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So I've been trying to figure out how much running the Bitcoin system really costs using the following numbers:

  • Total Bitcoin Hash Rate: 300.000.000 GH/s
  • Hashrate of an ANTMINER S4 (currently one of the most efficient ASICs): 2.000 GH/s Power
  • power consumption of an ANTMINER S4: 1.400W
  • Energy price: $0.15/kWh

  • 300.000.000 / 2.000 = 150.000 Antminers

  • 150.000 * 1400W = 210.000.000W
  • 210.000.000W * 24 hours = 5.040.000.000 Wh = 5.040.000 kWh
  • 5.040.000 * $0.15 = 756.000$

Taking into account other less efficient rigs around $1.000.000 seems (theoretically) realistic to me, but I just can't wrap my head around Bitcoin costing $364.000.000 per year. What am I doing wrong?

  • Yes, it's problematic. It keep the system going but it certainly looks bad in raw figures – Wizard Of Ozzie Nov 9 '14 at 1:06
6

Of course. At the current block reward of 25 BTC per block, on average 3600 BTC are mined per day which are worth over $1 million.

If it were significantly much cheaper than $1M (in terms of energy costs) to mine that $1M worth of coins, more people would do so, thus the difficulty would go up, thus the energy costs would go up.

By definition, the energy costs to mine x amount of bitcoins will never be significantly less than the actual worth of those bitcoins.

By the way, "wasting" (well, not really) only $365M per year is an incredible efficient improvement over the current banking system worldwide. The huge costs, waste of resources, and TONS of other collateral damage that come with the fiat currency infrastructure is astronomical, and saying that it's much, MUCH more than the costs of Bitcoin is even still an understatement.

  • 2
    The asker never used the word waste. – Nick ODell Nov 2 '14 at 22:24
  • 2
    You could improve your comparison with fiat by showing how much they (e.g. US dollar or Euro) spend every year. – Arturo Torres Sánchez Nov 2 '14 at 22:27
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    That's the thing, if it's 1 million a day that's $14 per transaction (around 70.000 yesterday) which I think is comparably high (if not higher) than the cost of processing transactions in traditional banking systems. Hence i suppose that Bitcoin can only maintain its currently very appealing low transaction cost so long as miners can make a profit without charging transaction fees, which might eventually be just as high (if not higher, since miners compete which means resources are wasted) as those currently charged by banks. – Sebastian Kovats Nov 3 '14 at 13:33
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    Sebastian, you are absolutely right! The cost of supporting transactions in bitcoin is much more higher, than in centralized systems. Bitcoin is alive now only because it is ponzi. – amaclin Nov 3 '14 at 17:11
  • Sebastian Kovats, your logic is reversed. If it's no longer profitable for miners, some will quit, and mining will become cheaper, rather than tx fees going up. The mining profit (block reward) vs costs (energy consumption) will always remain in a dynamic equilibrium. And @amaclin You better put your trust in fiat currencies then :) – RocketNuts Nov 4 '14 at 11:54

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