Future network energy consumption looks problematic

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Bitcoin does not have a feed back mechanism for price of electricity. Bitcoin always tries to spend all of it's money on electricity. This is by design, it tries to maximise the network security to the expense of all other goals.
If you are not familiar with this it's worth reading about Proof of work & costs & bottlenecks of mining operations.
The price of Bitcoin will rise to meet the demands of a growing user base. At a price of £52,000 per coin, the 12.5 BTC block reward will be worth £93m per day, most of which will be spent on electricity. Annually that would be ~341 TWH. For comparison, US consumes 4,070 TWH, UK 347 TWH. Obviously, the price would rise for electricity, the price of electricity would rise for everyone globally.

Businesses usually have a fixed amount of work (given a set number of sales) and if the energy cost is too high then alternatives are used or investments in increased efficiency are made. Over a period of years the energy cost of a business will go down as improvements are made. Importantly, if improvements can't be made, the cost of the product will rise, and the sales decline.

In Bitcoin, as improvements in energy consumption goes up, the work increases proportional to the improvement. A 50{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8} chip efficiency will result in a 50{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8} increase in difficulty rating. If the cost of electricity drops, Bitcoin will just scale up consumption to match the previous cost.
Bitcoin is super secure, if we consider it to have enough security, we can't opt not to pay more. At the current Bitcoin price we pay about £3.6m a day. If the price of Bitcoin increases by a factor of 10x, we will pay £36m a day. We have no supply / demand control of this price.

Given the current algorithm, it seems likely Bitcoin will become problematic with the amount of energy it consumes. It's insensitivity to price means that it will always consume what it can and we can never reduce it. The decentralized uncontrollable nature of Bitcoin means we can't artificially (e.g. make a law) constrain the energy usage. When Bitcoin completely mainstream it will also be some 10{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8} of the worlds power consumption.

I'm hoping there is some way to address this issue, I think Bitcoin is brilliant, but I don't think it's worth spending 2.5 Petawatt hours per year.

Sources: https://en.wikipedia.org/wiki/Electric_energy_consumption
http://digiconomist.net/bitcoin-energy-consumption

Edit: I hope some people have ideas on optimizing bitcoin for energy efficiency. I expect there is some PoW system that can balance the security incentive with our other needs.

TLDR:

Bitcoin has a strange relationship to energy, where other entities would diminish energy usage in the face of high prices, Bitcoin will blithely carry on trying to use as much as it can.

  • Improvements in energy efficiency result in increased work / difficulty rating. In a business, prices would lower, and less energy would be used.
  • Increased cost of electricity does not reduce the demand for mining. Product price would increase, lowering demand for the product
  • Mining supply / demand has no effect on the use of Bitcoin. *Supply / Damand of the product effects energy prices and vice versa *
  • We pay a fixed percentage of the "market cap" for security, which we can't change with demand.

TLDR too long didn't read:

A mainstream Bitcoin will use over 10{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8} of the worlds electricity. That is too expensive.

submitted by /u/Elum224
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Ticker

1 BTC = $28383.73 USD  (via Coinbase)
1 ETH = $1789.42 USD  (via Coinbase)
1 LTC = $89.13 USD  (via Coinbase)
Quotes delayed up to 2 minutes.

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