Quote from: ShadowOfHarbringer on December 27, 2013, 11:22:40 AM

Quote from: go1111111 on December 25, 2013, 03:35:22 AM

You've all heard the environmental/waste argument "the Bitcoin network uses too much computing power."

Right now I don't think this is a good argument. We're not spending that many resources mining if you make the comparison with the cost of securing banks and credit cards. However, if bitcoins jump in price like a lot of us hope they will, this will be a legitimate problem.

Actually, it will never be a problem because modern computing technology is still extremely inefficient and there are no signs that it will improve anytime soon.
Most of the power (I don't remember exact numbers, but it is at least 75% or more) that CPUs/ASICs use is still wasted as heat.

So we can use the heat produced by CPUs, GPUs and ASICs to heat our buildings.

Problem solved. NEXT, PLEASE !

This doesn't solve the problem. Let's say that you productively harvested all of the heat that BTC mining equipment released, (used it to toast bread, heat water, etc..), the marginal cost of mining would be 0 (because you needed the electricity anyway).

That would simply entice more people to enter the market, and the cost of maintaining the bitcoin network would be in raw materials, semiconductors, time, rather than in energy.

The standard economic analysis is perfectly valid and predicts that the cost of maintaining the network will equal the value of the coins created.

This is real dead-weight loss. Not even on the order-of-magnitude loss as government, so I'm happy to take money-creating authority from them. I don't think it will cause a problem for bitcoin adoption from an individual point of view, but it's a legitimate concern.

Interestingly, this means that taxation ( Cry

) of bitcoin mining is one of the few forms of taxation that results in no dead-weight loss, so if the government can put this money to good use somehow, that wouldn't be a bad thing. Further, if bitcoins were fractionally reserved, the price could stabilize at a fraction of the theoretical amount resulting in less dead-weight loss.

Obviously, the flipside to this is a price that is too low to subsidize miners and a weak network, provided no fixes to the transaction fee tragedy of the commons are implemented. It's an amazingly tough balance to strike, especially for Satoshi who had to do this all years in advance.