4

Except generating a different kind of "money value", what is the sustainable value of crypto currencies compared to the energy consumed to generate them?

Compared to currencies working with sophisticated papers and metals that have to be changed after some time of use by new notes and coins, crypto currencies do not seem to consume materials. However, they are generated in big data centres that need a lot of power to run. They say that the Bitcoin-System already consumes as much energy like the whole Swiss economy.

As the assumptions of the author were considered as "flawed" I recommend to read his thoughts and study.

I read the other question according to Bitcoins, but think that my question is different to that one, even after having edited title and text, which now allows to discuss above the used technology or algorithms.

As new information of today (Nov. 2018) they (Spiegel) state that Bitcoin consumes more energy than total Danmark. In addition the consumed energy is frequently produced in "dirty" coal power plants.

Improve this question
6
  • 2
    The question takes the premise that proof-of-work is the only basis for cryptocurrencies. Proof-of-work is the "use up a ton of electricity" part of cryptocurrencies. A number of systems use other methods instead (for example, proof-of-stake).
    – Jean-Paul Calderone
    Commented May 22, 2018 at 19:03
  • That is definitely the question because "many companies do not disclose information about their operations" (2nd article). Considering that currently only few people are using crypto currencies the estimates made by the author show that it cannot expand to global money if there are no improvements to reduce energy consumption or increase sustainable energy generation.
    – Salt
    Commented May 22, 2018 at 19:49
  • 2
    Apart from the flawed assumption, I don't think the question is a good fit for this forum. It calls for prediction of the future. There's no way anyone can provide an evidence-based answer to the question. People can guess. However, anyone who could make even remotely accurate guesses of such a nature would be able to profit massively on cryptocurrencies. I don't think there's any reason to suspect that anyone with such information or capabilities exists.
    – Jean-Paul Calderone
    Commented May 22, 2018 at 20:35
  • 1
    Being profitable doesn't mean being sustainable. Sustainability should reflect against alternatives to achieve the same result considering the charge involved to the ambient nature
    – Salt
    Commented May 22, 2018 at 22:16
  • I wasn't trying to answer the question. I was pointing out that being able to answer this question is somewhat equivalent to being able to print money.
    – Jean-Paul Calderone
    Commented May 22, 2018 at 22:48

1 Answer 1

Reset to default
3

The cryptos that require large/increasing/exponential amount of processing power/electricity to function are not sustainable according to the (resource-related) meaning of the word.

If, however, we ignore those — because they will clearly self-terminate — and just look at the cryptos that don't require huge amounts of energy to exist, then we've got a more even playing field.

Unfortunately for cryptos, they are now competing against an established monetary system where the vast majority of all current 'money' is already electronic. Physical cash makes up a negligible percentage of total financial transactions in the developed world.

So the real sustainability question is not really about whether "cryptographic hashing is more environmentally sustainable than plastic notes and metal coins", rather it's about whether "the modern electronic financial system is more environmentally sustainable than a DLT system".

Since the modern electronic financial system is fiat and backed quite literally by nation states bullying each other and bombing each other out of existence with their armed forces, one could quite easily posit the notion that the environmental impact of such a system is profound.

Since non-government DLT systems are decentralised and backed by math, not war, it is easy to posit the notion that such systems can be sustainably powered by ever-greening electrical grid and therefore have a much lower long-term environmental impact.

tl;dr: Not all cryptocurrencies are sustainable. Those that aren't will go extinct in short order. Those that remain need to be contrasted with a primarily cashless modern financial system. Upon doing so, the forces that back the two come into play. At that point you are comparing greening grid math to war machines. Ergo: Cryptocurrencies are more sustainable, but not the cryptos you're thinking of, and not for the superficially-obvious reasons.

Improve this answer
2
  • Can you make some examples of the two kinds of cryptocurrencies? Bitcoin is of course a cryptocurrency that requires a lot of power. But what about cryptocurrencies that require less?
    – user5966
    Commented Aug 27, 2018 at 19:59
  • 1
    All networks dependent on "proof-of-work" are energy hogs by design. To not fall into that category you need to base your network on "proof-of-something-else". PeerCoin uses "proof-of-stake" and Chia plans to use "proof-of-space", for example. Note that just because something is sustainable it doesn't mean that it will be successful. The western financial system tends to reward greed and corruption, not sustainability.
    – Tim
    Commented Aug 28, 2018 at 8:50

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.