The Heat of Bitcoin

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This fall, we completed a backyard cottage. It’s currently unoccupied and so I agreed to allow a friend to run three Bitcoin AntMiner machines out there. This is Seattle and it was in the forties outside and I’d shut off the heat to the building while we ran these three machines. We were only running them at two-third’s power and still, the temperature inside popped up to 92℉. I had to keep three upstairs windows open, just to maintain the temperature in the 80s.

This was my first time being in contact with actual Bitcoin mining machines. They are super loud and are like running little heaters.

I was curious because I’d heard lots of stats thrown around, and apparently, there is some controversy around estimates of Bitcoin mining electricity usage.¹ From what I could find, total worldwide energy consumption is around 33 billion kilowatt hours. For comparison, total US electricity consumption in 2016 was 3.85 trillion kilowatt hours. So, if these numbers are to be believed, Bitcoin electricity consumption is 1/1,000 of total US electricity consumption. If anyone with more knowledge on this subject has a clearer picture, please let me know.

The point is, my experience over the last few days demonstrated, very heatedly, what kind of energy usage these machines create – and it’s a lot. Over the course of three and a half days, my friend made around a hundred bucks, so I can see the draw from the miner’s perspective, but from a societal perspective, there just has to be more ecologically sustainable paths toward building decentralized consensus facilitation. Maybe proof of stake? Not my field, but man, this experience has taken a lot of the shine off this technology for me personally. It went from a theoretical “yeah, they consume a lot of power” to “wow, that’s not good.”

¹ https://www.cnbc.com/2017/12/21/no-bitcoin-is-likely-not-going-to-consume-all-the-worlds-energy-in-2020.html

29 comments

  1. How much $ in energy did his mining rigs consume while he “made” $120?

  2. Craig Froehle, unclear. He hasn’t run the numbers for me yet.

  3. Craig Froehle​ here at where we live our prices drop as we use more electricity, with the central air going during the cold snap we dropped down to .01 a KWh – we actually figured out we could save money (in winter) by putting a rig in all the coldest rooms. Getting an antminer though is very very difficult at this point. We could have them run full power and it would cost about $3.50 a day with the latest models according to the mining calculators. BUT we would actually likely have less cost as the heat wouldn’t be running nearly as often.

  4. That’s quite a picture Gideon Rosenblatt​ you’ve drawn.

    Regarding the energy, it comes to the question: is it worth? Bitcoin vs energy? …

  5. Total worlwide is in billion but US only is in trillion ? Did I missed something ?

  6. Nicolas Vidot yes, the 33 billion refers to the use of electricity in mining Bitcoin worldwide.

  7. Craig Froehle Yep. Some of the people who came out best from the various gold and silver rushes in the past centuries were the Hardware and Supplies Merchants. 😉 😉 😉

  8. This is touching on an element of market pricing that I’m looking at: how different goods (or services) seem to get priced.

    Bitcoin mining hits two specific areas at least: the production costs of currency or value-storing assets (depending on which of the two Bitcoin is), and of the cost and/or definition of mining.

    I’m leaning toward the view that currency is generally traded at or above the cost of production. Where it’s traded above production cost, the bonus (to the minter) is referred to as seignorage.

    Similarly, I’m leaning toward the view that mining is, by one definition, any activity in which the true full costs of resource creation (or formation) are not born by the party “producing” them.

    On this last, it’s important to note the difference between the terms creation or formation, on the one hand, and of production, on the other.

    These are frequently taken as synonyms. They are not. To “create” a thing is to bring it into being. To “produce” is merely to bring forth, into view or notice. (Both after 1913 Webster.) One may produce a witness, but one may not create or manufacture one.

    There are some uses of the term “mine” that have turned up in my readings of late that display this.

    Farming is described as “soil mining”, if farming practices deplete, diminish, or erode topsoil at rates faster than it is created. Given rates of depletion of an inch or more every decade, and of formation of an inch or so every century, then soil is being mined at 10x its rate of formation.

    Unsustainable harvesting of forests, fisheries, sand, and other resources, biological or mineral, similarly occurs if the taking or diminishing of that resource exceeds its rate of formation.

    Edward Glaeser in discussing various economically-declining cities speaks of costs of housing well below costs of replacement. In such circumstances, acquisition of property in such areas (or depletion or razing of structures) is a mining of that existing stock. Once claimed, the housing cannot be replaced or renewed economically (that is, for a profit, inclusive of construction).

    A question that comes to mind in all of this is whether or not bitcoin creation is best described as a mining activity or as a minting activity. I’m inclined toward the latter.

    Miriam Rozian John Wehrle paul beard Woozle Hypertwin may find this of interest.

  9. paul beard I need to get to those books (1491 & 1493, both).

    I’m wondering about how various native practices emerged, and which ones proved durable. I’m leaning toward this being somewhat evolutionary: the indigenous tribes had no vast external stores of energy to apply to solving problems as we do, and so had to live within narrowly-constrained resource budgets.

    Those who did, survived. Those who did not, died.

    (Or perhaps less drastically: those who did out-competed those who did not.)

    And this wasn’t always the case. The history of megafauna extinction within the Americas suggests that indigenous humans did drive these, directly or indirectly, to extinction. Most within ~10k – 50k years or so (I need to read up on what present understanding of settlement and migration of humans through the Americas is).

  10. Craig Froehle He made $120 dollars before settling his accounts! He needs to pay rent for the space you provided and he needs to pay utilities. There is also the cost of the equipment that he used and the cost for the labor of setting up the equipment. There are also fluctuations in the marketplace such as changes in the value of bitcoin and energy as well as the cost of the computer equipment and networks to redeem the value of the bitcoin. The profit analysis is just missing a few things.

  11. Nicolas Vidot, the billion is just from Bitcoin mining, whereas the trillion is total electrical usage.

  12. Marzi Pan, yes, in this case I wasn’t charging for rent and utilities, but the equipment is very expensive. I think he said these particular ones are around $4,500 each.

  13. Edward Morbius, I’d not heard the term “soil mining” before. I think that is a very useful way to think about farming.

    As for production costs, I can tell you from this little anecdotal, microeconomic example, that the recent drop in BTC made this undertaking less interesting/lucrative and is also making it harder to get a decent price for unloading those machines (which he is trying to do).

  14. Gideon Rosenblatt Ouch! He’s in the RED! Lol! Sounds like a bad investment. It is never really the the store or the restaurant that makes any real money it is the people who sell the equipment to run a business who make out like bandits!

  15. Gideon Rosenblatt And therein: cost, price, value.

    The true cost of bitcoin mining (or coining) is rising, the price is tending to not follow suit, and hence the use value is falling.

    Including of the appurtenances of the trade and craft.

  16. Edward Morbius, I think one of the more interesting aspects of the whole value question is the distinction between exchange value and use value.

  17. Bitcoin’s real value is to launder money and purchase black market products.

  18. Gideon Rosenblatt In general, exchange value is an independent concept from use-value.

    There are cases where they can approach one another. E.g., the beneficial value of the mining equipment here.

    A longer explanation would be … longer.

  19. Edward Morbius, well, I think that in the case of Bitcoin, it’s a useful distinction. The exchange value is all over the map. The true use value is, well, still largely TBD, I think.

  20. Marzi Pan There are those who insist its principle value is educational: in demonstrating the benefits of a well-regulated and transparent monetary system.

  21. Edward Morbius Lol! That’s funny!

  22. Go deeper when trying to compare… look into the (ALL) the energy consumption connected to a single credit card transaction… the hole runs deep.

    “No! Only let the banking industrial complex use energy to do ‘money’ and value transfer!”

    Smh.

  23. Interesting. Points me towards an awareness of how creativity and ingenuity abounds more easily in the virtual world, but without associated development and advancement of the cold hard facts that exist on the platform of our physical world, we face a probable disappointment in the complete execution of what we dream.

  24. paul beard Necessity was absolutely a part of it. The thing is that the practices which survived demonstrate, erm, survival bias. We don’t know what the native variants of rapacious consumption and exploitation were, because they didn’t survive.

    (The fact that there are traces of numerous native civilisations which themselves didn’t survive suggests that these did in fact exist, or in the alternative, that even living-in-harmony practices were not sufficient. The Anasazi and Mayan civilisations come to mind.)

    The other problem, of course, was that when the long-term-sustainable native civilisations met a bunch of short-term-diseased Europeans, they completely caved under them, whether indirectly through disease, or directly through mass genocide on the part of the Europeans.

    That’s a theme explored in another variant in Aldous Huxley’s Island. I’d consider that the far more depressing cousin to his Brave New World, in that whilst the latter does portray a dystopia, what Island shows is that even if you could create a utopia, it would fail, betrayed from inside.

    Agreement on your share-of-the-gains bits.

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