Argentina as a Bitcoin farmer

Ries

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Always makes me laugh when people get all worked up about BTC not being green. The traditional banking system uses far more energy.

What's the energy footprints of all the banking branches, the heating, the air conditioning, the employees who need to travel to the branch to work, the customers who need to travel, the guns and trucks needed to transport money, the material and energy to print physical money, the energy for ATMs and on and on....?

And soon cryptos like Ethereum and Solana will be able to replace all the functions of a bank using much less energy using POS.

Bitcoin is around 2% of the amount of money in the banking system.
And Bitcoin mining currently uses about 50% of the electricity of the entire global banking system.
Out of the approx 8 billion people on earth, about 100 million have used, or use, bitcoins.

so, yes, it is true that bitcoin mining, currently, does indeed use less electricity than all the banks put together.
but it uses half as much, to serve a tiny tiny percentage of the people.

And, by design, each bitcoin made uses more electricity to create than the last one. Its energy consumption will trend upwards at a frantic rate.

In Europe, Japan, and the US, we have non-speculative online banking that does everything Bitcoin does, in terms of utility- and, for most, a stable currency beats a speculative risk on bitcoin.
The only reason bitcoin exists is to avoid taxes.
And, to gamble on getting rich.
It is not better in any way than current banking systems for day to day use.
The example of El Salvador seems to be that people are using bitcoin due to a terrible banking infrastructure, but not holding it, and already complaining a lot about the increased fricitonal costs. If they had a decent banking system, it would not be popular.

In my mind, its a pyramid scheme. The reason people cannot agree on its "value" is that it has none.
At least, dollars are backed by a real country, with laws, real estate, and a functioning economy.
 

elhombresinnombre

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I agree more-or-less with @Ries above though I might argue about some of the details at the edges. I think that bitcoin does have at least an intrinsic value related to the electricity invested in its manufacture. Some years ago I came across some numbers relating to the costs involved in manufacturing electicity around the globe and elsewhere some figures tracking the price and the rate of growth of bitcoin and using back-of-the-envelope techniques I came to the conclusion that, at that time, the average value over time of all the bitcoin mined to date roughly matched the average cost of the electricity consumed in the process. I don't know if the same applies today but I can't see why it wouldn't.

On that premise, I think that the way to make a profit mining bitcoin must be to use electricity generated at low cost (solar, hydro) or not to pay the full production cost - ie move to Argentina and use electricity subsidised by the taxpayer - or steal electricity by not paying for it in the first place, bypassing the meter or operating scams like the Buenos Aires Starbucks bitcoin mine https://www.bbc.co.uk/news/technology-42338754

Likewise, if it has an intrinsic value the only way to make a profit from trading bitcoin is to ensure that someone else is making a loss. Buying and selling as if trading comodities or currency is one way. Physical violent attack is another way (https://www.nytimes.com/2018/02/18/technology/virtual-currency-extortion.html (may be paywalled but you know how to bypass it, don't you?)) There are other forms of theft ranging from hacking directly into the places holding bitcoin to hacking indirectly by going into other computer systems and demanding a bitcoin ransom to decrypt the files etc.

As for the escalating cost of mining the last few bitcoin and the last few fractions of the last bitcoin, I have a gut feeling that the last 0.000000000000000000000001 or thereabouts of bitcoin is going to require more energy than we have in the known universe. But if all the lights start going out all over the world perhaps we already know the reason why.
 

Sequoia1321

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That’s interesting. I’d like to know more about Bitcoin’s energy consumption if it becomes more widely used. I don’t know the technicals but some smart people are for bitcoin, like Jack Dorsey, MicroStrategy, Elon Musk sometimes, etc. The guy from MicroStrategy, Michael Saylor, actually seems very cool. But at the same time, people seem to be raising important concerns as well. I don’t personally know the answer so would be curious to find out more. I heard that Christmas lights take up more energy than bitcoin, though not sure what will happen to this if bitcoin gets more widely used. But bitcoin also seems to have important utility. It’s the people’s money as opposed to government money. And it’s not inflationary like USD. Assuming it doesn’t get hacked, I trust it as a store of value in some ways more than I trust USD that keeps inflating, except for that Bitcoin is very volatile currently. It’s not highly regulated and there’s lots more available leverage for crypto traders than there is for stock traders, and so they’re using no where near the money that they have in bitcoin to trade, which might be why it’s so prone to volatility, because if their stop losses get triggered or their loans are liquidated it causes massive price movements as if there are huge amounts of bitcoins being liquidated. Or maybe there’s another reason why it’s so volatile, not sure.

I’m not an economist though, maybe there’s something I don’t understand and USD and fiat in general are doing it right, or that both fiat and crypto have a valid use case, which they seem to have at least at the moment. But personally I don’t like the value of my money getting lost over time due to money printing. But Bitcoin isn’t the only alternative, right? What about proof of stake cryptos? Aren’t they much more energy efficient? But there has also been a drive to use renewable energy sources for bitcoin mining, and I heard lots of the mining worldwide is done by renewables. I don’t know the answer and how beneficial it is for the world and Argentina in terms of energy use, but I don’t think Bitcoin was a useless thing either. Also, I heard that Bitcoin is one of the few cryptos that got widely distributed among different people rather than being distributed highly among founders and original investors. I heard that kind of diversity of ownership isn’t an easy to replicate in new cryptos, because now days big players tend to gobble lots of it up, not sure how true that is. Although, Satoshi’s wallet has a huge amount of Bitcoin that apparently has never moved, 1 million BTCs out of a total possible BTCs of 21 million, is a big percentage in the hands of one person/entity, so that might be a source of concern, even if Satoshi was a good guy which it seems to be true, what if his wallet gets hacked or something, I don’t know.

A lot of questions. But at the same time, I respect what bitcoin has done and it seems crypto will have a successful future and hopefully will create a more free society, and to allow unbanked people to have access to money. It and cryptos in general are the people’s money after all, people just creating money out of thin air, sometimes it seems bad, but sometimes it seems very good, depending on the characteristics of the money they create, which Bitcoin seems to have many good characteristics. And governments might not be able to destroy it, which seems like a good thing. Also, there has been a creation of new wealthy people. I see on Youtube lots of young people or people who became rich from it who otherwise work a 9-5 job, so that seems sort of cool, assuming they are good people who got this new power, which lots of bitcoiners it seems were good people of a good culture, so that’s not bad kind of people for new power creation. The movement seems to be very international, anti-authoritarial, people minded as opposed to nationalism minded, and into having more decentralized and self working systems as opposed institution heavy systems. Bitcoin and the crypto phenomenon that it started seems to be one of the coolest things to happen in a while. Reminds me of how rock and roll hit the scene and made lots of adults upset, yet I think it was genius and a burst of creativity that’s still relevant. I believe there is also a sensual, gut feeling, heart analysis in addition to logic heavy analysis, and this sensual/heart analysis I think can see things that sometimes our logical mind might miss. That sensual part of me doesn’t like to get rid of bitcoin. But senses can also be wrong at times, so I would also like to know more about the energy situation of it and if it’s worth it today or in the future. For example, if they use renewables is that going to fix things with it? Or what if one day energy creation becomes much easier to do and more environmentally friendly, like if every house will have a box that creates energy out of thin air? Or if computer hardware becomes more energy efficient? It seems many of our great progresses have been win win, of having your cake and eating it, of smaller yet having more power, so I could see this continuing to be happening in energy and computers as well. Or maybe this has already happened with proof of stake cryptos. I don’t know.
 

FrankPintor

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Bitcoin's 99.9% energy inefficiency (almost all of the POW is thrown away) and 10 mins per Bitcoin transaction are huge problems for scaling Bitcoin to compete with credit card transactions for example (less than 1s per transaction and a fraction of the energy).

About the value of Bitcoin, I don't know if you can consider the energy used to represent the value since that's gone. The value seems to be in the blockchain, so every transaction is verified and can't be counterfeited, but what other currency invests so much in protection mechanisms like that? Banknotes have security features like metallic strips, holograms, etc that don't cost as much as the banknote is valued at.
 

Dougie

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Ethereum and Bitcoin are a pyramid scheme with no technological improvements lol.

Ok, you can keep your bank accounts with the scam artists at Wells Fargo, shiny rocks and blood and oil soaked US dollars.
 

Brian_is_here

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Layer2 solutions will reduce the speed and cost of bitcoin transaction. Lightning Network

Ethereum is used for a lot for decentralized finance purposes. That's a huge driver in the price. Other cheaper/smaller blockchains are already muscling in on its high prices (Solana BNB). But ETH has first mover advantage. This is also the concept behind the NFT craze. Smart Contracts

Bitcoin mining usually goes where the electricity is cheapest. Green energy from hydro dams is usually the cheapest. In China they would physically move their mining farms to where the cheapest electricity was seasonally (hydro or subsidized coal). In the US and Canada, this is almost always Hydro. Green energy is usually just cheaper.

Layer1 will never be able to compete with creditcards, but Lightning network (Layer 2 or L2) will. This is somewhat the strategy behind El Salvador. Chivo wallet uses the Lightning network for a lot of work. Your CC vendor spends like 1-3% of the transaction on fees. Sure its fast, but the vendor is paying 2.5% for the privilege.

The cost of mining and price of bitcoin secures the blockchain. The blockchain is protected simply because to attack it, you'd need to mine more than everyone else combined. There are no counterfeit bitcoins. It is not something that can exist. Your ownership and all other ownership of all other bitcoins is secured every time a new bitcoin is created. The creator has to solve an increasingly challenging problem and then verify all previous solutions in order to achieve ownership of the next bitcion. (hence the name blockchain, each BTC exists in a block and they're chained together).
 

Sequoia1321

Registered
Layer2 solutions will reduce the speed and cost of bitcoin transaction. Lightning Network

Ethereum is used for a lot for decentralized finance purposes. That's a huge driver in the price. Other cheaper/smaller blockchains are already muscling in on its high prices (Solana BNB). But ETH has first mover advantage. This is also the concept behind the NFT craze. Smart Contracts

Bitcoin mining usually goes where the electricity is cheapest. Green energy from hydro dams is usually the cheapest. In China they would physically move their mining farms to where the cheapest electricity was seasonally (hydro or subsidized coal). In the US and Canada, this is almost always Hydro. Green energy is usually just cheaper.

Layer1 will never be able to compete with creditcards, but Lightning network (Layer 2 or L2) will. This is somewhat the strategy behind El Salvador. Chivo wallet uses the Lightning network for a lot of work. Your CC vendor spends like 1-3% of the transaction on fees. Sure its fast, but the vendor is paying 2.5% for the privilege.

The cost of mining and price of bitcoin secures the blockchain. The blockchain is protected simply because to attack it, you'd need to mine more than everyone else combined. There are no counterfeit bitcoins. It is not something that can exist. Your ownership and all other ownership of all other bitcoins is secured every time a new bitcoin is created. The creator has to solve an increasingly challenging problem and then verify all previous solutions in order to achieve ownership of the next bitcion. (hence the name blockchain, each BTC exists in a block and they're chained together).
Regarding the security of the network, what about quantum computers? Can’t they, if created, or if already exist secretly, hack these cryptos? But then again, can’t they also mess with other things as well? Often governments have capabilities exceeding current known capabilities, like for example, when the code breakers in WWII hacked the German Enigma machine, or when they had radar that was able to know the enemy’s position, etc. I have however heard of someone mention the term quantum resistant cryptos, but I’m not sure if bitcoin is one of them or if this might be possible to do with an upgrade.

In addition to the Layer 2 solution, regarding competing with credit cards, I’m surprised actually that companies like Paypal, Visa, and Mastercard have been seemingly very friendly and adoptive of crypto. See below articles for example. I don’t understand how these companies allowing crypto might work in terms of transaction speed. Are these actions by these payment companies going to basically allow people to use their network to effectively and easily pay using their crypto?


 
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Brian_is_here

Registered
Regarding the security of the network, what about quantum computers? Can’t they, if created, or if already exist secretly, hack these cryptos? But then again, can’t they also mess with other things as well? Often governments have capabilities exceeding current known capabilities, like for example, when the code breakers in WWII hacked the German Enigma machine, or when they had radar that was able to know the enemy’s position, etc. I have however heard of someone mention the term quantum resistant cryptos, but I’m not sure if bitcoin is one of them or if this might be possible to do with an upgrade.

In addition to the Layer 2 solution, regarding competing with credit cards, I’m surprised actually that companies like Paypal, Visa, and Mastercard have been seemingly very friendly and adoptive of crypto. See below articles for example. I don’t understand how these companies allowing crypto might work in terms of transaction speed. Are these actions by these payment companies going to basically allow people to use their network to effectively and easily pay using their crypto?


Quantum computing doesn’t work quite like that is a long way out from being able to break complex encryption.

When it does the entire worlds encryption will be broken.
 
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