Is Bitcoin mining a waste of electricity?

Bitcoin's recent and continued sharp price rise has received widespread attention from the global media, and debates have arisen over whether the bubble will burst. However, according to foreign media Powercompare, most reports have missed a more interesting and unexpected consequence of this price increase - a surge in global electricity consumption used to "mine" more Bitcoins.

According to Digiconomist's Bitcoin Energy Consumption Index, the current annual electricity consumption for Bitcoin "mining" is estimated to be 29.05TWh. TWh is a terawatt-hour, equivalent to 1 billion (10^9) kilowatt-hours. How amazing is this number? In terms of proportion, this is equivalent to 0.13% of the world's total electricity consumption. Which countries currently consume more electricity than the global Bitcoin mining consumes? Powercompare also provides the percentage of global Bitcoin consumption in each country's electricity consumption:

For example, Ireland currently consumes about 25TWh of electricity per year, and global Bitcoin mining electricity consumption is 16% higher than that country's electricity consumption. In addition, the UK consumes about 309TWh of electricity per year, so global Bitcoin mining consumption is only equivalent to 9.4% of the UK's total.

The question is, is mining Bitcoin a waste of electricity?

Full disposal rights within the scope of property rights

On the premise that property rights are clear, everyone has the right to freely dispose of property.

As long as it is my own property, how I use it is my own business, and others have no right to accuse me of being wasteful. I can use my things however I like, as long as it does not harm society or the rights of others.

The electricity used in Bitcoin mining, mining under the POW consensus algorithm, has clear property rights. The electricity I use for mining is purchased by myself. I bought the electricity from the market, and I own the property rights. I can use it for mining if I like. What right do you have to say that I am wasting it?

Of course, those who steal electricity for mining are wrong. This has nothing to do with POW. It is a problem of the thief's character. If he steals other people's electricity, he should be arrested. All the accusations that POW mining is a waste of resources are fundamentally untenable.

In addition, some lame economists and experts come out and talk about "externalities", saying that one person's behavior will cause benefits or costs to another person who does not choose this behavior. For example, because we miners mine and buy a lot of graphics cards, the price of graphics cards has increased, so people who play games have to spend more money to buy graphics cards. This is the behavior of miners buying graphics cards that leads to costs for gamers.

These low-level economists are so bored that they came up with a term like externality, which was then used by even more stupid people to accuse Bitcoin mining of wasting electricity. Although the electricity used for mining is paid for, it could have been used in more useful areas and could have produced more social benefits... so mining should not be done. This is absolutely outrageous and shameless logic.

What does it mean that electricity can be used to do something more useful? Is it more useful to play games? Is it more useful to use air conditioning? Is it more useful to turn on lights? These are all subjective judgments. Under the premise of a free market, the criterion is that it is more useful if you are willing to spend more money. We think mining is more useful. If you think it is more useful to do other things, please spend more money to buy electricity. If you have the ability, buy all of it. We promise that we will not accuse you of wasting resources.

Externality is an inaccurately defined term, and those who understand it should stop using this toxic term.

Unavoidable losses cannot be considered waste

When we go home for Chinese New Year, my mother always cooks more than what is needed. When the whole family is full, my mother says, "Eat a little more, share a little, don't waste it." I have to reason with my mother again, we have to waste it, if we eat this food, we will get obesity and diabetes if we eat too much for a long time, the best way is to throw it away. Throwing away leftovers should not be defined as waste. It is something that must be done for a healthier life.

POW (Proof of Work) is the most humane part of blockchain design. The essence of mining is to distribute Bitcoin fairly. There is no administrative threshold, only an economic threshold. If you want to get coins, you can buy them with money or invest in mining. This is the fairest design.

For the sake of fairness, humans have paid more than just a little bit of electricity. In human history, the fairest currency is gold. Gold is obtained by humans using the largest mining equipment and taking great pains to dig out gold from the ground, using the world's most toxic cyanide to refine gold, and then making gold nuggets, burying them back in underground warehouses, and sending countless soldiers to guard them... How can it be more "wasteful" than this?

Many of the behaviors you think are not happening are just because you haven’t calculated the accounts clearly.

If you buy car insurance, would you expect the insurance to work and go get a car accident and ask for compensation? No one would do that, because no one is stupid. But almost no one does not buy car insurance, because it is very useful and can hedge risks. If you say that Bitcoin mining is purely calculating meaningless random numbers and it is a waste of electricity, it is because third-rate economists really don’t understand: the establishment of trust is never free. You don’t understand the value of Bitcoin. Bitcoin is now worth 60,000 yuan, which means that there are millions of people willing to spend 60,000 yuan to buy a coin, and this is the value. If you insist that Bitcoin can be sold for 60,000 yuan without mining and without wasting electricity, it means that you have to eat 5 bowls of rice to be full, and you can’t ignore the value of the first 4 bowls of rice. Why not skip the first 4 bowls and eat the 5th bowl directly? :)

In fact, the current digital currency market share is almost all POW mining, which is the most efficient consensus mechanism so far.