are much better. It's possible that we've contributed to adverse weather, but even if that were certain, we'd still have a moral imperative to harness more energy to improve the quality of our lives. Also, the more energy we use, the less vulnerable we are to adverse weather: in the last 100 years, deaths from natural disasters and weather phenomena have fallen by 99% (https://www.sciencedirect.com/science/article/pii/S0040162520304157#:~:text=Global%20death%20risk%20from%20extreme,which%20will%20reduce%20vulnerability%20dramatically.)
"2) Bitcoin uses a deliberately energy intensive consensus mechanism. At least 50% of that energy is not coming from renewables so is contributing to carbon emissions."
It is difficult to know exactly what % of miners are using renewables, but according to the BMC (which accounts for roughly ~40% of miners) in August, renewables already make up well over 50% of their operations (https://cryptonews.net/news/mining/21424205/#:~:text=BMC%20statistics%20H1%202023&text=The%20members%2C%20spread%20across%20six,sustainable%20electricity%20mix%20to%2059.9%25.)
"a) this will only happen AFTER it exhausts power consumption at marginal cost from non renewables
b) will consequently drive up said prices
c) will likely crowd out other energy uses during bull runs, as BTC can temporarily shift back into otherwise unprofitable energy sectors."
Yes, I think this is all true, but I don't necessarily think of it as net negative. Miners may choose to use renewables after fossil fuels because "green energy" isn't as financially viable, so that's what we may expect -- its far cheaper to generate a lot of energy from oil than from wind turbines.
In terms of driving up energy prices, miners are incentivised to use the cheapest energy possible anywhere on the planet, so we shouldn't worry about it adding to the energy price problems in the UK (https://www.visualcapitalist.com/mapped-global-energy-prices-by-country-in-2022/). There is an issue that in very poor countries, it might be viable for multinationals to come and mine using energy that prices out the native population (I vaguely remember something like this happening in Iran). This is a political issue, and not one that directly effects the UK. One could imagine a scenario where Venezuelans, for example, can't afford electricity because their natural resources are being used by foreign companies to mine, and these companies are able to pay higher prices -- on the other hand, such a thing *would* generate revenue for the country that wouldn't have otherwise been possible, and bring in investment from abroad that wouldn't otherwise have come.
Also, miners intentionally harnessing all this energy means that in times of emergency they can reallocate their resources to help those in need, as demonstrated by the miners in Texas during the floods last year (or was it 2021?), when miners reapportioned their energy back towards the grid to keep Texans' energy afloat.
I'd accept that Bitcoin will consume more and more energy over time, but my main point of contention would be that I'm of the mind that this is a good thing and we should welcome it. The fact that Bitcoin can incentivise renewables is a plus, but not the main focus for me
Thanks, well articulated response. Thank you for citing sources, that speaks to your integrity and good faith. I also appreciate that this wasn't your main point, so thanks for indulging me. I am personally concerned about the climate, and so this is my biggest concern about PoW blockchains.
(1) is a fair response. I am not a climate scientist, and have no interest in learning about climate science at the moment, so I just defer to the majority here. I consider this to be a reasonable heuristic that's served me well enough so far so I'll leave it at that.
I agree with you that 'more energy use == bad' is not a good narrative.
I think the better narrative is: "we can see a potential risk of adverse weather, (likely) caused by global energy policy. If we can make sensible adjustments to energy policy to reduce the risk, we should make such adjustments". If we can agree on the above statement, then we can focus upon debating what is 'sensible'.
On (2) I continue to be surprised by BTCs renewables. Seems to always be higher every time I check. Very interesting. I was trying to find some non-crypto news sources and sure enough:
https://www.nytimes.com/2022/03/22/technology/bitcoin-miners-environment-crypto.html
Same story everywhere you check. Consider my mind slightly altered on this. Thank you.
Vox (I know) are a bit more skeptical but don't really give good arguments why: https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-renewable-china
(3) I think the key thing to consider still is scaling. BTC is sitting at $0.5T, which nicely squares to about 0.5% of GDP. If we really do want to seriously consider BTC as a global reserve currency, then we need to think about how a 10x, 100x, and even a long term 1000x usage of the technology scales. We need to see how the Lido thing plays out over the next few years but if PoS does manage to stay decentralised, I'd consider it a superior consensus mechanism over PoW, as it will have achieved the same ends as the BTC network, at vastly lower cost.