US starts 'emergency' checks on cryptocurrency power use, citing winter power demands The US government has just signed off an emergency probe into how much power cryptocurrency miners are drawing from America's electricity grid. More specifically, the Energy Information Administration, part of the US Department of Energy, has been granted funding for a six-month study into cryptocurrency energy use, which …
If it risks causing power outages during periods of high demand while accomplishing nothing of value then it is a problem for everyone. At least EV charging is accomplishing something of value in terms of reducing demand for fossil fuels. There would be reason for power companies to upgrade grids as necessary to support increased demand due to EV charging as that's a use case that will always be around and grow in the future.
There is no business case to upgrade grids due to cryptomining, as there is no way of knowing future demand patterns for it or if bitcoin will even be a thing in the future - maybe the bubble will burst for good, maybe laws will be passed cracking down on it due to its main use being for crimes like ransomware, drug sales, and money laundering.
If it risks causing power outages during periods of high demand while accomplishing nothing of value
That is highly subjective. It clearly creates value to people who are using it.
If there is a problem with power outages then perhaps energy companies should change their fee structure to afford improvements in infrastructure or invest the money they already have better - rather than ensuring their shareholders can buy another yacht.
There is no business case to upgrade grids due to cryptomining, as there is no way of knowing future demand patterns for it or if bitcoin will even be a thing in the future
You can say that about almost everything that uses energy.
But Cryptominers *aren’t* paying the market price of the electricity they use, they are free-riding. The wholesale price of electricity fluctuates by 10x, from $50/MWh to $500/MWh, on an hourly, daily or weekly basis. This is all ironed out to towards the consumer by price fix guarantees from the wholesale provider. The consumer can’t, and won’t, pay the instantaneous price.
The issue isn’t when cryptominers use it when there’s plenty around, and the wholesale price is low. The concern is those times when consumers and vital industry are right on the edge of brownouts. On those days, the wholesale provider is buying from the generator at £500/MWh, and selling to you at £100/MWh, a massive loss. They are prepared to accept the massive loss *only* because it’s a huge social good that consumers aren’t blacked out, so they have to absorb it. But why should cryptominers get the same consideration as home consumers? If cryptominers would be prepared to pay at the true instantaneous marginal cost (which occasionally might be up to £2000/MWh or even higher), then maybe ok. But they aren’t, they’re still paying at £100/MWh, because they are lumped with grandma who we don’t want to freeze to death.
That is highly subjective. It clearly creates value to people who are using it.True. So let's drop the "while accomplishing nothing of value" clause and consider what's left.
Bitcoin mining and use creates demand for power. That demand is probably enough to materially affect the overall electricity market. (We could argue about whether it's "distorting" the market, but that would just lead us back to quibbling about words and value. So let's stick with "affect", it's a nice neutral word I hope we can agree on.)
"Perhaps" energy companies should change their fee structure? - well yes, perhaps they should. And perhaps regulators should change the constraints on those fee structures. And perhaps legislators should consider all this when reviewing their regulations, and also when considering regulations on the use of Bitcoin itself.
But how can any of these people do any of these jobs properly without good information?
"If they are paying the bills then what's the issue?"
Reductio ad absurdum: If someone (e.g. Elon Musk) decided to build a giant electric powered heater in the middle of the desert, as a means of spending down his billions, would you still say it was an OK use of resources, so long as he was willing to pay the electric bill ?
There has to be some point where the cost/benefit ratio gets examined for the use of shared resources, especially ones that contribute to anthropogenic climate change.
There is no inherent need for cryptocurrency to use "proof of work", other methods exist to provide digital money without the enormous power requirement...
Here's a couple of possibly relevant links...
https://nextbillionseconds.com/2024/02/02/cryptonomics-final-so-long-and-thanks-for-all-the-grift
https://www.eia.gov/todayinenergy/detail.php?id=61364
<dons fireproof suit>
And _that_ is the issue here. I've been a documented coin skeptic since the Cypherpunks mailing list (in the 90's). And I've become more dubious of the idea almost every year since. But you REALLY do not want the government deciding what you can and cannot use electricity to do. This sort of activity should trigger everyone's conspiracy alerts.
This sort of activity should trigger everyone's conspiracy alerts.
And yet it doesn't. Remember power showers? Those are pretty much a thing of the past in the EU. Shower heads used to have a 'massage' setting, now it's a choice of dribble or drool, thanks to flow reducers mandated by EU diktat. Then there's hoovering. The EU also decided to limit their suckage. And they're still trying to make kettles less efficient by banning 3kW kettles. People keep trying to point out it takes the same amount of energy to boil 1l of water, it'll just take longer if diktat mandates a 1kW kettle instead. And if you prefer cooking over a gas flame, too bad, they're coming for your gas cooker as well.
Cryptomining is an interesting challenge, but governments are getting in on the game by proposing CBDCs as official currencies. It'll be interesting to compare the costs of 'printing' a digital £20 vs a plastic one. But being digital, it'll probably be far more expensive, but digital does give governments the ability to control our money and tack on social or carbon credits as well. On the plus side, it does permit a whole bunch of new freakonomics, eg what's the energy cost to fill your EV and pay for it with a currency you've cryptomined?
A CBDC isn't mined, it's issued by a central authority. It's basically the exact opposite of a proof-of-work cryptocurrency because it concentrates the authority centrally and grants them supreme control to do things like set the expiry date or usage limitations of any arbitrary token or tokens in a wallet. For example, a universal credit payment where a certain portion could only be used at approved supermarkets to purchase approved items and any remaining money in that portion expires at the end of the month or adjusting the interest rate on savings directly (even negative interest) to prompt people to stimulate the economy.
A CBDC isn't mined, it's issued by a central authority.
But you still need to create that token. Exactly what that will be is TBD, but currently is a form of cryptocurrency. Obviously it will need to be secure, and traceable so the energy demands of replacing 'paper' money with digital are going to be part of the challenge.
Sure there will be still be cryptography required to keep the CBDC secure, but it isn't as if printing off dollar bills doesn't require energy as well - particularly given how often need to be replaced.
There is a lot of talk about CBDCs but no one really knows what they would be used for. They aren't likely to be used to replace physical cash, at least not anytime soon. What many would want to do is make it easier to transfer money from one bank to another, since ACH sucks. Right now that's basically done with a system that requires trust - if I send you $1000 my bank has to trust my bank when it says "update your accounts to reflect the receipt of $1000". Beyond that trust it is just simple addition and subtraction in the right memory locations at our respective banks, and whatever they do in the level above with federal reserve banks to let them know about the changes in their deposits. The suckage comes in making sure I'm not overdrafting etc. which is why ACH is not instantaneous.
With a CBDC theoretically I could send you $1000 without involving the banks - sort of like how Apple Cash works now as far as not involving the banks (but we both have to trust Apple to correctly debit/credit our Apple Cash totals) The catch is that the US very much does not want me to be able to send $1 billion to you (if I had it, which unfortunately I do not) if you live in Russia or North Korea. So it won't be like traditional crypto where you can send any amount of money anywhere you want, and figuring out the rules and how to enforce them will add a lot of complications. It may not be any easier than the current ACH transfers - it might even be worse since it would have to obey SWIFT rules for international transfers. Unless the CBDC dollars have a way of telling who is receiving them, so I get easy transfers to a US citizen but maybe not so much transferring outside the US.
I think that's why we hear talk about CBDCs but no one is expecting anything to arrive anytime soon.
THe EU didn't limit the "suckage", they limited the power draw, resulting in significantly more efficient hoovers being put together.
I'd like to have a 2kW element in my kettle - since then I'd be within my battery inverter, which means I only draw from the grid when there is plenty of capacity.
Lowering the amount of water you boil is still something most people don't do... we have a water dispenser for other reasons, but it does mean that we only boil the water we need.
Replacing a gas hob with an induction hob is a significant benefit in terms of both energy use and, more importantly, home safety. Noone is going to take your existing hob off you, but when you upgrade, you'll have to upgrade. No doubt you complained when they banned DDT or formaldehyde...
My shower is still mains pressure, and plenty strong, not quite as strong as my direct mains shower from twenty years ago, but then I've moved 100 miles and the water pressure here is slightly lower.
"Cryptomining is an interesting challenge" No it's not - it's a complete waste of time...
I don't know where you live, but I still have to see any water flow reduction at home.
And the EU didn't mandate anything like that, unless you can point to the exact directive and the list of countries that did implement it.
Of course, if you are located in an area like Barcelona, where water is scarce, it is another matter...
They may want to ration power more generally, or end crypto, as they cannot control it.
Q. A single Bitcoin transaction apparently eats up around 762.89 kWh,
I find that difficult to believe.
The Middle East and the Aussies could be absolutely minting it with solar arrays and BitCoin farms.
The cost varies, as Bitcoin is deliberately designed so that transactions cost more as time goes by and as more "mining" capacity exists.
So the real world cost of a transaction continually rises as time goes by.
It only falls if large groups stop bothering to validate transactions.
This of course means Bitcoin was explicitly designed never to be usable as currency, as it's inherently deflationary - one should never spend a bitcoin because it will always be worth more next week. Until the whole room comes down, of course.
Can you please expand on the rationale behind this? If the price of conducting a transaction in BTC is constantly increasing (scientific "if" BTW, we know it is), then wouldn't the value of the BTC decrease because more of the proposed value is expended on the transaction? Like how using a service with a minimum transaction fee becomes impractical for small transactions because a 1% (minimum 50p) charge represents a 10% surcharge on a £5 transaction.
I find that difficult to believe
Sounds like you are confusing a "bitcoin transaction" with "energy required to mine one bitcoin". They are not the same thing. A bitcoin transaction is the energy required for example for me to transfer from my wallet to yours some amount of bitcoins (whether .000001 or 100000) There's the "lightning network" which makes transfers off the bitcoin blockchain to avoid that massive expense, for the ever more theoretical use of bitcoin to pay for small stuff like a cup of coffee, but if I'm making a one time payment to you and you want to be assured that you are really getting the funds you're going to want an on chain transaction and it will require three quarters of a megawatt hour (and going up over time!)
The best figure I could find for the energy to mine a single bitcoin as of last year was 266 megawatt hours. That will also increase over time. So no, it isn't as much of a no brainer to set up a solar farm on cheap land in the Australian outback as it would be if the cost of mining was only 762 kWh!
Maybe we should just spend the money going into this investigation on just fixing the power grid so it can handle the demands of today and the future, and making it more "green" so that it's not a big deal if someone wants to use and pay for more power. Just assume we need massive upgrades based on the trends of total power usage increase, peaks, etc. It shouldn't matter what specifically the power is being used on unless they're looking to start regulating and banning particular activities in order to reduce the load because the power companies would rather hold onto more profit than spend it to fix the problems.
Also I can't possibly believe that a single Bitcoin TRANSACTION by itself uses so much power it takes an entire swimming pool to cool the equipment that handled it, unless you're counting the fact that the equipment was already running and generating heat anyway and not splitting up that heat output with all the other things the equipment had been doing or just the idle power draw, and including every piece of equipment along the entire chain between endpoints and servers and network equipment. Perhaps MINING a coin could use that much power, attributing all the power used by the equipment solely to that coin (and since the equipment wouldn't even be turned on otherwise, that seems valid).
I don’t think you appreciate just how much computing power it takes to do a bitcoin transaction. This is not like an SQL INSERT statement on a bank database. All these computers all over the world can only do about 7 transactions per second.
Also, there is no such thing as idle power draw in a mining rig, they run at maximum output 24/7.
Really?
Farkin!
Is there a link to support this (I can’t be arsed goggling it.. saving my carbon footprint an all). That’s amazing, that and the 0.55% of global power consumption.. fuckme, somebody put the entitled (pointless) crypto bros up against a wall
I expect the downvotes to be excessive (as is their nature).
Last report I read, a recent one from one of the big consultants, said cryptocurrency accounts for 0.5% of global electricity consumption (might be energy consumption, even. Can’t remember).
Either way, that’s a huuuuuuge amount just to provide a few currencies. It’s not heavy industry, it’s not transport, it’s not manufacture. It’s crazy.
Edit: it’s 0.55% of electricity consumption, but only Bitcoin.
https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2023/bitcoins-role-esg-imperative.pdf
It’s not heavy industry, it’s not transport, it’s not manufacture.
That's a poor argument, unless you want to look at energy consumption generated by the likes of Netflix? It's even worse as couch potatoes watching boxset after boxset are not exactly producing anything apart from waste.
OK, well, I can find figures for 2019. Netflix streamed about 60 billion hours of content that year.
Their own energy usage was 451 GWh. To that let's add the energy usage of devices showing that content: if we assume the average viewing device is a laptop, it will be using about 60W, so 60 billion hours translates to about 3,600 GWh, for a total of a bit over 4 TWh.
Bitcoin's energy usage that year was - well, frankly I can't see quite how to read this graph, but the range of estimates seems to be about 50-75 TWh.
Bitcoin wins by more than an order of magnitude.
Also I can't see how you argue that "the world would be better off without Netflix", while also being prepared to defend Bitcoin on the grounds that people who use it clearly do find value in it. Those two positions seem quite unreconcilable to me.
>Either way, that’s a huuuuuuge amount just to provide a few currencies. It’s not heavy industry, it’s not transport, it’s not manufacture. It’s crazy.
Let's keep our apples & oranges separate here, shall we?
What is the global electrical consumption for banking & finance? That is what should be compared with. How much energy is used each day keeping the legacy financial systems alive, cashing checks, sending money, processing credit card transactions, etc?
I don't know the answer, and I am not going to waste time trying to figure it out. I am just pointing out the irrelevance of the comparison to industry, transportation, and manufacturing. Compare a system of finance to other systems of finance. Then we will have some perspective.
I quit cryptocurrency a couple of years ago as a result of these issues but before then I had been running a bitcoin generator in my home office during the winter for years - the generator heating cost me money that bitcoin paid for with a bonus for me. The original bitcoin concept was very good, but criminal activity has made it embarrassing these days so I'm just paying to stay warm in the winter.
A quick and dirty search threw up this 2018 article.
It concludes that the *entire* banking industry uses four times more power than Bitcoin. Banking: everywhere. Bitcoin: very very niche. That’s not good.
It you have a more reliable study then I’d be interested to see it.
“According to our studies in the previous article (https://medium.com/@zodhyatech/do-bitcoins-consume-more-electricity-than-our-country-3cc354a6c191), Bitcoin consumes around 32.56 TWh. This consumption itself translates to a country consumption equal to that of Denmark.”
“So total consumption for banks during a year only on those three metrics is around (I am rounding) 26 TWh on servers, 87 TWh on branches and 26TWh on ATMs for a total of close to a 140 TWh a year.
We could easily see bitcoin consumes a quarter of the power of banks.”
https://web.archive.org/web/20230204160555/https://medium.com/@zodhyatech/which-consumes-more-power-banks-or-bitcoins-8302750fe2bc
Yeah, that wasn't the *ENTIER* banking industry from what I read in the article. It was just the Banks and their branches and ATMs. So, Just the bank buildings, servers, branches and ATMs use 3 times the power of bitcoin in 2018. Also it was written by a green energy group, so its not like you can say it was unbiased.
So you need to slow down you search, and not make them so dirty. :-)
I waited a couple of days to post about this. This comment is basically my argument as well. This is a red herring that the government wants to use to point to as a way to regulate and collect money from the crypto mining markets without directly regulating those markets.
I'm not a conspiracist, but the governments of the world and, in turn, the banking industry are worried about crypto. Not only because it's used for illegal transactions but also because they are having trouble understanding how to get their cut from it.
Ultimately they are comparing the energy used for mining to be equal to the power usage of the Netherlands. Ok. So?
Well, let's compare it to the worldwide use of paper and metal currency!
So the government, for comparison, should be asking the following for their energy usage:
1) Mining, timber and cloth industries
2) Federal minting
3) All banks that process metal and paper currency (Including all buildings involved)
4) All stores that process currency
5) Reclamation and recycling industry for currency
6) All companies that transport currency
7) All federal regulation business entities that are involved in regulating currency.
And while you're at it, make sure you do this on a global scale because crypto energy usage is based on global usage.
Isolating crypto mining from all of the other financial uses of electricity doesn't make any sense at all. If you check one financial industry, you should then be checking every one of them.
Then, let's compare that to the energy usage of crypto mining.
If each bitcoin transaction uses three quarters of a megawatt hour, then you'd think it would show up in US energy data, especially since it's allegedly threatening grid stability, and the US is the biggest developed country to have significant bitcoin use. Funnily enough, US total generation has been near enough static around 4,100 TWh since 2010. Much the same is true for electricity imports.
I'm inclined the view that it doesn't use 750 kWh per transaction.
It probably does use 750kWh per transaction, but it depends on your definition of “transaction” in the denominator. Bitcoin is largely not used as a transactional currency. A normal currency is exchanged for goods or services, which is what I would call a transaction, and negligible fraction of transactions are currency exchange, dollars for sterling etc.
But Bitcoin, almost all the “transactions” on the blockchain are buying or selling Bitcoin in units of national currency. Depending on your viewpoint, it’s speculation/investment/currency exchange/store of value. But it definitely isn’t “buying a beer with a Bitcoin”. The total number of those transactions is small. Out of the 500k “Transactions” per day, some number-juggling of data provided by BitPay suggests 5% (which I assume is a wildly optimistic agenda, but lets take it). 25k real- world transactions per day, globally…..17 per minute?!!
For comparison, a single large multi-floor pub in London on a Saturday night, will cruise past that transaction rate effortlessly.
So yes, divide any real-world energy-use by almost-zero, you get a stupid-high number.
Maybe other aspects of US energy use have been declining. Screens, lighting, home appliances - all have grown significantly more efficient in that time. Parallel improvements have happened in industry. And then there's the growing vogue for heat pumps.
So why hasn't consumption come down substantially? Well, electric vehicles would be part of that. And BTC would be another part. Don't you think it's worthwhile to be able to quantify these contributions?
Before governments start banning bitcoin, given that that 0.55% of electric usage is only going to go up over time - by design, by bitcoin's completely moronically stupid design!
We'd be better off cutting it off at the knees now, rather than waiting for another doubling or two or a grid collapse somewhere caused by mining activity during peak demand in places that don't bribe them to get off like Texas does.
Maybe the way around it is utility regulators to pass a rule against utilities making demand peak deals with miners. Without the incentive to get off the grid in a demand peak, they will inevitably cause a blackout or two. Once that happens public support for banning bitcoin mining will be massive and even our dysfunctional congress would pass that bipartisan bill in record time.
Speaking of moronic, educate yourself before typing. The only thing a government can do is regulate on/off ramps between Bitcoin and fiat currency. If you & I want to trade Bitcoin for goods & services using something like the Lightening Network, there is absolutely nothing the government can do to prevent it.
The only way to ban Bitcoin would be to shut down all computers, dismantle the Internet and unplug the power grid. There is no Bitcoin CEO to fire or Bitcoin company to break up. Bitcoin simply cannot be stopped or regulated - and THAT is its ultimate appeal as a hard currency.
They can ban bitcoin mining in the US to solve the energy problems it causes. Which is realistically what they should have done when China kicked out all the miners and they start popping up in the US.
If they wanted to attack the demand side and the fact it is mostly used for criminal activity and speculation, neither of which are a public good, they could use banking regulations to prevent companies from exchanging bitcoin directly into dollars. There are ways around that via transferring to/from euro first for example but any illegal but also "legal" purposes like people paying ransomware would become a lot more difficult. Two birds with one stone!
So at UK electricity prices it costs over £200 in electricity to process a single bitcoin transaction?
Where the hell is the value in a "currency" that costs (someone, somewhere) that much to process...?
People complain when Visa/MasterCard/AmEx charge a few percent on card transactions.
As for the people who don't seem to see a problem with this crypto bullshit consuming vast quantities of electricity: so long as any real value-producing consumer of electricity is required to use carbon-emitting energy because there isn't enough zero carbon on the grid, this shit is literally directly contributing to global warming.
There's a whole lot of bad, and literally nothing good about crypto, aside for a few scammy crypto-bros making a mint at the expense of others and the planet.
It hasn't been a currency for years. Its proponents tried patching things up with the lightning network, but I think even its biggest boosters have realized it will never be used for buying a cup of coffee. All the true believers talk about now is how it is going to go up in value, basically admitting it has been a money making scam all along.
The problem is that all the suckers who got roasted in the last big drop in price are not coming back so their claim that "everytime it falls it comes back 10x higher than the last high" are not going to pan out this time around. There aren't enough greater fools this time. It may struggle to get back to the previous high at all before the next drop. Hopefully the next drop will take it into 4 digit territory - if so all mining (except that being done with stolen electricity) will become unprofitable and the whole house of cards will collapse.
Cryptocurrency mining only makes sense to the miners when the price is right. They don't buy electricity when the price is high, they buy it when it is surplus and low. Surplus electricity? Yes, green energy cannot be stored - when the wind is blowing & the sun is shining, the power needs to be used at that time. So rather than let the surplus go to ground, spin up a miner and put it to work. Get a hard winter and consumer consumption spikes the rates, shut off the mining because the energy costs too much. It is that simple.
As for the price of bitcoin going up.... Look up "bitcoin halving". Sometime mid-2024, the miners will lose 50% of their rewards. Factor that in to the math problem. That means miners have to spend twice as much electricity to get the same amount of bitcoin. Bitcoin either needs to double in price, or the price of electricity will need to fall 50% for the miners to get the same net financial rewards at the end of 2024 as they get today.
In the UK (including Isle of Man, but not Northern Ireland which is part of the Irish Grid, or Jersey which is part of the French grid), we have a *lot* of wind, and about 14GW[1] of capacity to export to Europe, wind farms are asked to turn off their turbines about once per year on average.
In the USA (including Canada, but not including Texas which has its own grid), their two grids cover a much larger population. While some parts of it might be as windy as the UK and Ireland, overall I'm pretty sure it won't be, and therefore they will likely have even less of a problem of having to tell wind firms to turn off their turbines.
[1] 7GW of links to Europe, we usually import at maximum capacity, so the margin is that we can reduce that to 0GW then start pushing electricity in the opposite direction. There's also links to Ireland and Northern Ireland, I don't count those, because any time we have surplus wind, they also have surplus wind and want to export it to us; and definitely wouldn't be interested in importing our surplus.
The potential generation capacity these days is much less, compared to pre-Good Friday agreement days when the Rev. Ian Paisley could be relied upon to generate a strong head wind.
In the UK now, it is primarily the Conservative and Unionist party that keeps the lights from going out with the contribution from all the in-fighting and nonsense from their many lunatic fringes
First off, green energy can absolutely be stored. Batteries are a thing. The standard home solar installation around here includes a battery, which is used day-to-day to offset household consumption from peak to offpeak times.
Second, I doubt if BTC miners pay spot price for their electricity. (Indeed, the story some months ago about them selling back power to the grid in Texas implies that those miners, at least, pay a precontracted rate.) So they will not respond to wholesale prices in the way you suggest.
"Second, I doubt if BTC miners pay spot price for their electricity. (Indeed, the story some months ago about them selling back power to the grid in Texas implies that those miners, at least, pay a precontracted rate.) So they will not respond to wholesale prices in the way you suggest."
That implies that they are paying market rates - they are just buying the energy a long way in advance, since they have very well known static load, and can power things down (or just idle them) to get a different, well known, static load.
That means they can buy (making up numbers) 1MWh for each settlement period months, or even years, in advance - and come the time when those are due for "delivery" they can choose to either use the energy they bought (potentially *months* ago) to do whatever it is they do to make a profit, or sell it on to another user at a higher price than they bought it - again for profit?
"push up people's bills"
It's not just a US problem. Electricity is in short supply. Even if you disagree with that due to the 'Renewable' green stuff like Solar/Wind coming on stream, you must agree that it's getting harder and harder to deliver the required increasing number of electrons using the 'Grid' - which most people still rely on.
The major problem is here is that the infrastructure has not kept up with the abrupt increase in demand....OK, the HV transmission system we call the Grid may be able to cope with the demand NOW, but as transport moves off fossil fuels onto 'leccy, we'll find out it's the aging HV-to-LV conversion equipment (Substations) and the LV distribution system (Underground/overhead cables and transformers etc.) are going to become the issue. That 'last mile' is a killer, just as it was for POTS and xDSL.
As the ratios of energy types we use becomes more biased towards electricity - and it will due to electric vehicles, heat pumps etc - we'll find that the seriously old LV distribution infrastructure we all use can't cope. Even if we *can* generate enough electricity to satisfy demand, I doubt we'll be able to get it to the point of consumption - you and I - where it's needed. Here in the UK, most LV distribution is underground in the metropolis, with overhead cabling being used in the more rural areas....but it's all very elderly and has a design capacity of way, way less then we think we're going to require.
As we change the ratio towards 'leccy, the 'Grid' and regional suppliers/LV distributors will be forced into upgrading their infrastructure to cope..... for which we will ALL have to pay as they won't do it out of altruism, at least not while there's shareholders to satisfy. In fact, looking at the UK MPAN, (See 'Loss Factor') we can see that we the distribution operators are *already* aware of how much it costs them to deliver our electrons. We get charged for the cost of delivering our consumption over the 'Grid' infrastructure, and IMHO this is why you always have to provide your MPAN when shopping around.
Bitcoin, and indeed *any* 'Proof of work' based cryptocurrency consumes a disproportionately large amount of leccy when you compare it to the 'average citizen' consumption. I don't see why I should be expected to pay more for my electricity usage to 'subsidise' some corporate entitiy's need to fund their increased delivery costs incurred due to someone else's desire to do the very, very electricity-intensive crypto mining malarkey - 'Proof of work' based or otherwise - or desire to charge their very hungry electric vehicle.
If ever there was a use case for 'Pay as you go' (Or 'pay as you consume', if you prefer) - electricity is it.
Here endeth this Vino Rosso induced rant.
Yes - we probably need to increase the local capacity... but it's also possible to have devices respond to local voltage, rather than just to grid scale DFS. And that could be very easy way to improve the distribution of demand... as we move to more and more "delayed usage" type loads (hot water tanks, storage heaters, EV charging, home battery charging) then those devices can actually drop their usage when local conditions require it.
Indeed some of them (specifically home batteries and EVs) can feed the local network, actively lowering the strain, and then recharge at a time when the local grid isn't as strained.
That's clearly not going to "solve" all the local network issues, but our current domestic usage is really peaky, e.g. cooking dinner tends to be at about the same time for most households.
We can shape much of that usage by time of day tariffs - Obviously E7 and E10 did that decades ago, and many ToD tariffs still follow the same process. But what you then end up with is everyone putting all their high load devices on at exactly the same time, to take advantage of that cheaper rate.
For something like an EV - they spend ~23 hours a day parked. You don't really care when it gets charged, just that you keep it topped up enough to account for typical daily usage - or that it can be filled for a special journey. Similarly you don't really care when your water tank is heated, just that you have hot water in the tank when you want it.
So local conditions based "avoided this time because of local conditions" credits (of some sort) would allow for the demand spikes at half time in sportsball to be much less of a drain on the grid, because all the kettles get put on, and high power devices can simply go "you know what, voltage is dropping a bit, I'll pause for a few minutes". Some of them could even export for a higher credits.
The result is actually beneficial to the grid, and no significant effect on users.
My peak half hour power draw from the grid last year was 14.5kW, but my average was well under a kW.
Smoothing out that curve is entirely possible, but at the moment it's very beneficial to be fully lumpy - only 5% of my electricity for the year was used at "peak" rate... I actually don't care when peak/off peak is, I just schedule things to use the off peak whenever possible.
If I assume I can replace gas with a heat pump at a SCOP of 3 (very conservative) then my electricity average usage would still be under 1.5kW, but again it would be lumpy, and more seasonally lumpy than it is at the moment - January would have been at about 2.2kW for instance.
There is no way you're telling me that the grid can't cope with a third of the country boiling a kettle at the same time.
UK electricity consumption is actually falling, despite increasing electrification:
"Electricity demand reached a record low in 2022 of 320.7 TWh, down by 3.8 per cent from 2021. Electricity demand has declined year-on-year since 2015"
If you look a bit further back, that decline has actually been ongoing since 2005 (where we used 406 TWh) Table 5.1
So we know the grid can handle more than it currently does - by more than 25% - because it's already done it.
(Note that the effect of additional substations for new developments and towns isn't being taken account of here - those will spread the load even further, but I'm ignoring that).
@John Robson
That is one of the most lucid and considered replies in a while, and with sensible empirical evidence* actually referenced as well. Thank you very much for bothering.
'when the local grid isn't as strained'.....'but our current domestic usage is really peaky'
I can't help feeling that as the energy mix changes, all we'll do is to move the peaks in time and increase their magnitude - and therefore the point where the grid it strained - it will *always* be strained sometime.
OK, reading that linked doc, I agree the consumption has been dropping YOY - which is probably due to increasing efficiency/lower consumption of residential/domestic appliances and the switch from aged inefficient technology like tungsten filament lamps to comparatively efficient LED. Efficient in opex terms anyway - tungsten filament cost pennies to produce and could be bought retail cheaply. Capex-wise LED costs several £/$ more than filament lamps.
The difference between the power consumption of filament vs. fluorescent vs. LED is well known and the latest and greatest 'LED' is the winner, natch. However, if EVs are adopted/consumed at the rate expected (very fast!), the overall 'delta increase' will be far out-strip the 'delta decline' in consumption shown - which is at the 'macro' level.
My reasoning is based on the following : My commute to work : 4 Miles each way. By boss's commute : 40 miles each way, and his EV is charged at work, along with 1 other user. The charger available is 7.5KW, and they are BOTH plugged in, drawing ~30A for hours on end.
Leaving a 40W TF lamp on for 5Hrs=0.2KWh. Leaving a 4W LED on for 5H=.02KWh. Leaving a 2KW electric storage heater or convector heater on to 5Hrs=10KWh. Leaving an EV on for 5 Hrs=37.5KWh...and 5HRs for a moderately-discharged EV is a conservative figure....yes, these are 'micro' figures, but 'macro' is the sum of 'micro'....
We both know that the consumption curve can be smoothed out with some co-ordination and motivation - but people ('Consumers') are too selfish to do that without regulation and/or enforcement.
Nice riposte, but I remain unconvinced.
* "Lies, damn lies and then statistics". Also, have you noticed that the UK Government's "Office Of National Statistics' title contains the right letters (and in the right order) to spell 'Onanists'?
1) I was a skeptic of coin on the cypherpunks mailing list in the 90's. While I laud the goal of ensuring personal autonomy in our financial transactions, the real-world political blowback was always the fatal weakness.
2) In 1998 the CAP Theorem was proven. Embarrassingly, I did not realize until it was pointed out here that the CAP theorem puts a hard limit on what can be achieved with coin. That limit is far too low to ever allow it to function as a broad currency.
3) I don't know when the idea of "proof of stake" came out. I finally read up on it. If you think that coin is generally a scam, then this should be your ultimate proof. Any coin using this system is violating the very basis of a decentralized "currency".
Having said all of that, this study is extraordinarily problematic. I hope the cryptobros sue to stop it--and win. Why? Because I really don't want the government telling me what I can use electricity to do. Please think carefully about just what that means.
Since Netflix came up, let's talk about that. That's 93 billion hours in the first six months of 2023 (per Forbes). So let's say 186 billion a year. Accepting the 17,000-to-1 conversion claimed above, that's just shy of 11 million entries on the blockchain (Not transactions--there are multiple transactions per entry). Or 30000 per day. Or 1250 an hour. So Netflix is absolutely dwarfing Bitcoin for power usage. And producing what? Overweight viewers. If your goal is to cut back on electricity consumption, you should target the entertainment industry.
Or, we could be more closely aligned and talk about the horror show that is the lightning trading system in the stock and commodities markets. That industry is not only consuming boatloads of power, it is also attracting many of our brightest brains and rewarding them simply for stealing from each other anyone foolish enough to try to be a day trader.
If we're going to outlaw something based on its ill effects, I would go after Vegas & casinos generally--they are destroying far more lives than coin will ever touch.
But I don't. I don't because I have my hobbies, and I demand that the government leave me free to pursue them.
You might think about how things might go if yours becomes the disfavored hobby.
I don’t think it’s as simple as “I should be free to do X, as long as I pay for it”. As a society, we have since forever recognised the “middle way” of differentially taxing “socially disapproved” activities. Whether that’s government intervenes to tax high-CO2 cars, or harmful-but-not-illegal activities such as smoking.
In this case, the crypto miners are free-riding on the social contract: that consumer electricity is minimally-taxed as an essential utility. They’re using a government-subsidised resource, where the subsidy isn’t the average price, but the guarantee of supply and government-financed hedge against price fluctuation of input pricing. It’s a “lucky coincidence” for crypto that delivery of input supply makes it technically difficult to differentiate. If it weren’t physically coming out of one plug, it’s obvious that this activity *would* already be differentially taxed, cf “red diesel”. It’s a bit like some City wideboy figuring out that books are VAT-free, and bulk-buying them to use as furnace fuel. The activity is only economic by leveraging governments inability to differentiate vs social goods like schoolbooks, otherwise it would always be more profitable to burn the raw material for books before they had been printed.
Fair point, it is qualitatively same issue. In my view it’s a quantitative question “is the size of harm large enough to make it worth acting”. The making of MAGA hats isn’t sucking enough power, that people are going cold in their homes during the winter. But if it did, then yes we probably would have to categorise industrial power-use as “critical”, “strategic”, “neutral” and “antisocial”; as we run short of power then brownout the industries at the bottom end first.
>Because I really don't want the government telling me what I can use electricity to do.
I get your position. I really do. I don't like the idea of being told what I can use power for by a committee of people who, even if they were well-intentioned, would be several layers removed from me and can't possibly understand the reasons for the specific usage patterns of every single person. And I don't like the idea of creating that ability and then potentially having it in the hands of a committee of people who are not well-intentioned.
However.
1) Load-shedding is already a thing. It has been a thing since forever. Similarly, differences between pricing for consumer and industrial usage have been a thing since forever. None of this has been really abused by governments, as far as I know. Would you be uncomfortable with legislation that simply makes sure that crypto mining gets considered as industrial usage, with the attendant priority and tariffs? Physical mining can and does get cut off by "the government" (regulator agencies, actually, but nevermind), or taxed differently from tea kettles, and as far as I know nobody has ever considered this an attack on civil liberties.
I mean, if running electrical smelters at home ever became a widespread hobby, I really wouldn't mind attempts to figure out if it can be brought into the same rules as running electrical smelters in a factory. It's still smelting.
2) Crypto mining is not just any hobby. Cryptocurrency has few legitimate uses, and is widely used in support of illegal activity. It's interesting that you bring up Vegas and casinos, because those are exactly the examples I would have made. Gambling is something that you can do as a harmless, fun hobby - but it causes far more harm than good. Because of this, they are activities that are extremely heavily regulated and taxed. This, too, is mostly not considered an attack on civil liberties.
So, the existance of Vegas and casinos actually support the argument that crypto doesn't need to be considered the same thing as Netflix.
3) The idea that, once I pay the tariff, the power is mine to do as I wish, is a typical free-market ethical position - I pay for the thing, the thing is mine, all constraints compensated for. I get it. I have objections to it, but they don't matter right now. What matters is that electricity is not a free market, has never been one, doesn't even vaguely look like one, can't be made to work like one, not even in theory (because of natural monopolies and massive externalities).
IOW, that tariff you pay is the number it is because it has a lot of hidden strings, and assumptions about what you're doing with it. Otherwise, domestic usage would be a horrible mess. It looks like you are free to do whatever with the power you buy only because domestic usage is very predictable, and regulation can handle it by mere statistical means. But if a significant chunk of domestic usage deviates from the means, regulation can, and will, and ethically has to change to handle the new pattern. Again, this is mostly not considered an attack on civil liberties (if only because of the effective illusion of free market we are accustomed to).
> Load-shedding is already a thing. It has been a thing since forever.
Totally agree, I can remember days back in the 1980's where the company I worked for at the time was offered incentives to reduce power on "bad" days, they basically ran the standby generators in parallel with the grid and stopped whatever they could (including production areas) to get the power demand down to as close as zero as possible.
Wow. It wasn't until I read that that it hit me--I've been a direct victim of load-shedding. Well, technically, it was my family's farm.
We were required to install devices to allow our wells to be turned off remotely. The ones that put water on our crops. Were we informed when this was done? No. When the power came back, was there any way to get water to the bottom of the field, which did not get it because the water was shut off, without overwatering the top, which had already been watered? No.
I understand what was going on, but classifying food production as "industrial" in that fashion is a REALLY ****** way to do business.
Of course, it was needed--but why? Because those government regulators you're talking about failed to required the producers to meet projected power usage--and we're talking late 70's here. Funny, we're having exactly the same issues again, except the government regulators are being even more accommodating to the (existing) power providers.
Yeah, we've got a power problem--the supply is being held back.
And no, I'm not such a communitarian to support things like pricing "home" and "business" uses of power differently. Lowering the price that I pay to run a mixer doesn't need to come at the cost of charging me more to produce it in the first place. Such market distortions echo downrange to hilarity.
And nope, I'm really bothered by the sin taxes on tobacco & alcohol. And I've gotten more so as I have aged. The tax code is an entirely unjust place to attempt to mold society.
Well, last time I remember we had load-shedding incident in the U.K. a couple years back, it seemed that our bottom-priority circuit included the rail network. Hard-wired. I agree maybe it shouldn’t be that way, but that’s what we’ve got. I’m not that keen to lose our rail network regularly just to keep the crypto bros running.
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