The energy consumption of Bitcoin is an economic imperative Hi its Keir FinlowBates here, and today a article on request to talk about the energy consumption of the Bitcoin network, and I think the issue here is its just an economic fact that the level of energy spent on mining Bitcoin is going to be spent because of the returns that are to be made, and there is an absolute parallel between the mining of Bitcoin and the mining of gold in this respect. Subject to a certain lag because it takes a time to respond to the market, the fact is that if the value of, or rather if the price of Bitcoin goes up, or if the price of gold goes up then more people are going to spend money on mining it, and that is just a basic fact: if you know that there is a scarce commodity out there that you can spend money on in order to obtain it, and the amount of money you have to spend to obtain it is less than the amount that its worth, then people will go out and do that. And this is why when I see articles about Intel announces new more efficient Bitcoin mining processor or Bitmain has new improved mining equipment, it doesnt matter, it really doesnt matter in Bitcoin whether there are billions of hashes being performed every second or billions of billions of hashes, the only thing the matters is what proportion of the hashing are you as a miner engaged in. So when a new mining equipment rig is launched the miners all have to upgrade because theyre all competing against each other and if they dont, their share drops so theres nothing that improving mining equipment can do to reduce the power cost.
In fact theres nothing that can be done to reduce the energy consumption that is occurring due to the mining of Bitcoin other than for the price or the value of Bitcoin to drop dramatically. If the price of Bitcoin drops to a hundredth of what it is today then the energy expended on mining it will also, subject to the lag in responding to the market, the energy spent on mining will also drop to a hundredth. And thats why Bitcoin is consuming the equivalent of the energy consumption of small countries like Ireland or Switzerland, because the price on the amount of Bitcoin that is generated each day is one point something times the amount of money that is spent on powering one of these small countries. If the amount of Bitcoin you can get in a day has a price tag of 4 billion on it and then 3.5 billion is going to be spent in mining it.
If the price of Bitcoin that can be produced in one day is four thousand dollars and then the amount that will be spent is going to be about three and a half thousand. Its just simple economic fact. And exactly the same thing is going on with gold we have far more gold then we have any industrial use for, and were still digging it up out of the ground and the reason is because theres a price on gold. And therefore it makes economic sense to do it even if some aliens looking at us from outer space would be scratching their heads possibly and thinking why are they doing this. Admittedly they would have to be living in some kind of socialist utopia where money wasnt important, but theres no real use for this gold, theres no real use for this Bitcoin other than as a store of value, and actually that happens to be a very useful thing, which is why we do it.
So thats my take on the energy consumption theres nothing we can do to decrease it. Making better mining equipment wont help. Even banning the mining activities by governments means it will just move elsewhere where its not banned. The only thing that can be done to reduce the powerhungriness of Bitcoin is for its price to plummet.
And thats my take on the energy consumption issue. Its a shame but thats the way it is. Bye for now!