In this video I explain why the Bitcoin proof of work mining algorithm is unsustainable over the longer term because of a deep tension between the way it offers security and the costs of running it. In particular I try to show in the video why all of the efficiency gains from ever cheaper and faster computers will be absorbed by the need for the mining pools to keep pace with each other as they race to be first to find an acceptable hash for the new block on the blockchain. The difficulty setting of the algorithm will just keep increasing driving the total hashrate ever higher. I also discuss some historical data that shows the trends of the costs of mining from 2010 to 2020.
In the context of the digital economy where one goal is to dematerialise aspects of our economy, this makes Bitcoin an outlier as it doesn't offer to do more with less, it offers to do the same thing with more resources each year. From all of this, even if energy usage and climate change wasn't a concern, it is not clear how Bitcoin can be sustainable in the long run if it sticks to proof of work.
However, Bitcoin is fascinating, so hopefully it will one day move away from proof of work and become a sustainable part of our political economy.
▬▬ Chapters ▬▬
00:00 - Bitcoin is an outlier
00:43 - Bitcoin is fascinating
01:38 - Not investment advice!
01:47 - Intro to mining, difficulty and blockchain
04:43 - Difficulty adjusts
06:08 - Compute getting cheaper
07:24 - Scenario showing Bitcoin's problem
10:17 - History shows it's worse than that
12:26 - Exponential rise in resource use
14:22 - So Bitcoin is unsustainable
15:39 - My guess for longer term
16:57 - I hope Bitcoin succeeds
17:36 - What do you think?
▬▬ Data sources used in the video ▬▬
Source for current Bitcoin hashrate (at time of writing script!):
Graph of Bitcoin difficulty over time:
Source for graph showing the trends in costs of computing:
Source for paper about the *relative* costs of Bitcoin mining staying at roughly 1%
Song Yo-Der, Aste Tomaso (2020) The Cost of Bitcoin Mining Has Never Really Increased
▬▬ A few useful links and resources about Bitcoin ▬▬
3Blue1Brown video about: But how does bitcoin actually work?
Satoshi Nakamoto Institute (for detailed history of the origins of Bitcoin)
Cambridge Bitcoin Electricity Consumption Index (for analysis of current energy usage)
▬▬ Audio visual source materials ▬▬
Music:
Song: Valence - Infinite [NCS Release]
Music provided by NoCopyrightSounds
Free Download/Stream: Watch:
Image of a lock:
URL: File: Attribution: Svengraph, CC BY 3.0 (via Wikimedia Commons
Image of a Bitcoin
URL: Filename: bitcoin-3125488_1280.png
Attribution: License: Pixabay License, Free for commercial use, No attribution required
Image of earth
URL: Attribution: OpenClipart SVG ID: 96370
License: Public Domain
Image of a flame
URL: Attribution: License: Pixabay License, Free for commercial use, No attribution required #bitcoin mining geld verdienen #bitcoin block finden #bitcoin kaufen paysafecard
Bitcoin is unsustainable - Explaining why proof of work cant work long term! [u7j_6AZEyQn]
In this video I explain why the Bitcoin proof of work mining algorithm is unsustainable over the longer term because of a deep tension between the way it offers security and the costs of running it. In particular I try to show in the video why all of the efficiency gains from ever cheaper and faster computers will be absorbed by the need for the mining pools to keep pace with each other as they race to be first to find an acceptable hash for the new block on the blockchain. The difficulty setting of the algorithm will just keep increasing driving the total hashrate ever higher. I also discuss some historical data that shows the trends of the costs of mining from 2010 to 2020.
In the context of the digital economy where one goal is to dematerialise aspects of our economy, this makes Bitcoin an outlier as it doesn't offer to do more with less, it offers to do the same thing with more resources each year. From all of this, even if energy usage and climate change wasn't a concern, it is not clear how Bitcoin can be sustainable in the long run if it sticks to proof of work.
However, Bitcoin is fascinating, so hopefully it will one day move away from proof of work and become a sustainable part of our political economy.
▬▬ Chapters ▬▬
00:00 - Bitcoin is an outlier
00:43 - Bitcoin is fascinating
01:38 - Not investment advice!
01:47 - Intro to mining, difficulty and blockchain
04:43 - Difficulty adjusts
06:08 - Compute getting cheaper
07:24 - Scenario showing Bitcoin's problem
10:17 - History shows it's worse than that
12:26 - Exponential rise in resource use
14:22 - So Bitcoin is unsustainable
15:39 - My guess for longer term
16:57 - I hope Bitcoin succeeds
17:36 - What do you think?
▬▬ Data sources used in the video ▬▬
Source for current Bitcoin hashrate (at time of writing script!):
Graph of Bitcoin difficulty over time:
Source for graph showing the trends in costs of computing:
Source for paper about the *relative* costs of Bitcoin mining staying at roughly 1%
Song Yo-Der, Aste Tomaso (2020) The Cost of Bitcoin Mining Has Never Really Increased
▬▬ A few useful links and resources about Bitcoin ▬▬
3Blue1Brown video about: But how does bitcoin actually work?
Satoshi Nakamoto Institute (for detailed history of the origins of Bitcoin)
Cambridge Bitcoin Electricity Consumption Index (for analysis of current energy usage)
▬▬ Audio visual source materials ▬▬
Music:
Song: Valence - Infinite [NCS Release]
Music provided by NoCopyrightSounds
Free Download/Stream: Watch:
Image of a lock:
URL: File: Attribution: Svengraph, CC BY 3.0 (via Wikimedia Commons
Image of a Bitcoin
URL: Filename: bitcoin-3125488_1280.png
Attribution: License: Pixabay License, Free for commercial use, No attribution required
Image of earth
URL: Attribution: OpenClipart SVG ID: 96370
License: Public Domain
Image of a flame
URL: Attribution: License: Pixabay License, Free for commercial use, No attribution required #bitcoin mining geld verdienen #bitcoin block finden #bitcoin kaufen paysafecard