{"id":22043,"date":"2018-05-25T20:31:50","date_gmt":"2018-05-25T20:31:50","guid":{"rendered":"http:\/\/ci027cfe63900026c3"},"modified":"2018-05-25T20:31:50","modified_gmt":"2018-05-25T20:31:50","slug":"first-bitcoin-mining-conference-hashes-over-high-cost-energy","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/first-bitcoin-mining-conference-hashes-over-high-cost-energy","title":{"rendered":"First Bitcoin Mining Conference Hashes Over the High Cost of Energy"},"content":{"rendered":"
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Bitcoin mining<\/a> uses as much electricity as Ireland, and by the end of 2018, the Bitcoin network will be using as much energy as Austria, according to a new report<\/a> by Alex de Vries of the Experience Center of PwC in the Netherlands.<\/p>\n

Billed as the first serious, peer-reviewed study of energy use in crypto mining, the report has set off alarm bells, adding to current concerns about the impact of future mining energy consumption on environmental issues like climate change.<\/p>\n

At the first-ever conference<\/a> for crypto mining, held on May 17, 2018, in New York City, an expert panel hashed out the implications of rapidly growing energy consumption among miners worldwide.<\/p>\n

Amber D. Scott, CEO of Outlier Solutions<\/a>, moderated a panel of experts that spoke about the energy issue as part of a discussion on the topic of proof of work (PoW) vs. proof of stake (PoS). <\/p>\n

Scott told Bitcoin Magazine<\/em> that there was a lot of discussion at the conference about the new energy report in part due to the attention it\u2019s currently receiving in the press. <\/p>\n

\u201cThis is an area where there is a spectacular amount of FUD [fear , uncertainty and doubt],\u201d she noted. \u201cThis is in part because it\u2019s a nuanced issue that can\u2019t be summed up in simple statements about net energy consumption.<\/p>\n

\u201cI think that part of the reason that Bitcoin has been a \u2018target\u2019 in this respect is that there are relatively straightforward calculations in terms of power consumption in conjunction with the underlying value not being well understood or widely accepted. For instance, few people question the utility costs of a bank or ATM, and the energy consumption cannot be calculated in a straightforward way,\u201d she added.<\/p>\n

Scott Howard, CEO and co-founder of Toronto-based ePIC Blockchain Technologies<\/a>, told the conference audience what many there were already saying: that the energy consumption issue is \u201cfake news\u201d and has been oversimplified to suit Bitcoin opponents.<\/p>\n

High Energy and Environmental Costs of Traditional Fiat and Banking <\/h3>\n

Traditional banking and fiat creation have their own high energy costs, noted a number of conference panelists, including Alex Petrov, CIO of Bitfury<\/a>; Jan \u010capek, CEO of Slush Pool<\/a>; Samson Mow, CSO of Blockstream<\/a>; and Howard.<\/p>\n

They talked about the high infrastructure costs, in terms of both energy and the environment, associated with traditional banking systems, including ATMs, security and servers.<\/p>\n

\u201cThere are 3.6 million ATMs deployed in the U.S. Each of them are using 7 to 800 watts just in standby mode,\u201d said Petrov. \u201cThis alone generates huge numbers of electricity usage, slightly higher than the Bitcoin network.<\/p>\n

\u201cIf you add \u2026 internal banking systems, CTVs, communicating with other banks, additional protection \u2026 you get higher costs than the cost of Bitcoin,\u201d he added.<\/p>\n

\u201cGold mining consumes enormous energy. Portions of the electricity crypto mining consumes come from power generation and distribution originally built to supply ore and precious metals extraction or processing,\u201d said Howard.<\/p>\n

\u201cWhere traditional energy consumers like gold mines really fall down is all the other negative externalities of the \u2018wealth\u2019 they create. Gold mining during and after is one of the most toxic and destructive operations on the planet.\u201d<\/p>\n

Howard talked about the use of abandoned industrial sites for Bitcoin mining, like pulp and paper mills that had been closed due to dwindling forestry supplies and increased concerns about energy use and toxic waste pollution.<\/p>\n

\u201cLots of crypto mines are sitting in old industrial sites with a 100-megawatt transformer sitting next to them,\u201d he said.<\/p>\n

By way of example, in the Q&A session that followed the panel, one conference participant talked about his mining operation in British Columbia in a partly abandoned manufacturing site where water is pumped through his mine for cooling and then recycled into a warm-water fish farm.<\/p>\n

Mining Doesn\u2019t Create New Hydro Infrastructure: Power Is Produced Even If Unused<\/h3>\n

After the panel, Howard reiterated to Bitcoin Magazine<\/em> what other conference panelists had said: that large energy mega-projects like hydro dams produce electricity whether they\u2019re used or not.<\/p>\n

\u201cTo my knowledge, no one has built out any net-new power generation to supply a crypto mine. Power generation stations are major pieces of infrastructure that take years to put in place and in the range of a decade to pay off. Most power generation is done, certainly in the western world, by publicly owned and\/or regulated utilities. Those stations run 24\/7, 365 for decades. The energy goes onto the grid no matter what and, until we figure out storage, is a perishable commodity.<\/p>\n

\u201cCrypto mining takes full advantage of this, typically sucking up energy at very low prices. The prices are low because the energy can\u2019t find more productive use, often taking over abandoned industrial sites far away from urban centers,\u201d he added.<\/p>\n

\u010capek told the conference that \u201cChina has been overinvesting in hydro power and has large amounts of power that is not being used\u201d as a result of overbuilding hydro dams in anticipation of industrial needs (principally aluminum manufacturing) that never materialized.<\/p>\n

\u201cCheap hydro power has helped China dominate the world\u2019s Bitcoin mining business, and this power would be generated with or without Bitcoin mining,\u201d said \u010capek, who recommended a recently released study<\/a> on the energy costs of mining in China. <\/p>\n

\u010capek said a rough estimate of global Bitcoin mining energy use is 25 terawatt hours per year, only a fraction of the amount of energy used in manufacturing aluminum globally.<\/p>\n

PoW vs. PoS<\/h3>\n

The panelists mostly agreed that proof of work\u2019s higher energy use is necessary for real security and that proof of stake is not likely to happen soon. They noted that PoS would not give the Bitcoin network the security it needs, even if it was more energy efficient.<\/p>\n

\u201cThe more energy that\u2019s expended, the more security you have,\u201d noted Mow. \u201cThe system has to be nuclear-proof.\u201d<\/p>\n

Petrov defended the possibility of a hybrid model of both PoW and PoS, saying, \u201cProof of stake may work for some specific purposes, not necessarily in the financial area but inside private blockchains.\u201d<\/p>\n

Mow responded that using both PoS and PoW \u201cbrings out the worst of both worlds,\u201d while Howard noted that Dash is using a hybrid model with some success, though it\u2019s very expensive to use.<\/p>\n

Howard concluded: \u201cIt [Bitcoin mining] is a positive economic activity, typically in places where it is needed, as well as meaningful revenue to the utilities which are major employers and usually profit centers for governments. The \u2018waste of energy\u2019 argument, like most establishment arguments against blockchains, does not pass the test of science.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cThis is an area where there is a spectacular amount of FUD. This is in part because it\u2019s a nuanced issue that can\u2019t be summed up in simple statements about net energy consumption.”<\/p>\n","protected":false},"author":2916,"featured_media":22044,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[592,326,3384,1651,2082,3325],"class_list":{"0":"post-22043","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-conferences","9":"tag-energy","10":"tag-jan-capek","11":"tag-new-york-city","12":"tag-samson-mow","13":"tag-scott-howard"},"author_data":{"id":2916,"name":"Jessie Willms","nicename":"jessie-willms","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/34e39b2d2b80d0f1b4eaf183ca23eff71d1e903536d749658f27936a80197dee?s=96&d=robohash&r=g"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/first-bitcoin-mining-conference-hashes-over-the-high-cost-of-energy.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/22043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2916"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=22043"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/22043\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/22044"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=22043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=22043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=22043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}