Canada and the United States look like ideal destinations for mining, according to the analyst.
For the researcher, it has been proven that the PoS mechanism can be attacked.
Electric power moves the world and often the world is movedby money, even if it is fiat.Electricity is a global, national security issue for most countries. So it is for Bitcoin (BTC), but without being a state.
Maintaining the security of the network is worth more than the speed of transactions. Shielding a distributed system for the transfer of value requires its participants to use energy to protect and validate information. This has been questioned in the past by people who are unaware that most of the energy Bitcoin uses is renewable, according to some studies.
To reflect on the energy issue and current bitcoiner, CryptoNews spoke with Julian Drangosch, electrical engineer, Argentine teacher and participant of the NGO Bitcoin Argentina. For the researcher, energy consumption is currently misunderstood in society, which has led to the first cryptocurrency being singled out.
Why is energy use so important in the Bitcoin network?
Bitcoin’s energy consumption is the most important thing in the network, because it is one of the parameters to measure how resistant to censorship BTC is. Energy is a commodity in our universe and making an expenditure to ensure that the rules of the protocol are met ensures that, if you want to attack the Bitcoin network, you’re going to have to spend that same amount of energy to try and maybe succeed.
Julian Drangosch is a designer of high-voltage electrical substations. Source: Courtesy Julian Drangosch.
This premise is aligned to the concept of Zahavian signals
that was proposed by Amotz Zahavi. He explained how evolution leads to “honest” or trustworthy signaling among animals that have an obvious motivation to cheat or deceive each other. He states that costly signals must be reliable signals, since what it costs the signaler to emit the signal could not be offered by a less capable individual. This
protects the Bitcoin network
by making an energy expenditure that other entities, be they companies, nations or countries, cannot make.
Why do you think Bitcoin is accused of “wasting” energy when other industries such as traditional mining
and mining are not.onal or banking industry perform worse?
I think energy consumption is misunderstood, partly because the energy industry is not something that many people are familiar with and partly because the media make stories with clickbait headlines to attract readers to their stories.
All human activities have an energy consumption and I don’t see that we are judging with the same severity what these industries contribute to human public life. I think it’s related to whether one thinks the Bitcoin Network brings value to the world by having an incorruptible monetary network or not.
If one thinks it is a positive contribution then the energy expenditure is valid and if one doesn’t think so then ANY energy expenditure should not be made. It’s a highly censorious position that. If one compares the Bitcoin network in annualized energy consumption to other human activities like:
- The world’s clothes dryers consume 1.6 times that of BTC.
- The world’s heating consumes x2 BTC, the world’s cooling x10.
- Copper production x1.9 BTC, aluminium x16.3, gold x3.5.
- World banks and ATMs x4.7 BTC.
I don’t see that we are wanting to slow down those industries, copper is fundamental to the electric power transportation industry, aluminum is to the aviation industry and Bitcoin is fundamental to having a new monetary system out of the hand of our rulers and bankers.
The so-called Bitcoin Mining Council noted that 56% of miners use sustainable energy, what to do to increase that figure?
Mining has evolved throughout Bitcoin’s history from mining with the CPU, GPU, FPGA and ASIC. It has also done so with respect to its power consumption: it was originally mined with the power available in the jurisdictions where they were installed, and that has evolved as well.
Naturally mining is going to migrate to where it can have access to cheaper and more efficient renewable energy (which would be hydroelectric) and to jurisdictions where they can have laws and predictability in the legal status of Bitcoin mining.
Canada which has 400 TWh of hydroelectric power available and the United States with 285 TWh seem to be ideal.
Power companies are already talking about providing nuclear power to bitcoin miners. How do you read these announcements?
Any kind of energy that can be created on demand is the right thing to do. Nuclear power has a bad reputation because of the FEW nuclear accidents that have happened throughout history. But instead we have installed tens of hundreds of coal and gas fired generators that have emitted tons of CO2 into the atmosphere.
What do you think could be Argentina’s potential for Bitcoin mining? How is the expansion in Patagonia going?
Looking at it honestly Argentina
has little potential in my opinion. Not because it does not have energy resources, but because Argentina’s energy matrix has been expanding based on gas and coal for the last 2 decades, driving the import of fuels from abroad and creating fiscal deficit.
Beyond that, on October 26, 2020 the company Bitfarms, announced a non-binding memorandum of understanding to secure electricity at approximately US $ 0.02 per kWh with the plan to pursue the development of a 210 MW Bitcoin mining facility in Argentina.
Distribution of what are the main energy sources in Argentina. Over the past two decades, natural gas has predominated. Source: Our World Data.
do you think Paraguay’s energy potential will make it the “new China” for miners in the future?
It is unlikely to be the new China. Mining was located in China for 3 particular reasons, which occurred at a particular time and will not be repeated. The reasons were: access to ASIC equipment, as the manufacturers are predominantly in South Korea and Taiwan; low cost of transportation; and hydroelectric power in large quantities available for consumption.
If one looks at Paraguay’s energy matrix, the majority of power is hydroelectric
, but they do not have enough generation for Bitcoin’s energy demand.
According to the energy consumption index
created by Cambridge University, Bitcoin’s annualized consumption today is at 93.5 TWh, but over the last year it has been at 170 TWh, which means that Paraguay could absorb some of Bitcoin’s hashing power, but not 50% as it was once housed in China.
In El Salvador there is talk of geothermal energy as an alternative for miners, do you think that its capacity of 204 MW can supply an industry of this type in the country?
If one does the math, 204 MW of energy
can power some 62,500 state-of-the-art equipment (Bitmain Antminer S19 Pro, which individually consumes 3.25 kW each). Those computers would generate 6,875 Exa Hashes for the Bitcoin network which corresponds to 5.2% of the computational power the network has now, but is 3.8% of the maximum seen at the beginning of the year.
Let’s remember that Proof of Work is a competition and the computational power of the network is coming back online and protecting the network in a very fast way, in the last 2 months we saw the difficulty of the network increased by 54%.
<img width=”700″ height=”352″ src=”https://yellowrocketagency.com/wp-content/uploads/2021/09/btc-electricity..png” alt=’BTC power consumption.’ /> The annualized energy consumption of the Bitcoin network is currently 93.5 TW/h. Source: cbeci.org.
With the exodus of Chinese miners, how do you think the global hash rate
map will look like? Which countries will benefit?
While some inexperienced investors may have been scared off by China’s Bitcoin mining ban, this narrative has been around since 2013-2014. Indeed this time many facilities closed in Sichuan and Xinjiang provinces and are moving to other locations.
Every time one attacks an anti-fragile system, the system becomes more resilient to those attacks. Bitcoin mining is leaving China
, and in response all Bitcoin mining is going to flourish in different countries. It’s a trend that has been around for at least 3 years. Russia, United States, Kazakhstan and Iran are the most likely destinations for these facilities.
Not only is the computing power of the Bitcoin network going to recover its value of 180 Exa hashes/s, it had its minimum value at almost 80 and is currently at 130 exa hashes/s, but with the price increase of almost 500% it had in the last year we could see new infrastructure installation and further increase the security of the network.
Do you consider that Proof of Stake (PoS) projects could gain any advantage over Proof of Work (PoW) projects because of the challenges to Bitcoin mining?
Bitcoin is not a mechanism for the transfer of bitcoin, but rather the creation or transfers or currency is a side effect of the network. The Bitcoin blockchain (or as Satoshi called it, “timechain”) is a mechanism for the transfer of synchronization packets of this Proof of Work protocol.
That proves that there is no need for blockchains with other synchronization mechanisms like Proof of Stake (PoS). It’s not that the blockchain is the important thing and then we have to make PoW more efficient and that’s why we changed the synchronization mechanism to PoS. The real invention is Proof of Work (from Adam Back in hashcash
) and that’s what we need in the world and blockchain is the way to convey that to the world.
With other technologies like Client Side Validation, already having a global consensus of the state of the network and a mechanism for transfer, you can have data outside the network, but committed to a state that is in the network. The participants of the commitments (smart contracts or DLC) do know the commitments and states, but nobody else in the network knows about them.
Whoever did not understand this fundamental concept, still did not understand Bitcoin. Any other consensus mechanism like PoS is demonstrably attackable. We will see these scenarios when Ethereum changes its consensus mechanism on a large scale.