[LINK] Bitcoin and global warming

[Jim Birch]

Tom Worthington wrote:

> Yes, I am going to put my "ICT Sustainability" class on to the job of
> fixing Bitcoin, next semester at ANU: http://programsandcourses.anu.
> edu.au/course/comp7310


There's a bit of a fundamental economic problem there, isn't there?
Reducing the energy cost of a bitcoin (or the cost of energy) will result
in more bitcoin production.  The  situation is inherently unstable under
most scenarios.  While bitcoins can be generated at a cost below their sale
price it makes economic sense to devour arbitrary levels of resources to
produce bitcoin.  (The climate catastrophe scenario.) Two stable situations
can exist. One is where the cost of new bitcoin is approximately equal to
dollar cost of the energy required to produce bitcoin and a more-or-less
classical price/demand curve matches the flow of cash from bitcoin
speculators. (Here, the level of harm is dependent on the aggregate minds
of the speculators.)  The other one is where the dollar value of bitcoin
reverts to its natural value ie zero, and bitcoin production stops.  (The
preferred option from an environmental damage perspective.)

I'm expecting the  second scenario to prevail sooner or later for basic
economic reasons.  However, I would be extremely foolish to bet on a
cessation of human stupidity on any fixed time frame. It is possible that a
hybrid solution might arise for a while, that electric heaters are
converted to bitcoin generators.

Jim