Bitcoin Q&A: Why “energy consumption” math sucks

[inaudible] [AUDIENCE] Do you think it’s possible to have a
blockchain that has the five pillars of a fair currency… while there’s no mining? [ANDREAS] Umm, [one that] has no mining? Possibly.
[One that] has no energy consumption? No. People misunderstand the energy
consumption of systems like Bitcoin. First, people say it’s a “waste” to use energy
[for Bitcoin], which is a subjective perspective. It is a “waste” to you, but obviously for the people
using that energy and paying for it, it is not a waste. They call it an investment. What [those people] are trying to say is, “I am going to
[insert] my decision of what the market should do.” There is a dangerous path there. We are not talking
about energy generation, but energy consumption, which are two very different things [to focus on]. Energy isn’t a bad thing; energy produced
from polluting sources is the bad thing. Consumption of energy from solar is a wonderful thing. You just invested in [the production of] all these solar
panels that can [also] be used for other purposes. You reduced the unit cost of solar energy.
That is magnanimously wonderful! It matters where energy is coming from; if we have
a problem with where energy is coming from, let’s address that problem. Let’s start deciding that some forms of energy
[generation] are harmful and some are not. That means [accounting for] the externalities of carbon
and pricing them; depending on your political leanings, [that] is either the worst form of communism or it’s
the libertarian solution of creating markets for carbon. It doesn’t matter. If the problem is carbon and
climate change, address the problem, not Bitcoin. It is a bit [hypocritical] to say, “This form of energy
consumption, which I’m not using, is wasteful!” “But Christmas lights are pretty!” [Laughter] Christmas lights actually consume a significant
percentage of U.S. energy every year, and for what? I remember this funny movie where a guy
[decorates] his entire [house and neighborhood], [grabs] two very high voltage cables, and
[heaves to connect the power cables]. The whole neighborhood lights up. Then the camera zooms out to this [other]
guy on the International Space Station (ISS); [He looks down and] says, “What is that?!”
They can see the house [lights] from space. Americans do this every year. Maybe Christmas is
“sacred” and we shouldn’t really bash Christmas… because the lights are pretty. So I have a few other [examples] for you: How about war? How about the U.S. Department of
Defense, the greatest polluter on the planet by far? How about [crony] capitalism and the amount of junk
we dump into rivers to extract cobalt for your iPhone? Lithium, gold, or all of the other things
that we are doing to our planet? We [must] decide [if we] are going to start prescribing
to markets what is a good or bad use of energy. The real problem is, who decides? I will not even go into the [energy cost of]
printing, shipping, and guarding paper money. Handling [fraud protection for] credit cards consumes
a far greater amount of energy than Bitcoin, while at the same time, eating away at our democracy. I won’t even go there. The real problem is, who decides? If you [determine for everyone that] “this use of energy
is bad,” “this use of energy is good,” you are a dictator. That is a decision that markets should make,
[particularly by] the person consuming the energy. If you want to tell me that there are externalities [for
certain sources which] have not been accounted for… in the price and the market isn’t working, great.
Let’s price those externalities. Let’s bill for carbon. In which case, Bitcoin mining — as the most
fungible and transportable form of consumption — would [be incentivised to] immediately
migrate [more] to the low-cost alternatives. [In many cases], you are scavenging
energy that would otherwise be wasted… because it cannot be transported effectively to other
locations, especially alternative forms of energy. You are depreciating the capital cost of building
[that infrastructure] in the first place. [Let’s say you plan to build a] solar [plant]. It delivers 15 megawatts, but [the nearby]
community only needs 5 megawatts. It will take [a few] years to pay for that
[plant] by [supporting] this community. [The energy] can’t be shipped too far or
[a lot] will get lost in the high-voltage cables. Then some guy comes along and says, “I will
[install] five thousand Bitcoin miners here.” “We will plug them in and can use 15 megawatts
right now. We will pay for this plant in a year.” What do you do? You build two plants. Then you build
three plants. Now we have stopped burning dinosaurs. We’re no longer burning fossil fuels. The least transportable energy, least matched
with demand, is alternative energy. Before you go blaming Bitcoin mining for the
end of civilization, at least do the math properly! The other problem [with these statements]
is the [attempts at] extrapolation. “Bitcoin is using this much energy
and it has this many transactions.” “Divide the amount of energy by
the number of the transactions.” Therefore, if the number of transactions grows by
this much [in this many years], Bitcion will use-” Bullshit! That is not the real math.
That is not a valid extrapolation! The amount of energy used in mining has no bearing
on the number of transactions you can process. The same [kind of bad] math as “my fourteen-year-old
has grown four inches so far this year.” “By the time he is twenty-five years old,
he will be forty-five feet tall.” [Laughter] That kind of shoddy math just got published in
[a “study” cited by] Forbes, Bloomberg, CNN, CNBC… All over the place with gloating and gleeful analysts.
“See? I told you Bitcoin will destroy the planet.” There is one last thing I would like to say:
they [did] the same thing [with] the internet. A lot of the things they say about Bitcoin,
[were also said] about the internet. “A haven of terrorists, pornographers, and pedophiles,”
of course, but they also “did the math.” They would say, “Google uses [x] data
centers to process [x] search queries.” “By the year 2020, the internet will
consume 30% of U.S. energy.” The actual percentage has dropped to less than 2%.
It [helped] deliver a level of productivity… and life improvement that far outweighs
that consumption of energy. They did the math wrong. Or they [just] lied, to make sure that their parasitic
bosses could keep sucking on that [data] pipe. [Applause]

79 thoughts on “Bitcoin Q&A: Why “energy consumption” math sucks”

  1. The key in all of this is "energy sources" – the world isn't declaring that all personal transport should be eradicated because of pollution from internal combustion engine, the way forward is renewable energy sources.

  2. The one and only, Andreas… excellent. We should spread Andreas work to the 7 corners of earth, so maybe people can see the crypto light, through a clear lense.

  3. Regardless of where the electricity comes from, if we can save the power we should. Bitcoin mining adds a constant base load to our energy requirements.

    I think a proof of space/storage solution is best, utilise the abundant and latent empty storage space that people and companies have yet to fill.

  4. @aantonop
    Is there or why isn't there a General voting system or verifying system within the blockchain/crypto space that can give some type of Crypto regulatory/validity to crypto issues/options?
    Why would we opt in to this decentralized space only to rely on centrally rulled "Government". Instead we collectively create our own Rules of the "Sea"/Crypto space?

  5. Banks use more, but this isn't a subjective matter. If you want to increase financial access, for what reason? A better world, tomorrow? A tomorrow? It is an important issue. Energy used there can not be used elsewhere. If an equally secure system comes along which uses less, the world would probably benefit from the efficiency.

  6. Haha great talk! I have you up there with Martin Luther.
    It is a matter of time before you can buy christmas lights with little shiny plastic bitcoins on them 😀

  7. Your talks are usually great, but the arguments in the beginning sound pretty dumb to me honestly. It is full of tu quoque logical fallacies where you point to other energy-consuming things. Bitcoin does have an energy problem, it is just not as big as the mainstream media makes it up to be.

  8. The amount of fanboyismn is crazy. He really is bitcoin Jesus. But let's talk about energy consumption shall we.

    You're right Andreas, the real problem is who decides. In bitcoin it is the miners. And the people who were here first, who have an incentive to make bitcoin work. Do they really care about the environment? I think they mostly care about getting richer.

  9. With LN this problem could be solved ? I mean , reducing onchain/offchain transaction ratio could end up in proportionally less hashing power to process the same number of transactions in the whole network, right ?

  10. This talk was unbelievable as always!
    Yes.. people are so delusional without realizing it, and its even worst nowadays with disinformation you can see easy critics about any technologies, exactly like the same group would have said about with the internet being no more than a fax machine in the early years… or even a lot before that with Television vs Theaters, or even Cars vs Horses in the 1800-1900's with things like the Red Flag Act in the UK and maybe US if I remember correctly lol… those regulations slow down innovation and it is ridiculous when you think back about those… so yeah its gonna be even worst for deentralized technology/network protocols that works on top of existing infrastructure because people wont realise it like they dont realise they use linux everyday in their car/termostat/phone/most servers in the world (Internet/cellphone/sms/any device/protocol that can send and receive of simply expose frequency/picture/whatever transmission of data and be able to transact or do anything imaginable with it…)

  11. Every time I had a Satoshi when someone said energy blah blah bitcoin blah blah I would have had a full bitcoin by now

  12. His comments are nonsensical. One day, maybe 2-5 years from now, when you look back at the crypto bubble, you'll realize this and how silly you were to think he was a source of knowledge.

  13. I find this debate from Non Bitcoiner Naive, Did They ever Questions How much of The TOTAL Energy The BAnks and Their Fancy Tall huge Branches Consume on a Daily Basis. C'Mon

  14. BTC also doesnt need co² polluting concrete buildings like traditional banking, also its not btc fault that miners use coal/nuclear energy to mine them. Bitcoin is just a protocol lol.. so wtf are those electricity fud people talking.

    And if you go further to the truth.. plant a hemp farm and save the forest, also build hemp houses which are co² positive.. beat that mofos 😀

  15. Whenever I have a doubt I know AA will have an answer to that and will explain everything beautifully. Thank you so much

  16. Excellent as always… i gave this answer on energy usage due to bitcoin mining:

  17. While all of this is true, the "How about.." argument is not very good and usally used by people who have no real arguments. Just because there is even more energy wasted somewhere else, doesn't make it ok for the Bitcoin network to waste energy as well.

  18. To sum up "dumping waste" as just being "Capitalism" is nonsense. Waste happens in all types of political systems. Capitalism actually allows innovation in waste management. From an emissions standpoint, the US has reduced emissions the most BY FAR… I think most people are not only absolutely clueless about Capitalism because they've been taught to hate it since high school, but also clueless about the energy space… Bitcoin is extremely Capitalist and Voluntaryist at its core as well, you're sort of discrediting your argument by bashing it.

    Otherwise, great explanation.

  19. What an incredible explanation – I've been trying to come up with a cogent set of arguments against "Bitcoin takes too much energy" and Andreas compresses it all in <10 min.

    It's only a matter of time before aantonop hits 1 mil subscribers.

  20. Awesome speech! As for burning "fossil fuels".. that is yet another myth perpetrated by the oil barons to keep the price high through the myth of scarcity, just like DeBeers promotes the myth of scarce crystalized carbon (diamonds). Oil is most likely produced by the Earth itself and also exists in space.. there are complete interplanetary nebulas of hydrocarbons floating around in space that have been detected by spectrum analysis.. there were no dinosaurs in space BTW.

  21. You are correct in theory. There should be a global cap and trade (and carbon tax perhaps). Bitcoin mining could work under a sound cap and trade model that was properly implemented. But do you expect an effective global cap and trade system to be put in place where (enough) governments are on board and where we could accurately monitor (enough large) participants to limit emissions to an acceptable level?

    In my opinion, with the law of the land: 1) We will not have such policies implemented across the globe quickly if at all. (So we are doing a lot of damage between now and then. We should be taking responsibility if we care about the planet) 2) We will not be able to monitor most miners effectively at the time of their mining. Only large and sophisticated companies would comply. Plenty of small miners are going to be burning coal in remote areas and getting around regulation. They will do whatever minimizes costs just like any greedy capitalist would (game theory).

    Would it be possible to have some kind of sustainability built into the code of the Bitcoin network? Could we be able to limit rewards in the network for only hash produced by solar power (or other renewable sources)?

  22. "Should we start pricing in the externalities of carbon" = "should we self-appoint a violent monopoly to arbitrarily set a price on carbon emissions, and to violently force unwilling people to pay for it". Smh.

  23. I love Andreas but he didn't address something I think might be important. Bitcoin electricity consumption isn't related to the number of transactions on the network. What is it related to? As I understand it, it's related to the hash rate. More miners = higher hash rate? Higher BTC price = more miners?
    So therefore: higher BTC price = more electricity consumption? Which could still grow at a ridiculous rate?

    Also, do second layer bitcoin applications like Liquid influence any of this?

  24. Keeping up with the Kardashians consumer significantly more electricity than bitcoin. 1.6billion tv's. Average power consumption of 72 watts. Used 5 hours a day. Uses 204twh. Btc running 24/7 uses 42twh. But btc is so wasteful!!

  25. Interesting POV. Although i agree to some extension, i find it mind boggling why everyone is talking about the environmental impact crypto has by wasting energy but totally ignoring the fact that its footprint is much lager then “just burning fuel”. The amount of CPU’s, GPU’s, assic’s miners that are stressed to the limit because of aggressive competition. Please do the math for me because i’m just a stupid small fish but please can someone just do the math and tell us how many electronics are burned caused by POW alone in a year. I would love to finally see those numbers.

  26. Hi Andreas. At 6:21 you say "the amount of energy used in mining has no bearing on the number of transactions you can process". I've heard this mentioned before from other sources but I'm struggling to understand what this means with regard to the counter-argument. Could you please clarify or point me toward something I can read that would help me understand? Thank you.

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