Home > Uncategorized > The real costs of making (and using) money – the bitcoin waste

The real costs of making (and using) money – the bitcoin waste

energy

Bitcoins are a total waste. On this blog, I’ve written some posts on ‘the real costs of making money’ (a summary here). Producing money takes resources: labor, capital, land. One of the ’land’ aspects used to be silver and gold. Digging for gold and silver a social setting: the slaves in the silver mines of Larium (Athens), the native workers which perished in the high altitude silver mines of Cerro Ricco, Peru (the Spanish empire). Or ‘apartheid’, which guaranteed a steady flow of cheap ‘free’ labor to the gold mines, in South-Africa (British empire). Fortunately, we have fiat money now – the value money does not have to be backed anymore by forced labor.

Bitcoins are a recent new kind of money (though it really seems to be more a store of wealth than a means of exchange). Unfortunately, producing bitcoin requires enormous and in fact unacceptable amounts of energy. And even using bitcoin is weirdly expensive. It has been checked and rechecked: one bitcoin transaction uses as much electricity (not ‘energy’, as is often stated) as is needed to power one rich world house for four weeks, i.e. about 200 KWH. According to experts, competing systems like Ethereum seem to less wasteful. The social setting of bitcoin: a corrupt private Big Brother energy guzzling network of transactions which backs the value of money. Not good.

 

  1. SH
    October 24, 2017 at 2:31 pm

    Thanx! Interesting info – plus I think the whole thing is a scam – if its value is market based, it can and will be manipulated …

    • October 24, 2017 at 7:51 pm

      “if its value is market based, it can and will be manipulated …”

      Demand can be manipulated, probably. Supply is limited precisely because “mining” is so expensive. I guess it is possible that there is a DeBeers of Bitcoin out there somewhere, but overall supply is limited, but just by math rather than geology.

      • SH
        October 24, 2017 at 10:01 pm

        So where are the “mines” and who determines who can “mine” – and how big the “supply” is” – If “supplies” are limited seems to me it would indeed be possible to “corner (and manipulate) the market” and, if it can be done, it will be …

        “Invisible currency” – made by the same folks who made the Emperor’s clothes?
        And the digital equivalent of “counterfeit”?

  2. rddulin
    October 24, 2017 at 2:34 pm

    We do not have flat money now and the whole system is absolutely dependent on cheap and under-compensated labor. We have the most expensive money ever created.
    Essentially all money today is created by contracts between lender-guarantors and borrower-debtors. The LGs in consideration of binding obligations to pay interest on the part of the BDs
    issue a “certificate of money authenticity” signifying that if necessary they will pay on demand the face value of that certificate to the holder, another such certificate of equal value. These certificates have value because the BDs will exchange them for labor to service their debt obligations.
    This is a very interesting and potentially productive area of study. I greatly appreciate references to your previous posts on this subject.

  3. Garrett Connelly
    October 24, 2017 at 3:59 pm

    Thank you for this article.

    I have been an entropy thinker for quite a few years and still see no reason not to use standard accounting and calories as the money. One monetary unit being one kilocalorie.

    • October 24, 2017 at 7:54 pm

      And the exchange rate between a hectare-second of sunlight, a banana, and a thousand year old evergreen?

    • Pablo Martin Podhorzer
      October 27, 2017 at 11:57 am

      Somebody has been reading “The Forever War” I see…

  4. Trond Andresen
    October 25, 2017 at 6:35 pm

    Merjin. do you have source for the graph? Very interesting!

  5. rddulin
    October 25, 2017 at 10:08 pm

    Creating money as debt with perpetual interest is probably an order of magnitude times as expensive as bit coin. The cost never ends. Like burying someone in a rented tuxedo.

  6. rddulin
    October 25, 2017 at 10:09 pm

    Interest is probably still being paid on money borrowed by neanderthals..

  7. October 26, 2017 at 6:09 am

    A much broader perspective,

    We begin with the story of the greatest conqueror in history, a conqueror possessed of extreme tolerance and adaptability, thereby turning people into ardent disciples. This conqueror is money. People who do not believe in the same god or obey the same king are more than willing to use the same money. Osama Bin Laden, for all his hatred of American culture, American religion and American politics, was very fond of American dollars. How did money succeed where gods and kings failed?
    ~ Yuval Noah Harari, “Sapiens: A Brief History of Humankind,” (2015)

    • SH
      October 26, 2017 at 6:14 am

      Greed …

      • October 28, 2017 at 11:11 am

        Greed is just a word. What’s its history? Is there just one form of greed, or many forms? What are relationships between each of these forms and actions? When Gordon Gekko declares “Greed is Good” what’s he saying and how does it affect society? Consider these. Then we’re on the way to some understanding of what people have created and used.

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