Why Bitcoin Uses Energy \ stacker news ~bitcoin

Why Bitcoin Uses Energy www.forbes.com/sites/peterizzo/2022/03/31/why-bitcoin-uses-energy/

39 sats \ 4 comments \ @ugmug 31 Mar 2022 bitcoin

21 sats \ 2 replies \ @BTCMiner 31 Mar 2022

Despite claims to the contrary, energy is essential to Bitcoin's operation.

If Bitcoin did not use energy, its design would simply not offer benefits over existing government monies, and it would fail in providing a viable alternative.

After Ethereum's planned transition to proof-of-stake, the protocol will indeed use less energy. However, it will require those who compete for its money issuance to own at least 32 ETH (about $100,000 at today's prices).

By contrast, Bitcoin users don't need to buy Bitcoin at all to compete for its money issuance.

When new money is issued in the fiat ecosystem, it always occurs at the request of policymakers who work with financial institutions to lend out the new money, entering it into circulation. As on blockchains that do not use energy, new money is awarded based on existing capital and influence.

Simply put, Bitcoin’s miners do not set the rules, they follow them.

22 sats \ 1 reply \ @BTCMiner 31 Mar 2022

Proof-of-Work is NOT needed to validate transactions. When you receive funds, your wallet should validate the incoming transaction

Proof-of-Work is system which decides between conflicting VALID transactions produced around the same time

https://twitter.com/CleanUpBitcoin/status/1508869491610075151

https://twitter.com/BitMEXResearch/status/1509620779733991426

0 sats \ 0 replies \ @BTCMiner 31 Mar 2022

Another point that is not widely communicated ... is that the amount of energy bitcoin consumes today is related to the price, not to any actual need for that to be 15 GWs.

Put simply, miners will add facilities and hashing equipment as long as their plans are that such investment will be profitable. So if the price doubles (or is expected to double), the miner's revenues double, ... and for the most part, the hashrate (and the amount of energy consumed) will double -- all else being equal.

Now the reason that doesn't actually happen is that more of those revenues end up going to capital expenditures (CapEx) than to electricity. That CapEx is spent on more efficient hardware, ... so even though a higher BTC/USD price results in more hardware being acquired, the total amount of electricity won't rise anywhere near at the same level.

And then halvings (every four years), result in the miner's revenues being cut in half, ... which ends up forcing "marginal" miners offline/out of business, or to cause them to de-commission obsolete hardware and invest in the more efficient hardware.

In other words, it's not a strict liner relationship ... where when bitcoin price jumps 4X doesn't mean the amount of electricity consumed will also rise 4X. But electricity consumption and price are indeed related.

10 sats \ 0 replies \ @ugmug OP 31 Mar 2022

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