What This Post Isn't↑§
This post is not an econ crash course or an intro to cryptocurrencies.
And so this post is especially not for luddites who need to characterize cryptocurrency users as evangelical circle-jerkers, Indian scammers, criminals, etc. because they can't be bothered to read beyond the headlines.
In other words, if you have fundmental misunderstandings about cryptocurrency and/or fiat, this post probably won't address them.
Quick Note on the GPU Shortage↑§
Currently, there is a lot of unwarranted hate for crypto miners, the new wave of which is mainly from salty gamers who need a scapegoat for the ongoing GPU shortage.
Just wait until they find out about the Industrial Revolution & its consequences for the human race.
Nah, just kidding, the Industrial Revolution & heavy industry has driven down costs and have allowed for exponential technological innovation, the problem is Capitalism. Anyways.
Let's be clear, the GPU shortage is being worsened by GPU miners, but the main driver is probably unprecedented consumer demand because people are working from home & realizing that integrated graphics aren't going to cut it anymore.
Multiple factors are at play, & noone knows for certain if there's a single thing to blame--And more importantly: If it even matters. This situation is a total mess.
Quick Note on Mining↑§
Mining profits are exceptionally good at the moment, as per this table from Tom's Hardware:
January 2021 GPU Cryptocurrency Mining
|Component||$/Day||Power $/Day||Profit/Day||Break Even|
|GeForce RTX 3090 ($1499)||$10.80||$0.80||$10.00||~150 days|
|GeForce RTX 3080 ($699)||$8.80||$0.60||$8.20||~85 days|
|GeForce RTX 3070 ($499)||$5.45||$0.40||$5.05||~99 days|
|GeForce RTX 3060 Ti ($399)||$5.40||$0.40||$5.00||~80 days|
|GeForce RTX 2080 Ti ($1199)||$5.35||$0.55||$4.80||~250 days|
|GeForce RTX 2080 Super ($699)||$3.80||$0.50||$3.30||~212 days|
|GeForce RTX 2070 Super ($499)||$3.60||$0.40||$3.20||~156 days|
|GeForce RTX 2060 Super ($399)||$3.50||$0.30||$3.20||~125 days|
|GeForce RTX 2060 ($299)||$2.85||$0.30||$2.55||~117 days|
|Radeon RX 6900 XT ($999)||$8.05||$0.55||$7.50||~133 days|
|Radeon RX 6800 XT ($649)||$7.00||$0.50||$6.50||~100 days|
|Radeon RX 6800 ($579)||$5.75||$0.40||$5.35||~108 days|
|Radeon RX 5700 XT ($399)||$5.00||$0.40||$4.60||~87 days|
|Radeon RX 5700 ($349)||$4.80||$0.40||$4.40||~79 days|
|Radeon RX 5600 XT ($279)||$3.35||$0.30||$3.05||~91 days|
|Ryzen 9 5950X ($799)||$1.25||$0.25||$1.00||~800 days|
|Ryzen 9 5900X ($549)||$0.95||$0.25||$0.70||~785 days|
|Ryzen 7 5800X ($449)||$0.68||$0.25||$0.43||~1050 days|
|Ryzen 5 5600X ($299)||$0.55||$0.15||$0.40||~747 days|
|Ryzen 9 3950X ($749)||$1.13||$0.25||$0.88||~850 days|
|Ryzen 9 3900X ($499)||$0.90||$0.25||$0.65||~767 days|
|Ryzen 7 3800X ($399)||$0.63||$0.25||$0.38||~1050 days|
|Ryzen 7 3700X ($329)||$0.63||$0.25||$0.38||~866 days|
|Ryzen 5 3600X ($249)||$0.48||$0.23||$0.25||~1000 days|
|Ryzen 5 3600 ($199)||$0.45||$0.15||$0.30||~666 days|
|Core i9-10900K ($499)||$0.50||$0.30||$0.20||~2500 days|
|Core i7-10700K ($379)||$0.43||$0.23||$0.20||~1900 days|
|Core i5-10600K ($265)||$0.29||$0.23||$0.06||Forget it!|
|Core i9-9900K ($339)||$0.39||$0.23||$0.16||~2120 days|
|Core i7-9700K ($269)||$0.28||$0.23||$0.05||Forget it!|
|Core i5-9600K ($199)||$0.16||$0.15||$0.01||Forget it!|
It's easy to see how these gains scale rapidly. Mining isn't going anywhere, farms are a multi-billion dollar industry for a reason.
Bitcoin Electricity Costs↑§
The University of Cambridge estimates that Bitcoin contibutes 0.58% of the world's total electricity consumption, consuming 126.98 TWh.
That's more than Argentina (125.03 TWh), Norway (124.127 TWh), Pakistan (120.564 TWh), the United Arab Emirates (119.455 TWh), the Netherlands (110.682 TWh), & many more.
If Bitcoin were a country, it'd rank 29th in annual electricity consumption.
This energy use is necessary for making the blockchain secure.
This isn't counting other cryptocurrencies either, like Ethereum or the plethora of unheard-of altcoins miners are into.
But unlike fiat, Bitcoin (& many other crypto currencies) don't need a GDP, a military, or a banking system to exist.
So the cost of the Bitcoin infrastructure is much less than the cost of the infrastructure of traditional fiat, which requires having a functioning country, right?
But it's not like replacing fiat with crypto will result in this "additional" infrastructure shutting down either, so this comparison doesn't actually make much sense.
Comparing the electricity costs of Bitcoin with random shit doesn't prove anything, it just lets us get a better understanding of large scales. (Related Tweet)
Apples & Oranges↑§
A common comparison used is comparing the costs of credit cards & digital wallet services (e.g. VISA, Mastercard, Apple Pay) to Bitcoin.
Let's just get the low-hanging fruit:
Bitcoin isn't a payment system, it's a currency, but as we covered, comparing the costs of Bitcoin to traditional fiat doesn't work either.
Credit cards & digital wallet services need the banking system to exist.
It's extremely easy to ignore both of these points & ask the superfluous question, "How much electricity do banks use?" & go down a rabbit hole trying to calculate the electricity cost of the world's banking systems. Yup, that's a whole 7 hours of my life wasted.
Electricity, Carbon Emissions, & Natural Resource Competition↑§
Electricity costs are a massive factor in mining profitability.
So miners, especially farms, are heavily incentivized to mine in places with cheap electricity.
There is a global consensus that wind & solar power are the lowest-cost sources of electricity available today, so it's no surprise that CoinShares estimated that 73% of Bitcoin miners in 2019 used at least some renewable energy as part of their power supply.
The reason there are so many farms in China is because China's massive dams provide hydropower that give better profit margins throughout the year, even through the dry season. (The University of Cambridge estimates that all China-based Bitcoin mining operations combined have a total network hashrate of about 65%.)
While there is real concern that mining electricity demands could lead to fighting for natural resources, if cryptocurrency is what causes a country to resort to human rights violations to get natural resources, it probably was just the straw that broke the camel's back & not the primary driver.
In other words, the Uighur genocide isn't happening because cryptocurrency miners need electricity.
Rare Earth Elements↑§
Speaking of natural resources, GPUs contain finite rare earth elements, so using GPUs to mine is pretty much a waste of these & electricity, right?
This argument usually relies on over-extrapolating like, "the DIY miner doesn't care where the electricity comes from, just that it's passive income--This contributes to the societal mindset of waste that is killing out planet" & is almost always a bad faith argument because it makes no fucking sense.
Needless to say, complaining about the industrial revolution making it impossible for the consumer to know their supply chains isn't really a GPU-specific thing. But I digress.
Once again, the low-hanging fruit:
Rare earth elements are abundant but dispersed, so they are expensive, but the name is a bit of a misnomer. Rare earth elements aren't rare, they're scarce, and their scarcity is a political concern, not an environmental one. GPU purchases aren't the primary driver behind China's reduction in rare earth element exports.
Rare earth elements are used everywhere, from electrical vehicles to TVs to smartphones to HDDs to sunglasses. GPUs aren't a primary driver of finite rare earth elements being used. The entire world becoming more technologically advanced is the main driver.
Mining isn't a waste of rare earth elements the same way gaming isn't a waste of rare earth elements the same way hardware accelerated web browsing isn't a waste of rare earth elements. GPUs are here, and they're here to stay, don't be a luddite.
Cheap Dirty Electricity↑§
In the past, heavy industries have put up with dirty electricity because of other costs & factors, but for farms, electricity costs are everything.
Your DIY at-home crypto miner obviously will just be using the power being provided to them, which will probably be cheap non-renewable energy mixed with a bit of solar, but the people actually consuming fucktons of electricity & building space are the farms.
Because of this massive incentive, the farms will function like the heavy industry of electricity, forcing down costs as much as possible, either in the form of subsidies or technological innovation.
And if mining as a whole actually starts to put a serious dent in the global electricity supply, you can bet your ass there will be a tremendous amount of growth in electricity production & storage technology.
But even if you disregard those points, you cannot disregard that every ten minutes, a block reward with an average value of $200,000 is found. That alone is a pretty good bounty to whoever can innovate the cheapest energy & fastest hardware.
Mining is not going anywhere.
It powers cryptocurrencies & makes them secure.
It is profitable.
Massive farming operations are the heavy industry of electricity.
They are actually incentivized to use cheaper energy, because unlike traditional heavy industry, electricity costs are everything for farms.
Currently, the cheapest energy comes from renewables, but government subsidies & technological innovation can push down costs.
Electricity usage doesn't intrinsically pollute like automobiles, the pollution is coming from energy production.
Singling out miners for destroying the environment by using electricity makes very little sense when they don't even control energy production & are also the most incentivized to use clean energy en masse & drive technological innovation.
The proper response would be calling for decarbonizing electricity grids, especially in China & Russia, but nuanced is cringe & amogus.