Isn't Crypto Energy Usage an Environmental Disaster?


To preface this, I am not a crypto expert. I'm merely a fan boy. I read the Satoshi white paper in 2012. At that time my life was a wreck largely due to the 2008 crash. So Satoshi's solution stood out to me as a game changer. I spent the slow weeks over Christmas vacation to dream about and publish a book on the subject. I enlisted help to help me understand it and write the book. Mainly as a means to understand it myself. The book is here.

It's horribly outdated and better experts than I have done better jobs at writing books on the subject. Mine is just an artifact now.


After that I did a deep dive into Andreas Antonopoulos's work. I watched everything he put out. I could see that this was going to change the world and I just had to understand it. 

So with that in mind. Here is my answer to crypto energy usage. I get asked the question (or told that it's bad for the environment) fairly regularly. So instead of repeating myself I pasted my answer here. Perhaps someone can do a better job of answering but as of yet I haven't seen this info compiled into one place. If it is let me know and I'll link to it from here.


Can anyone explain how crypto/blockchain “currencies” are going to be able to handle all the transactions they’d need to handle to replace the weird mix of stuff we currently call “money”? The power consumption just seems like an unsolvable problem, but maybe someone smarter like Phil Weaver knows.  ~Dan Theis


Yez there are several answers. 1) more transactions does not mean more proof of work computing. The computing power value used will always be just under the emittance plus transactiin fees. The electricity used dies not correlate to number of transactions. This is a fallacy spread by the media. 2) the large number of transactions needed are handled by layer 2 solutions such as the lightning network. Which is up and running. These solutions are proof of stake. This is an example of composability. One of the biggest ztrengths of crypto. Everything plugs into everything. Like legos. In this case computation (lightning) has been separated from security (bitcoin). Security is where the cost is. 3) a lot of mining is being moved to stranded sources of electricity. Geothermal in greenland and now el salvador. This is creating new clean industries. Essentially the power that would have gone to waste is converted to storable monetary value. 4) Renewable energy becomes financially viable. Renewable energy production does not generally match demand. And it cannot be stored. By placing proof of work mining near renewable energy sources it can use energy that would have gone to waste. The operators of renewable energy always have a place to sell their energy. This of course will lead to the building of more renewable energy facilities. Instead of raping taxpayers to build them the market will provide. Kinda the opposite of what the media is telling you Surprise!!!


It's also very important to realize that what is being paid for with energy is only partially the creation of money and state changes. It is security. That is the most important feature of btc. So add up all the security costs of fiat and even gold. What do all of those building cost to build and operate. The security guards. The cybersecurity specialists. The upkeep of the ancient settlement system that uses programming that almost nobody knows how to code in anymore. And how secure is that? How fragile is that? If you want to compare apples to apples add up everything. Security, production and transportation, Compliance.

Back in the day us crypto folks all touted the beauty of tiny transaction fees and all that enabled. I thought I would build my own tipping economy based on colored coins. That didn't happen. The increased transaction fees created a problem and the market created a solution. Btc has evolved to become a settlement layer. That's why it is referred to as digital gold. It is no longer a payment system per se. It is a settlement layer. When people buy a happy meal in El Salvador that transaction is not on chain. It is in the lightning network. At some point that lightning channel will settle out on chain but there is no predetermined time when it has to. It could stay open as long as it wants. and buy doing so it is saving on the settlement transaction costs. The computing cost to run a node on the lightning network is no more than a regular CPU and there is no proof of work algoryth. It is proof of stake. If there is more demand more channels open. And this solution has been operating for several years. Yes there was a problem with energy usage, but it is now at a point where that has reversed. Proof of work requires energy but to be competitive miners must find the cheapest energy. And that means finding energy that is not being used. Sometimes that means making it more financially incentivized to build green energy production. So our net in the end is actually solving environmental concerns, not creating them. Those who spout otherwise are slowing this move forward down. They are damaging the planet. They are damaging the economy, and they are most certainly putting our place as a world leader at risk.

Incidentally Eth is moving towards becoming a settlement layer as well. They are not trying to be all things. They are trying to be what all things are built on top of. And the plan is to be 100% proof of stake. We'll see how that goes. They also already have layer two solutions. Two different technologies vying for top spot. Optimism and zk rollups. Optimism seems to be the winning solution now but it is predicted that zk roll ups will eventually win out. This is because optimism does require a time delay for settlement. This was spurred on by the same thing that catalyzed btc layer two. High transaction fees. The network gets congested. Everyone panics and says it's the end. The marketplace provides a solution. Same pattern over and over since I don't know when.

OMG we can't go from 28K to 56k the network will never handle it. OMG VOIP will never work, the network will never handle. OMG you can't put video on the internet the network will never handle it. OMG you can't let just everyone do live video chat the network will never handle it. Oh wait

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