The crypto thread

[Samson]

This 0.3p is another of those literally irrelevant numbers. My mistake earlier was assuming that the electricity cost was necessarily lower than that, giving a connection to environmental costs. It's not - rather spectacularly so.

The 0.3p transaction fee is great for your personal finances, but totally irrelevant to electricity costs, and hence environmental impact. monero used something like 300 kWh for that transaction, not 1/30th of a kWh. The fact they only charged you personally for a fraction of the electricity cost doesn't help the environmental cost in the slightest. The inherent inefficiency of their blockchain network uses that much electricity per transaction, regardless of what you're billed for.

Incidentally, that x5000 number that you've referenced a few times is a ratio between two completely irrelevant numbers, and hence is equally irrelevant. The £15 assumes Visa's electricity cost is a relevant fraction of that, which it isn't. I get varying figures for actual electricity costs per transactions for Visa, but they're on the order of 1 - 2 Wh. Which is about $0.00018 at current prices. The 0.3p assumes Monero is charging you for the cost of the electricity - they're not. Hence both of these numbers have no relevance at all to which is environmentally better.

By comparison the electricity costs of monero, even if we take a low end figure of $2, is actually on the order of 10,000x worse in electricity costs for the same job.

You agree what we are trying to do is minimise the CO2 impact of our lives? The question is how we translate this into a do I do A or do I do B where A and B are interchangeable services. I think the best way I can do it in the real world is to look at the total environmental cost of option A and the total environmental cost of B, divide each by their total income and that is the cost per dollar. Then I can calculate my individual environmental contribution based on how much I spend on the service.

This logic allows any products or services to be compared and if everyone followed it would seem to minimise our total environmental impact.

Does this all make sense? I do not expect everyone to agree with the details of my logic, but at least do you agree it is a consistent and actionable strategy for assessing and attempting to minimise ones environmental footprint in a day to day level?

Given this I think my analysis is sound. It matters not at all that the electricity required to change the value in my bank account is trivial when my bank is investing in fossil fuel exploration and the executives are flying on private jets to get drunk on an evening. It is the cost of the whole system that matters, and the visa system has a bigger total environmental impact than the monero blockchain, even accounting for the amount of money that goes through it.

 

[uppi]

but I am fairly sure I only paid 0.3p of that $4 and that is where the money comes from.

And this is the mistake you are making. The money does not come from fees in any significant way. You are not really paying for the transaction. The transaction is paid for by mining new coins (and indirectly paid by everyone owning Monero, because adding coins decreases the value by inflation).

The miner gets $4 per transaction. This is very simple math. So if you are only paying 0.3p, someone else is paying.

 

[uppi]

You agree what we are trying to do is minimise the CO2 impact of our lives? The question is how we translate this into a do I do A or do I do B where A and B are interchangeable services. I think the best way I can do it in the real world is to look at the total environmental cost of option A and the total environmental cost of B, divide each by their total income and that is the cost per dollar. Then I can calculate my individual environmental contribution based on how much I spend on the service.

This logic allows any products or services to be compared and if everyone followed it would seem to minimise our total environmental impact.

Does this all make sense? I do not expect everyone to agree with the details of my logic, but at least do you agree it is a consistent and actionable strategy for assessing and attempting to minimise ones environmental footprint in a day to day level?

Given this I think my analysis is sound. It matters not at all that the electricity required to change the value in my bank account is trivial when my bank is investing in fossil fuel exploration and the executives are flying on private jets to get drunk on an evening. It is the cost of the whole system that matters, and the visa system has a bigger total environmental impact than the monero blockchain, even accounting for the amount of money that goes through it.

Then lets look at the total system:
Number of transactions made by VISA:

Visa, Mastercard, UnionPay transaction volume 2023| Statista

Nearly four out of 10 global card transactions in 2023 took place with a Visa-branded card.

www.statista.com

226 billion
VISA revenue:

Visa Revenue 2010-2025 | V

Visa annual/quarterly revenue history and growth rate from 2010 to 2025. Revenue can be defined as the amount of money a company receives from its customers in exchange for the sales of goods or services. Revenue is the top line item on an income statement from which all costs and expenses are...

www.macrotrends.net

Visa annual revenue for 2021 was $24.105B

total system cost:
$0.11 per transaction (if we assume that the whole point of Visa is making transactions)

total system cost for Monero:
$4 per transaction (if we assume that miners are not operating at a loss)

We know that most of the cost of Monero is in electricity and thus emits CO2. The executives of Visa do not have the money to fly enough private jets to emit enough CO2 that Monero comes out ahead in CO2 emitted per transaction

 

[MrCynical]

Some more calculations:

Visa processes about 150 million transactions per day. If these were run through monero, with its consumption on the order of 300 kWh per transaction, then each year, it would consume 16,400 TWh. For comparison, the total UK power production for the year is only about 300 TWh.

The average UK household uses around 10 kWh per day. One monero transaction is something like a month's electricity use for a household.

No matter how much we try to deflect with "but Visa's executives have big carbon footprints!", that cannot in any way counterbalance this. Monero is environmentally inexcusable. Sorry.

For what it's worth, I did actually change my mind in this discussion. I hadn't researched the exact figures, but had assumed they were bad from what I knew of Bitcoin. But now I've done the research, I'm genuinely surprised just how ludicrously awful they are.

 

[Samson]

And this is the mistake you are making. The money does not come from fees in any significant way. You are not really paying for the transaction. The transaction is paid for by mining new coins (and indirectly paid by everyone owning Monero, because adding coins decreases the value by inflation).

The miner gets $4 per transaction. This is very simple math. So if you are only paying 0.3p, someone else is paying.

But what is someone getting with a single transaction? If we look at some random transaction that has just happened they paid much more than me, but they got a much bigger transaction with loads more inputs and they got it done much faster. We do not know how much it was, and I do not understand why some people pay so much but one has to assume it was worth them paying this much so we can assume they got appropriate value from it.

Counting these transactions as equivalent seems like counting an economy flight the same as a first class flight. You cannot divide up the fuel used on the plane so the person in first class person used 20 times the amount of fuel, but it make more sense to me for the first class passenger to be responsible for 20 times the environmental cost of the flight.

It comes down to the same question: What logic do you use for divvying up the environmental cost of the activity? Being poor and tight it may be a bit self serving to put it all down to money, but it seems to make more sense than anything else presented, certainly just counting transactions and considering them the same when people are obviously getting different value from them and the total cost of providing the service is so different.

This is complicated by the cost of visa being a simple proportion of the value charged, and monero being on bytes of transaction and how quickly you want it done, but if we are going to set up a system for assessing environmental cost it has to be one that incentivizes a lower footprint lifestyle. That does not involve giving visa 5% of all added value.

Then lets look at the total system:
Number of transactions made by VISA:

Visa, Mastercard, UnionPay transaction volume 2023| Statista

Nearly four out of 10 global card transactions in 2023 took place with a Visa-branded card.

www.statista.com

226 billion
VISA revenue:

Visa Revenue 2010-2025 | V

Visa annual/quarterly revenue history and growth rate from 2010 to 2025. Revenue can be defined as the amount of money a company receives from its customers in exchange for the sales of goods or services. Revenue is the top line item on an income statement from which all costs and expenses are...

www.macrotrends.net

Visa annual revenue for 2021 was $24.105B

total system cost:
$0.11 per transaction (if we assume that the whole point of Visa is making transactions)

total system cost for Monero:
$4 per transaction (if we assume that miners are not operating at a loss)

We know that most of the cost of Monero is in electricity and thus emits CO2. The executives of Visa do not have the money to fly enough private jets to emit enough CO2 that Monero comes out ahead in CO2 emitted per transaction

Why are you counting it by transactions? Why is that relevant? How will reducing the number of transactions reduce the carbon footprint? You acknowledge that doing the maths on the accounts is not what takes the CO2 in VISA. Reducing the money they get will reduce their carbon footprint.

Some more calculations:

Visa processes about 150 million transactions per day. If these were run through monero, with its consumption on the order of 300 kWh per transaction, then each year, it would consume 16,400 TWh. For comparison, the total UK power production for the year is only about 300 TWh.

The average UK household uses around 10 kWh per day. One monero transaction is something like a month's energy use for a household.

No matter how much we try to deflect with "but Visa's executives have big carbon footprints!", that cannot in any way counterbalance this. Monero is environmentally inexcusable. Sorry.

This is not comparing like with like. From your numbers of $24.105B/year and 150m/day that is an average of 44c/transaction. That is lots of really small transactions. A monero transaction that takes up a 24th of a block is a complex transaction. We do not know the sizes, but I can be fairly confident that all monero transactions average much more than $8 each.

Me choosing monero over visa is not going to cause everyone to suddenly change to using monero and the blockchain taking 16,400 TWh/year. It might get us a bit closer to a system of transferring value that does not transfer 1/20th of it from me to the financial industry. The environment would be better off is that was to happen.

 

[MrCynical]

This is not comparing like with like. From your numbers of $24.105B/year and 150m/day that is an average of 44c/transaction. That is lots of really small transactions. A monero transaction that takes up a 24th of a block is a complex transaction. We do not know the sizes, but I can be fairly confident that all monero transactions average much more than $8 each.

The absolute lowest figure I can find for the electricity cost of a monero transaction is $1.88 from a forum for cryptominers, assuming a kWh cost of $0.10, which is far below actual market rates. Miners ought to know their stuff, but I've seen enough cases of people mining crypto at a loss not to be certain of that. What papers I can find are typically about ten times that per transaction for monero's blockchain.

Even taking the most generous possible outlier for every figure, each monero transaction is still a day or two's electricity usage for a household. Think about that. Make just one transaction a day is equivalent to running an entire extra house or two that you don't use, from an environmental standpoint.

Counting these transactions as equivalent seems like counting an economy flight the same as a first class flight. You cannot divide up the fuel used on the plane so the person in first class person used 20 times the amount of fuel, but it make more sense to me for the first class passenger to be responsible for 20 times the environmental cost of the flight.

Unfortunately it's closer to arguing that having the plane all to yourself is environmentally better if you sit in an economy class seat than a first class one. A transaction's environmental cost is not dependent on it's monetary value.

Me choosing monero over visa is not going to cause everyone to suddenly change to using monero and the blockchain taking 16,400 TWh/year. It might get us a bit closer to a system of transferring value that does not transfer 1/20th of it from me to the financial industry. The environment would be better off is that was to happen.

The above argument boils down to arguing that monero transactions are larger and less frequent. Going to the back of an envelope, given the extra processing costs, to keep the total number of transactions low enough to just be doing about the same total environmental damage as the existing financial system, you'd need to ban monero for any transaction under about $10,000. That's gone from day to day payment system to very occasional use for most people. And it's still being as generous as possible with the costs. I could easily stick another zero on that by going with more middle of the pack figures.

I get from a personal standpoint why you'd like a replacement for visa. I am not intending this as a personal attack on you. But monero's blockchain is utterly awful from an environmental standpoint, no matter how generous you are with the figures. The only thing keeping it from being a large scale environmental disaster is that few people use it.

To return to the comment that originally sparked this discussion:

the idea of any kind of blockchain tech being "green" requires a fair amount of ignorance of how it works anyway.

I'd like to revise that to:

Any scheme claiming to be eco-friendly that uses blockchain technology should be regarded with the same credibility as a scheme that claims giving everyone a private jet will benefit the environment.

 

[uppi]

But what is someone getting with a single transaction? If we look at some random transaction that has just happened they paid much more than me, but they got a much bigger transaction with loads more inputs and they got it done much faster. We do not know how much it was, and I do not understand why some people pay so much but one has to assume it was worth them paying this much so we can assume they got appropriate value from it.

Counting these transactions as equivalent seems like counting an economy flight the same as a first class flight. You cannot divide up the fuel used on the plane so the person in first class person used 20 times the amount of fuel, but it make more sense to me for the first class passenger to be responsible for 20 times the environmental cost of the flight.

You still don't get it. Yes that other person paid $0.13 for their transaction, but the minimum real cost was still $4. And that is not counting miners who cannot calculate and let it run in the background or whatever, driving costs potentially much higher.

You are arguing about whether the person who paid $1 for their economy seat or $10 for their business class seat on a plane hurts the environment more, when the government is subsidizing each seat with $400. In the end the volume of digital coins does not matter much, the consumed resources are quite similar.

Me choosing monero over visa is not going to cause everyone to suddenly change to using monero and the blockchain taking 16,400 TWh/year. It might get us a bit closer to a system of transferring value that does not transfer 1/20th of it from me to the financial industry. The environment would be better off is that was to happen.

So you prefer a system where you transfer value to the coal industry? I am not a fan of the financial industry and I won't deny that it is contributing to CO2 emissions. But substituting them with the coal industry is worse in my book.

 

[Hygro]

All that matters is how much CO2 is released in the two situations. In simplified terms one situation is that the visa corporation has £15 pounds more money, and that will either be spent on more stuff (which will have a footprint), more staff in the financial industry (which will have a footprint), or more profits for the shareholders (which will have a footprint). The other is 0.3p in the monero "ecosystem" which will incentivise more people to run miners in the background and so their computers will use more electricity, and similar things up to running farms.

And it's £15 less for you to use for the same, leaving us only with the system differences of the two methods of transaction processing.

 

[Moriarte]

I find the argument that we should discard all attempts at technological progress in financial sector, because that activity has large CO2 attached to it, questionable.

It sure is convenient to sit on the high ground in the swiveling chair of mastercard executive and present statistical extrapolations on the subject of how inefficient the new kid on the block is.

Going further with logic - why even attempt to make something new, when you can entrust everything to the good old duopoly, backed by world bank network and respective governments? (Visa/MC) What can go wrong? Some little inflation here and there, convenient asset freezes at the whim of the hegemon, bailouts, nothing big.

By that logic third world countries and even some first world countries should stop burning coal, because, well, more prosperous countries can sell them their excess green energy! Large problem with this fantasy logic includes: becoming dependent on the monopolist to the point of losing sovereignty; falling victim to violent energy market swings. Etc. In short, aforementioned “logic” neglects, entirely, the interest of the people, locally, in favour of some abstract financial superconstruction, which, in theory, should work for the benefit of everyone, but, in practice, benefits the ultra-rich elements of the system and prosperous nations.

We should absolutely challenge the old way of doing things and if it takes a bunch of CO2 emissions to get there - that’s the price we always pay. Bar nuclear holocaust, we, humans, are going to increase energy consumption almost every year. Greenness of energy is primarily achieved through construction of new nuclear reactors, wind, solar and hydro, NOT by limiting innovation and experimentation. Not that anyone can efficiently project limits upon worldwide p2p network.

Point is, cryptos are going to slowly, constantly improve efficiency. Such is the case of Ethereum, Monero, some other cryptos. Next gen crypto leaders will emerge. All major brokerages integrated crypto in their networks years ago, because they assume crypto is here to stay. Meanwhile, the world at large is going to provide more green energy over time. The idea that we need to stop now (with crypto) is preposterous. First of all, we can’t. Also, we probably shouldn’t.

 

[Samson]

People have started putting NFTs on bitcoin, or something. It has made transactions a bit more expensive, and the "bitcoin maximalists" have started calling for censorship on the blockchain which has a certain irony.

 

[MrCynical]

People have started putting NFTs on bitcoin, or something. It has made transactions a bit more expensive, and the "bitcoin maximalists" have started calling for censorship on the blockchain which has a certain irony.

I do find it rather telling that efforts seem to be focusing not on improving Bitcoin's horrendous efficiency, but on trying to stuff more wasteful formats such as jpegs into the existing system. And this is being done in the name of NFTs, an "innovation" which is pretty much exclusively the old "name a star after you" scam with a fresh coat of digital paint. Does rather highlight how much of the crypto space is about trying to make a quick buck off scams that rely on a supply of bigger idiots, rather than trying to produce anything genuinely useful. It makes it very difficult to take claims that Bitcoin and the like have anything to do with progress, or innovation or "the future" seriously.

As for the issue of censorship, at least some of those involved are smart enough to realize that if they leave the system as is, where anyone can permanently store information in the blockchain and no one can remove it, sooner or later something very illegal is going to end up on it. Plenty of governments are already looking for reasons to stamp out crypto (and in a lot of cases with good reason), and this approach is offering them a very easy weak point.

 

[Samson]

As for the issue of censorship, at least some of those involved are smart enough to realize that if they leave the system as is, where anyone can permanently store information in the blockchain and no one can remove it, sooner or later something very illegal is going to end up on it.

You know about this:

Child abuse imagery found within bitcoin's blockchain

German researchers have discovered unknown persons are using bitcoin’s blockchain to store and link to child abuse imagery, potentially putting the cryptocurrency in jeopardy.​

​

Researchers from the RWTH Aachen University, Germany found that around 1,600 files were currently stored in bitcoin’s blockchain. Of the files least eight were of sexual content, including one thought to be an image of child abuse and two that contain 274 links to child abuse content, 142 of which link to dark web services.​

Just to be clear, whatever the grundiad says, this is not people "using bitcoin’s blockchain to store and link to child abuse imagery", this is people uploading the most offensive thing they have to hand to the blockchain for reasons.

And, if you cared about that sort of thing you will really hate the IPFS.

 

[Birdjaguar]

Bitcoin Miner Adds Machines In Iceland to Hedge Against Tax
BY CAITLIN OSTROFF WSJ

New York-based Bit Digital is expanding its operations to Iceland to hedge the bitcoinmining company’s regulatory risk amid a proposed a crypto-mining tax from the Biden administration. Samir Tabar, chief executive of Nasdaq-listed Bit Digital, said that the company bought 2,500 new bitcoin-mining machines for $5 million last week and will house them in Iceland, the company’s first time sending new computers outside the U.S. in two years. Bitcoin miners’ electricity consumption has drawn ire from the Biden administration. It says the miners raise the cost of electricity on shared grids, and it cites the environmental impact of the increased demand for power.

In a March paper, the Treasury Department proposed that firms mining digital assets should pay tax equal to 30% of their costs of electricity. The tax proposal comes alongside a broader government crackdown on digital-asset companies after the collapse of crypto exchange FTX. The measures have spooked the U.S. crypto industry, prompting some companies to discuss moving operations outside the country, though few have done so. Leaving the U.S. completely would be a tall order for most U.S. crypto companies, whose operations, staffs, bank accounts and clientele are typically based in the country. Crypto exchange Coinbase Global, for example, generated more than 80% of its 2022 revenue in the U.S.

After the Iceland machines come online for Bit Digital, Iceland and Canada will house a combined one-fifth of the company’s mining machines. The rest are in the U.S. Such machines are the heart of Bit Digital and other bitcoinmining companies, which earn money by plugging the high-powered computers into electricity sources so they can work through mathematical problems to unlock new bitcoin. The process, called mining, has gone from something any individual with a personal computer could do a decade ago to a sizable industry that uses numerous computers and lots of electricity as competition to harvest bitcoin has grown. Government figures place the amount of energy used to harvest crypto in the U.S. last year near that used to power all of the country’s home computers. Crypto proponents say that the industry has moved to cleaner energy sources in recent years and that machines are often online when grid demand is low.

Bit Digital says that more than two-thirds of its mining operations are carbon-free. The Iceland operation will use hydroelectric and geothermal power sources, Tabar said. “What we’ve done in the past is the machines come to the United States, but now instead of doing that we have to look at different jurisdictions due to instability,” Tabar said. “We have to take that seriously.” Bitcoin miners have been particularly worried by the government’s tax plans, said Ethan Vera, chief operating officer at Luxor Technology, which runs a trading desk that brokers sales of bitcoin-mining machines. More companies have looked to add operations in countries such as Paraguay and Laos in recent weeks, he said. Some U.S. crypto companies have added services in foreign countries that have long been off-limits to local users. This month, Coinbase and rival exchange Gemini opened international derivatives exchanges to allow traders to make leveraged bets on the rise and fall of select cryptocurrencies.

The recalibration comes barely two years after China’s crackdown on bitcoin mining spurred what some called the “great mining migration.” Companies including Bit Digital hustled to pull machines out of the country or accelerate continuing processes—an expensive and stressful endeavor given the computers are highly susceptible to breaking if packaged and handled incorrectly. After China forced out bit-coin miners, many moved to the U.S., making the country a hub for digital-asset mining. In late 2021, crypto firms said the U.S. felt safer because of a slow and transparent legal system for shaping new laws.

Now firms are experiencing a shift in that landscape. Texas state senators have passed a bill that crypto miners say would hurt the industry, in part by eliminating tax breaks for such firms. Other cities such as Miami, which once courted bitcoin miners to use its nuclear-power plant, have soured on digital assets.

“The truth is there’s nowhere that’s safe,” Vera said.

 

[EnglishEdward]

Meanwhile in that quaint old island:

The UK Treasury committee recommends that crypto should be regulated as gambling:

Crypto should be regulated as gambling, UK lawmakers say

Bitcoin , ether and other cryptocurrencies should be regulated as gambling given the significant risks they pose to consumers, a panel of UK lawmakers said in a report on Wednesday.

www.reuters.com

Regulating retail trading and investment in unbacked cryptocurrencies could create a 'halo'
effect that leads consumers to think the activity is safer than it is, or protected when it is not, it said.

"We therefore strongly recommend that the Government regulates retail trading and investment
activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with
its stated principle of ‘same risk, same regulatory outcome’," the report said.

 

[Samson]

Meanwhile in that quaint old island:

The UK Treasury committee recommends that crypto should be regulated as gambling:

Crypto should be regulated as gambling, UK lawmakers say

Bitcoin , ether and other cryptocurrencies should be regulated as gambling given the significant risks they pose to consumers, a panel of UK lawmakers said in a report on Wednesday.

www.reuters.com

My first thought with that is does it mean any profits are tax free?

 

[Birdjaguar]

In the US gambling winnings are taxable.

 

[Samson]

In the US gambling winnings are taxable.

Indeed, but not in the UK. You lot love your double taxing.

 

[Birdjaguar]

That explains why Brits love to gamble.

 

[Samson]

That explains why Brits love to gamble.

Well, I am not sure that is the direction the arrow of causality works in this case.

 

[Samson]

I know. Without wishing to derail the thread too much, I was just interested enough to figure out exactly how monero works. Sorry - it's a simple crypto-token speculation scheme that's pretending it's not one (i.e. it pretends that processing financial transactions are relevant to its business model - it is mathematically demonstrable they are not). I'll leave it at that unless you wish to return to it over in the crypto thread.

I think I may have got something I missed before. Is your point that the money that pays for the electricity comes not from the transaction fees, but from people coming in and investing new money. Since the the emitted coins given to miners is represented by the blue line on the below graph, or the increase in the purple line , that represents the "cost", along with any change in the price of the coins?

Spoiler Some lines about crypto, including total monero in circulation by date :