[AUDIENCE] I want to ask you about
the energy consumption in mining. [ANDREAS] Yes?
[AUDIENCE] What is the solution for it? [ANDREAS] Well, energy consumption in mining is
— I think — misrepresented very often in two ways. [Cryptocurrency] mining is one of the few industries that is completely geographically independent, meaning that it doesn't matter where you are if you are mining, as long as you have inexpensive electricity. What that allows you to do, is choose the
location of your mining system based entirely on the local cost of electricity, which means that mining is doing market arbitrage for
the cheapest sources of electricity. In many cases, the reason the source
of electricity is cheap, is because it does not match the demand at that location, [especially] in countries where there aren't broadly deployed, efficient distribution networks for electricity.
One of the challenges with rapidly deploying and developing energy, is that you build a power plant not for the demand that it has today, but for the demand that you're going to have over the next 15 years. You have to make that investment now and grow into it,
because you can't simply move energy across a massive country when you don't have a distribution
network. I'm speaking of China, if you didn't figure it out.
That's one of the fundamental problems they have. This problem is replicated across not just China but
developing nations, as well as many developed nations. The places where electricity is needed,
and the times when electricity is needed, are almost always not the places and
times where electricity is available. What happens when you build a 50-megawatt plant in a
place where they only have 15 megawatts of demand? If it's alternative energy like wind, solar, or hydro,
you can't turn it off or turn it down. You've built it, it will produce, and then what?
You're basically wasting energy. What if, in that environment, you could find a way to turn that energy into an alternative store of value? Then instead of paying off the electricity plant
in five years, you pay off in one year, by using electricity that would otherwise be wasted.
Bitcoin is an environmental subsidy to
alternative energy all around the world, because it's causing these projects to be
amortized over a year instead of five. Oh, you're telling me we were running a green coin
all this time and I didn't even notice? One problem is that… You've got to understand
it from the perspective of balancing supply and demand on a global scale without distribution networks. The decentralization of Bitcoin is driving the decentralization of energy production, which is one of the most
important trends in human history. One of the other things you've got to keep in mind is that
Bitcoin is easy to criticise for its energy consumption because it's obvious.
There are a lot more
wasteful things that are far less obvious. Every time you pull out that little plastic card
and you use it to do a transaction, you're not aware of the hundred-thousand square foot data center, churning
a hundred thousand servers to do fraud detection. Or clearing. You're not aware of the tower offices
that are lit twenty-four hours a day; the trading floors, the bank vaults,
the armored cars, the diesel trucks, etc. All of those costs are mostly hidden and
they're enormous. Are you telling me…
That perhaps Bitcoin ends up being the most efficient way to do transactions on a global scale? You've got to remember:
the level of security we have for Bitcoin today, is a level of security that can handle
global attacks, by colluding nation-states. That's the level of security needed for
this system to remain censorship-resistant. But if the system was ten times bigger with ten times
more users, it doesn't need ten times more mining. It already has globally-secure mining. What we have
is enough. There's a profit motive that drives it. It's a mistake to think that if we go global,
that cost will also multiply. Quite the opposite, in fact. Over time, the reward from mining decreases; as a result it's more likely we'll see that
gradually taper off and plateau. This is a long game. The implications and complexity of
how cost is allocated, how energy is consumed, is huge. I don't think we can afford two proof-of-work systems
on this planet; I think we might only need one.
Maybe everything else could be proof-of-stake and anchor into the only proof-of-work system we have. We need one planetary-scale proof-of-work system to offer us true energy-dependent immutability, but maybe we can only afford one.
Turns out, that might be Bitcoin's killer app!.
