Cryptocurrencies and the economy

[Puppycow]

I realize that there's already a thread about bitcoin, but I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.

It does seem weird to me, how volatile they are. I admit, I don't really understand why people think they have value. Bitcoin is over $60,000 now. Ethereum over $2,000. Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable? How much energy does it all consume, anyway?

The popularity of cryptocurrency mining graphics cards may have surprised even Nvidia

Nvidia expects its CMP lineup will net $150m in its first three months, three times more than initially expected.

In the same breath as announcing a bleak outlook for GPU shortages this year, Nvidia has revealed that its CMP (Cryptocurrency Mining Processors) lineup is set to make more money than it had first expected.

Launched last month, Nvidia had initially expected a return of $50 million from its CMP lineup. In a short period of time, however, it has scaled that up three times, to $150 million for these cards' first three months.

Nvidia's CMP lineup is made up of four cards that share some similarities with existing and past GeForce generations from Nvidia. However, they are not one and the same. While they may share some silicon, the CMP cards are said to be built with GPUs unable to deliver what's required for Nvidia's GeForce lineup. They also do not feature any outputs and probably cost a lot more.

One major cryptocurrency outfit recently ordered $30 million in CMP GPUs, which accounts for a rather large chunk of Nvidia's new CMP revenue alone. It appears as though scale takes precedent over savings here—the order value could easily see Ampere and Turing chips going for thousands of dollars. It appears as though some of the larger mining operations are desperate for higher hash rates while cryptocurrency value is up, and are willing to pay extra for it.

If you stop and think about it, that's really an incredible amount of real resources being diverted to this. The $150 million is just a drop in the bucket I'm sure.

 

[Belz...]

Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable?

Of course not. Requiring computers to work like crazy to generate currency is insane.

How much energy does it all consume, anyway?

A lot.

 

[Puppycow]

A lot.

OK, you're in.

 

[psionl0]

Of course not. Requiring computers to work like crazy to generate currency is insane potentially profitable.

ftfy.

 

[psionl0]

I realize that there's already a thread about bitcoin, but I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.

It does seem weird to me, how volatile they are. I admit, I don't really understand why people think they have value. Bitcoin is over $60,000 now. Ethereum over $2,000. Good luck if want to buy a graphics card for your computer, because crypto enthusiasts are buying every last one they can. Apparently at current prices, it will pay for itself within a fairly short time. Is it sustainable? How much energy does it all consume, anyway?

The popularity of cryptocurrency mining graphics cards may have surprised even Nvidia



If you stop and think about it, that's really an incredible amount of real resources being diverted to this. The $150 million is just a drop in the bucket I'm sure.

I can only refer you to what I posted in the bitcoin thread:

You must admit that proof of work or even proof of stake are terrible validation techniques because of the energy they waste. If we could come up with an equitable "block" reward system for nodes participating in the consensus process then I am sure that we would have a crypto that was a winner.

As to whether cryptos have any use in the real world, the answer is "that depends". If the global printing press strategy that countries around the world adopt in their currency wars backfires (like has happened to individual countries many times in the past) then crypto-currencies might offer a way forward because their supply can't be manipulated.

 

[Samson]

My interest is in the construct that bitcoin is digital gold.

But the elements on the periodic table are a finite set, and will be forever. Gold is one of them.
The list of cryptocurrencies has no limit, and can be added to at will, so is infinite.

Gold is 1 /104 of a set.
Bitcoin is one of an elastic set to infinity, so can lapse back to zero value, divide any number by infinity.

 

[Olmstead]

I'd been planning to build my first gaming PC about a month ago.

A few hours later I ordered a pre-built rig.

Edit: Also, its carbon footprint is horendous.

 

[The Atheist]

How much energy does it all consume, anyway?

More than Holland, and half as much as the entire consumption of all the data centres on earth*: https://www.bbc.com/news/science-environment-56215787

I have a tech mate who shifted to Australia so they could set up their own solar array to have enough power to mine BTCs, because the cost of paying for it was prohibitive, and he is a PhD++ level computer genius, so if there was an easier way, he'd know about it.

*Most of their consumption is cooling/HVAC systems.

 

[Puppycow]

More than Holland, and half as much as the entire consumption of all the data centres on earth*: https://www.bbc.com/news/science-environment-56215787

I have a tech mate who shifted to Australia so they could set up their own solar array to have enough power to mine BTCs, because the cost of paying for it was prohibitive, and he is a PhD++ level computer genius, so if there was an easier way, he'd know about it.

*Most of their consumption is cooling/HVAC systems.

Wow. And that's just for bitcoin. Doesn't include other cryptocurrencies I take it?

 

[The Atheist]

It looks like it's just BTC. It's so dominant I expect the rest probably only use as much power as Tajikstan.

 

[p0lka]

I know someone that isn't that happy about the increase in bitcoin recently, as it takes ages to do transactions.
For them the value of bitcoin is in the convenience which is being affected now.

 

[Roger Ramjets]

ftfy.

Casinos are profitable too - for the staff and owners. For the gamblers (and everyone else) not so much.

But Bitcoin is potentially worse, because fund managers could be gambling with your money. So long as only a few are doing so the damage is limited, but imagine if Bitcoin became the dominant currency its inventors hoped for - it would be an ecological disaster and massively destabilize world markets.

I know someone that isn't that happy about the increase in bitcoin recently, as it takes ages to do transactions.
For them the value of bitcoin is in the convenience which is being affected now.

And once again Bitcoin fails to deliver on its promise.

 

[psionl0]

My interest is in the construct that bitcoin is digital gold.

But the elements on the periodic table are a finite set, and will be forever. Gold is one of them.
The list of cryptocurrencies has no limit, and can be added to at will, so is infinite.

Gold is 1 /104 of a set.
Bitcoin is one of an elastic set to infinity, so can lapse back to zero value, divide any number by infinity.

Just because this is a new thread, it doesn't mean that you can repeat ancient arguments from the old bitcoin thread that have been thoroughly rebutted:

This exchange took place 6 months ago.

Other than the highlighted, I can't make any sense out of this word salad.

You seem to insist that if you divide a finite crypto market by infinite cryptos, you get $0 per crypto.

That just illustrates your abysmal maths. Consider the sequence {1/2, 1/4, 1/8, 1/16, . . . }: This has an infinite number of terms and a finite sum but many of the terms are an appreciable fraction of the total (not zero).

The same is true of cryptos. No matter how many are invented, most will not amount to anything and won't drag money away from the top cryptos.

I accept that zero is an unrealistic valuation, but that is all.

I wish I could believe that but no doubt, you will soon go back to your "there are infinite bitcoins so bitcoins have no value" line again as if this exchange never happened.

No doubt, Samson was hoping that after all this time, the exchange will have been forgotten so that he could again rabbit on abou "infinite supply of digital money" as if it had never been discussed again.

For a moment putting to one side the technical picture, the fundamentals never change.
There is an infinite supply of digital money.
It is a matter of time to patiently watch infinite supply catastrophically atrophy demand.

Rat poison .

Nailled It!!!

 

[psionl0]

Casinos are profitable too - for the staff and owners. For the gamblers (and everyone else) not so much.

But Bitcoin is potentially worse, because fund managers could be gambling with your money. So long as only a few are doing so the damage is limited, but imagine if Bitcoin became the dominant currency its inventors hoped for - it would be an ecological disaster and massively destabilize world markets.

And once again Bitcoin fails to deliver on its promise.

Can't you tell the difference between mining for bitcoins and buying/selling the crypto?

 

[psionl0]

I wanted to discuss the whole crypto thing on a more meta level, including how they affect the economy more generally.

Before this thread becomes a duplicate of the bitcoin thread and gets merged with it I might add that the crypto market is currently worth about $1T which is pocket change in the global economy. How high the market cap will go to is anybody's guess.

As far as energy consumption is concerned, that is the biggest failing of cryptos. Their success is bad for the ecology. Until we get a crypto that is scalable and uses a consensus based (instead of competitive based) validation mechanism, cryptos aren't likely to be considered seriously as a currency.

 

[Puppycow]

It looks like it's just BTC. It's so dominant I expect the rest probably only use as much power as Tajikstan.

Found this page:

https://digiconomist.net/ethereum-energy-consumption/

Apparently Ethereum (currently) consumes as much energy as Belarus. 35 TWh. About a third of Bitcoin (99 TWH).

(And my auto-correct keeps trying to change it to "Ethereal".)

But graphics card makers cannot keep up with the demand, so it is likely to keep increasing for as long as the price stays high.

The Bitcoin page above says that a single bitcoin transaction consumes over 900 kWh of electricity and generates over 400 Kg of CO2.

 

[psionl0]

The Bitcoin page above says that a single bitcoin transaction consumes over 900 kWh of electricity and generates over 400 Kg of CO2.

If you are going to make this all about bitcoin then there is no point in having a separate thread.

The energy consumption figures show a need to find some workable consensus validation model and to ditch the POW, POS and other competitive validation schemes. There is definitely a demand for cryptocurrencies.

 

[TurkeysGhost]

There's no denying that bitcoin is profitable, at least for those lucky enough to be on the right side of the volatility, but the real question is if it is useful or even beneficial.

Seems that almost all the interest in crypto is purely speculative and not very beneficial, societally speaking. Hell, the intense speculative nature of crypto makes it less useful as a currency, and has a lot of negative externalities like power and material usage.

ETA: Strip mining the rain forest for precious metals might be something that is profitable for the person doing it, but we generally understand that such activities are not a good thing. Perhaps it's time to start looking at this pointless energy consumption in the same way.

 

[The Atheist]

Apparently Ethereum (currently) consumes as much energy as Belarus. 35 TWh. About a third of Bitcoin (99 TWH).

Wow, that's a lot higher than I expected. Ethereum's only 1/30th the price of BTC, so it's well out of kilter.

 

[The_Animus]

There's no denying that bitcoin is profitable, at least for those lucky enough to be on the right side of the volatility, but the real question is if it is useful or even beneficial.

Seems that almost all the interest in crypto is purely speculative and not very beneficial, societally speaking. Hell, the intense speculative nature of crypto makes it less useful as a currency, and has a lot of negative externalities like power and material usage.

One useful thing is that it can be used to purchase items that are illegal in certain areas and therefore hard to get. Whether one considers this beneficial would depend on how they feel about the item in question and the law prohibiting it. A good example would probably be Marijuana as many consider it being illegal to be ridiculous. I have no idea what volume of crypto transactions are for this purpose though.