Carbon intensity of crypto vs traditional currencies

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Bird on a Fire
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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 11:42 am

The carbon intensity of crypto also comes up a lot, but the normal economy is also quite carbon intensive.

I do wonder how an etherium or bitcoin compares with an equivalent amount of US$.

At least crypto is all from electricity and new components, which is comparatively easy to decarbonise compared with food production, or the fact that the dollar is bound up in oil extraction.
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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 11:50 am

The US has released more than 509GtCO2 since 1850
per https://www.carbonbrief.org/analysis-wh ... ate-change

There seem to be about $20 trillion in existence, if I'm understanding this link correctly https://money.howstuffworks.com/how-muc ... -world.htm

So that's a tonne of CO2 for every $40.

Bitcoin's 23 million tonnes a year doesn't look so bad. https://www.reuters.com/technology/how- ... 021-05-13/
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Re: NFTs

Post by Woodchopper » Fri Oct 08, 2021 11:55 am

Bird on a Fire wrote:
Fri Oct 08, 2021 11:50 am
The US has released more than 509GtCO2 since 1850
per https://www.carbonbrief.org/analysis-wh ... ate-change

There seem to be about $20 trillion in existence, if I'm understanding this link correctly https://money.howstuffworks.com/how-muc ... -world.htm

So that's a tonne of CO2 for every $40.

Bitcoin's 23 million tonnes a year doesn't look so bad. https://www.reuters.com/technology/how- ... 021-05-13/
I don't think you are comparing like with like. The carbon intensity complaints about cryptocurrency are about the process used to create bitcoin (ie massive amounts of electricity used to power computers). The comparison for dollars would be the carbon intensity of making the coins and notes in circulation.

Alternatively you could compare the carbon intensity of the dollar economy with that of the crypto economy, and the latter would include everything that people buy with cryprocurrencies.

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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 12:02 pm

Hmm. The value of a dollar comes from the economic activity of the US in general, not the cost of the raw materials. There have been times when pennies were worth more melted down for scrap, as well as examples of bank notes for failed currencies becoming worthless.

Where does crypto's value come from? You can get more of it just by "mining" it (doing the blockchain calculations), but I don't know what else is backing the crypto economy. Drugs and tax avoidance at a guess.

I know I should be using cumulative figures for coin mining, but I couldn't immediately find them. Multiply by ten seems fair as a quick and dirty approach.
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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 12:07 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 12:02 pm


Where does crypto's value come from?
Belief. In that respect it's not that different from fiat money, except that fiat money has some inbuilt demand because you have to pay your taxes with it.
You can get more of it just by "mining" it (doing the blockchain calculations), but I don't know what else is backing the crypto economy. Drugs and tax avoidance at a guess.
Tax avoidance is getting harder as more exchanges are brought under regulation. Some cryptos are mathematically limited in supply, others have fairly fixed 'inflation' rates.

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Re: NFTs

Post by plodder » Fri Oct 08, 2021 12:08 pm

“just mining it” uses a huge amount of power, like seriously huge. Until we have a surplus of clean electricity we need to focus energy use on the must haves, not the nice to haves.

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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 12:13 pm

plodder wrote:
Fri Oct 08, 2021 12:08 pm
“just mining it” uses a huge amount of power, like seriously huge. Until we have a surplus of clean electricity we need to focus energy use on the must haves, not the nice to haves.
For sure. Some of the US's historical emissions will have been to produce useful things. Others will be because of their fossil fuel industry suppressing evidence and wrecking policy initiatives, aided and abetted by government.

I'm just wondering which is cleaner - should I put my savings in DOGE or USD?

Crypto is obviously pure self-perpetuating consumption, whereas a modern capitalist economy might be only half that. How do cumulative emissions stack up?

I should split this, eh?
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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 12:14 pm

plodder wrote:
Fri Oct 08, 2021 12:08 pm
“just mining it” uses a huge amount of power, like seriously huge. Until we have a surplus of clean electricity we need to focus energy use on the must haves, not the nice to haves.
'Proof of work' cryptos are like this (e.g. Bitcoin, Ethereum today), 'proof of stake' are orders of magnitude cheaper (e.g. Cardano, Ethereum really soon).

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Re: NFTs

Post by Woodchopper » Fri Oct 08, 2021 12:33 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 12:02 pm
Hmm. The value of a dollar comes from the economic activity of the US in general, not the cost of the raw materials. There have been times when pennies were worth more melted down for scrap, as well as examples of bank notes for failed currencies becoming worthless.
Energy expenditure is about 5.25% of US GDP. If you're wondering about that, imagine a restaurant. By far the largest costs come from employing people. Then comes rent of the premises and after that buying the ingredients and other materials. Direct energy costs (cooking, heating, equipment etc) will be small compared to the others. There will also be a small indirect energy component in the other components (eg transport, building the premises etc).

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Re: NFTs

Post by plodder » Fri Oct 08, 2021 12:43 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 12:13 pm


Crypto is obviously pure self-perpetuating consumption, whereas a modern capitalist economy might be only half that. How do cumulative emissions stack up?

I should split this, eh?
sorry, what?

Crypto is just a currency. Printing dollars and typing numbers on a spreadsheet hardly uses any energy. Mining crypto for the same thing uses loads.

Not heard of these new energy efficient ones.

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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 12:54 pm

plodder wrote:
Fri Oct 08, 2021 12:43 pm

Not heard of these new energy efficient ones.
https://medium.com/tqtezos/proof-of-wor ... 8029faee44

Most cryptocurrencies will be proof of stake a few years hence.

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Re: NFTs

Post by Woodchopper » Fri Oct 08, 2021 1:00 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 12:13 pm
I should split this, eh?
Yes, seems to be a derail.

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Carbon intensity of crypto vs traditional currencies

Post by Bird on a Fire » Fri Oct 08, 2021 1:13 pm

Splitting some posts from NFT thread
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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 1:23 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 11:42 am
The carbon intensity of crypto also comes up a lot, but the normal economy is also quite carbon intensive.

I do wonder how an etherium or bitcoin compares with an equivalent amount of US$.

At least crypto is all from electricity and new components, which is comparatively easy to decarbonise compared with food production, or the fact that the dollar is bound up in oil extraction.
I think the best comparison to make is how much does it energy does it cost to process a transaction. A visa transaction for any normal fiat currency uses many orders of magnitude less electricity than processing a bitcoin transaction for the same amount.

Proof of stake cryptos are much closer to visa costs though.

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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 1:26 pm

plodder wrote:
Fri Oct 08, 2021 12:43 pm
Bird on a Fire wrote:
Fri Oct 08, 2021 12:13 pm


Crypto is obviously pure self-perpetuating consumption, whereas a modern capitalist economy might be only half that. How do cumulative emissions stack up?

I should split this, eh?
sorry, what?

Crypto is just a currency. Printing dollars and typing numbers on a spreadsheet hardly uses any energy. Mining crypto for the same thing uses loads.

Not heard of these new energy efficient ones.
But why do people want dollars? If you set up ploddercoins, even if the quality of printing and minting and data-entry were equal or higher you'd struggle to get anyone using them.

It's because dollars are backed by the US economy, and fossil fuel extraction in general (petrodollars). Belief pays a part, but that belief rests on tangible activity.

In cryptocurrency this is made more explicit, by getting computers to do otherwise-useless calculations. But dollars (and pounds and euros etc) also maintain their value because the people in those economies possess a lot of wealth and/or consume a lot of resources. We are all just GPUs for billionaires, encouraged to overconsume pointless crap.

People are getting distracted by the shiny whizzy complicated tech stuff, and ignoring the fact that ultimately faith in any monetary system depends on consumption.
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Re: NFTs

Post by Bird on a Fire » Fri Oct 08, 2021 1:28 pm

sheldrake wrote:
Fri Oct 08, 2021 1:23 pm
Bird on a Fire wrote:
Fri Oct 08, 2021 11:42 am
The carbon intensity of crypto also comes up a lot, but the normal economy is also quite carbon intensive.

I do wonder how an etherium or bitcoin compares with an equivalent amount of US$.

At least crypto is all from electricity and new components, which is comparatively easy to decarbonise compared with food production, or the fact that the dollar is bound up in oil extraction.
I think the best comparison to make is how much does it energy does it cost to process a transaction. A visa transaction for any normal fiat currency uses many orders of magnitude less electricity than processing a bitcoin transaction for the same amount.

Proof of stake cryptos are much closer to visa costs though.
But there's a step before that - why choose one currency over another?

The choice of cryptocurrency depends on its value, which depends on mining - more people using it makes a more stable, trustworthy system.

People make international transactions in USD or EUR for the same kinds of reasons.
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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 1:29 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 1:26 pm


It's because dollars are backed by the US economy
Anything Americans are willing to except in return for their real goods or services can be said to be 'backed by the American economy'. This includes Gold and Bitcoins as well as dollars.

People might choose bitcoins or Ethereum because the cost of sending them overseas is much lower, or because they like the fact that their supply can't be arbitrarily increased by political negotiation of the kind of that happens in central banks.

Their main disadvantage is that they don't have a 'built in' demand of being legal tender, i.e. you have to change whatever you have into US dollars to pay US taxes. Only El Salvador will accept bitcoins in the payment of tax at the moment.

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Re: Carbon intensity of crypto vs traditional currencies

Post by Bird on a Fire » Fri Oct 08, 2021 1:45 pm

I can't find any estimates of total carbon emissions for bitcoin, so this is very rough.

https://digiconomist.net/bitcoin-energy-consumption/ says 81.18 Mt CO2 / year. Assume that's been static since 2009 when it launched (which it obviously wasn't), and we get 81.18*12 = 974.16 Mt CO2 - as near as damnit 1 Gt.

There are currently about $100 billion of bitcoin in existence. https://coinmarketcap.com/

Then we need to add to that the size of the bitcoin economy, somehow. That'll involve a lot of assumptions.
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Re: Carbon intensity of crypto vs traditional currencies

Post by sheldrake » Fri Oct 08, 2021 1:55 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 1:45 pm
I can't find any estimates of total carbon emissions for bitcoin, so this is very rough.

https://digiconomist.net/bitcoin-energy-consumption/ says 81.18 Mt CO2 / year. Assume that's been static since 2009 when it launched (which it obviously wasn't), and we get 81.18*12 = 974.16 Mt CO2 - as near as damnit 1 Gt.

There are currently about $100 billion of bitcoin in existence. https://coinmarketcap.com/
That's very wrong. Bitcoin market cap is roughly $1 trillion today.
Then we need to add to that the size of the bitcoin economy, somehow. That'll involve a lot of assumptions.
This energy comparison might be useful https://www.statista.com/statistics/881 ... ison-visa/

Doing the same things in bitcoin vs doing them in $ over VISA (or simillar transaction systems) is radically more expensive in energy terms.

'proof of stake' currencies massively reduce this cost though.

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Re: NFTs

Post by WFJ » Fri Oct 08, 2021 1:58 pm

sheldrake wrote:
Fri Oct 08, 2021 1:29 pm
Bird on a Fire wrote:
Fri Oct 08, 2021 1:26 pm


It's because dollars are backed by the US economy
Anything Americans are willing to except in return for their real goods or services can be said to be 'backed by the American economy'. This includes Gold and Bitcoins as well as dollars.
This.

The comparison in the OP makes no sense whatsoever. It would be like comparing the energy costs of growing/harvesting/processing/transporting/cooking a portion of rice to the energy cost of cooking a hamburger when discussing the relative carbon costs of vegetarian or meat eating diets.

Any energy costs associated with economic activity using the dollar or any other currency have to be added on top of the computing energy costs of bitcoin etc.

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Re: NFTs

Post by Woodchopper » Fri Oct 08, 2021 1:59 pm

Bird on a Fire wrote:
Fri Oct 08, 2021 1:28 pm
sheldrake wrote:
Fri Oct 08, 2021 1:23 pm
Bird on a Fire wrote:
Fri Oct 08, 2021 11:42 am
The carbon intensity of crypto also comes up a lot, but the normal economy is also quite carbon intensive.

I do wonder how an etherium or bitcoin compares with an equivalent amount of US$.

At least crypto is all from electricity and new components, which is comparatively easy to decarbonise compared with food production, or the fact that the dollar is bound up in oil extraction.
I think the best comparison to make is how much does it energy does it cost to process a transaction. A visa transaction for any normal fiat currency uses many orders of magnitude less electricity than processing a bitcoin transaction for the same amount.

Proof of stake cryptos are much closer to visa costs though.
But there's a step before that - why choose one currency over another?

The choice of cryptocurrency depends on its value, which depends on mining - more people using it makes a more stable, trustworthy system.

People make international transactions in USD or EUR for the same kinds of reasons.
The difference is that the USD or EUR are backed by central banks that, so far, have always paid their debts. Furthermore, the US and Eurozone governments transact their business in those two currencies, so people have to use them. That confidence is partly based upon the size of the US or Eurozone economies but also on the perception that they will continue to pay their debts.

To take a contrary example, Russia has massive fossil fuel reserves and has defaulted on its debts.

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Re: NFTs

Post by Woodchopper » Fri Oct 08, 2021 2:00 pm

WFJ wrote:
Fri Oct 08, 2021 1:58 pm
sheldrake wrote:
Fri Oct 08, 2021 1:29 pm
Bird on a Fire wrote:
Fri Oct 08, 2021 1:26 pm


It's because dollars are backed by the US economy
Anything Americans are willing to except in return for their real goods or services can be said to be 'backed by the American economy'. This includes Gold and Bitcoins as well as dollars.
This.

The comparison in the OP makes no sense whatsoever. It would be like comparing the energy costs of growing/harvesting/processing/transporting/cooking a portion of rice to the energy cost of cooking a hamburger when discussing the relative carbon costs of vegetarian or meat eating diets.

Any energy costs associated with economic activity using the dollar or any other currency have to be added on top of the computing energy costs of bitcoin etc.
Yes, I agree.

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Re: NFTs

Post by sheldrake » Fri Oct 08, 2021 2:15 pm

Woodchopper wrote:
Fri Oct 08, 2021 1:59 pm
[
The difference is that the USD or EUR are backed by central banks that, so far, have always paid their debts.
It's not clear to me what you mean by 'backed'. If you take a pound to the BOE, all you can exchange it for is another pound. You don't have a legal right to exchange it for any particular amount of a commodity like gold or silver like in the old days. Central banks always pay their debts because all they have to do is print more money. Governments don't always get to print more money.. but they don't exactly back their currencies with anything real either. One of the very appeal of bitcoin to many people is the mathematical assurance that it's supply can't increase beyond 21,000,000 bitcoins. Fiat/Paper currencies always devalue over time.

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Re: Carbon intensity of crypto vs traditional currencies

Post by secret squirrel » Fri Oct 08, 2021 2:24 pm

The meta point about proof-of-work is that it's anti-efficient by design. However efficiently you produce energy, if profitable for miners, proof-of-work blockchains will push the limits of energy production, for no benefit to the system. It's a pure red queens race. Proof of stake solves this problem, but creates new ones to the point where it doesn't really work, which is why the etherium has been '18 months away' from switching to proof of stake for years.

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Re: Carbon intensity of crypto vs traditional currencies

Post by temptar » Fri Oct 08, 2021 2:25 pm

Point is that it makes bitcoin by definition deflationary which is not necessarily economically beneficial. Plus bitcoin is one of the least energy efficient crypto.

Crypto is a libertarian's wet dream. Objective is to get government out of transactions. I am not all that convinced of proof of stake being anything other than the rich to stay rich either. Currently, thecryprosdont work a whole lot as form of payments and the focus tends to be on asset value rather than payment utility.

In short, the benefits in economic terms are not directly proven. For proof of work, the energy utilisation has wiped out the benefits of years of work in making devices more energy efficient.

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