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Is Crypto Mining a Waste of Resources?

As we all know, the Chinese government completely banned the existence of Crypto mining in June 2021. This move led to a series of chain reactions, which not only caused the price of GPUs to drop, but also caused serious damage to the redistribution of social resources and the sustainable development of virtual currencies. There was a certain impact and intense discussion. Just like what a miner said: “This time it can be said to be a complete farewell” a mining machine manufacturer told reporters, “The process of de-sinicization of mining has begun.”

Bitcoin

Although Bitcoin seems to some people to be a waste of social public resources, it is still sought after by many people due to some special attributes of Bitcoin.

It has to mention the advantages and attributes of Bitcoin: Decentralization.

Bitcoin is decentralized, meaning that it is not controlled by any central authority or institution, such as a government or bank. This makes it attractive to those who value financial autonomy and independence.

In addition, it’s safe. Transactions on the Bitcoin network are secured through advanced cryptographic techniques that make them virtually impossible to tamper with or manipulate. Bitcoin has a finite supply, with a maximum of 21 million bitcoins that can ever be created. This scarcity has driven up the value of Bitcoin over time and makes it a potentially attractive investment opportunity. Global accessibility: Bitcoin can be sent and received by anyone, anywhere in the world, as long as they have an internet connection. This makes it an attractive option for international transactions, particularly in regions where traditional financial infrastructure is limited or non-existent.

However, is the relative contribution of Crypto mining to social resources, do the advantages really outweigh the disadvantages? “No central banker would stand for such farcical wastefulness. But the decentralised cryptocurrency bitcoin relies on it.”

factories

But is it really perfect? Obviously not

Let’s use the most famous bitcoin to make an argument.

Bitcoin and other cryptocurrencies have undoubtedly revolutionized the financial world, offering a new way to conduct transactions and store value. However, as with any technological advancement, there are some disadvantages and negative impacts on social resources. Here are some key concerns related to Bitcoin:

  • Energy consumption: Bitcoin mining, which involves solving complex mathematical problems to validate transactions and create new coins, consumes a significant amount of electricity. As of my knowledge cutoff in September 2021, it was estimated that the Bitcoin network consumes more energy annually than some entire countries. This high energy consumption contributes to environmental issues like climate change and can strain local energy resources
Bitcoin’s electricity
Source from Cambridge Bitcoin Electricity Consumption Index:Bitcoin’s electricity use has skyrocketed over the past two years.
  • E-waste generation: Bitcoin mining hardware becomes obsolete quickly, as more powerful and efficient devices are constantly developed. This results in a rapid turnover of equipment, contributing to the growing problem of electronic waste.
  • Income inequality: The early adopters of Bitcoin and those with the resources to invest in powerful mining equipment have seen significant financial gains, while others may have missed out on the opportunity. This can exacerbate existing income inequalities, as the wealthy continue to accumulate more wealth through cryptocurrencies.

To sum up, it seems that Bitcoin or Ethereum will indeed cause a certain degree of waste and pollution to social public resources. But is that really the case?

Different Voices and Perspectives

“Electricity cannot be stored on a large scale. In Inner Mongolia, Sichuan, Xinjiang and other places with rich power resources but underdeveloped economies, electricity produced is wasted if it is not used, and it will damage the generator. Now that someone pays to recycle waste, it is too late for the local government to be happy.” from “Is Bitcoin mining a waste of resources“.

In addition, talking about virtual currency mining as a waste of social resources is actually a sneaky change of concept. Many people think that mining does not generate social value, so mining is a pure waste of resources, which is a misunderstanding.

The essence of mining is that global miners use algorithms and computing power together to maintain a (relatively) absolutely safe and decentralized currency system. In essence, all electricity costs, graphics card costs, and ASIC R&D and manufacturing costs , are maintaining the system.

All over the world there are some remote regions with extremely rich reserves of hydropower and wind resources. The resources in these areas are renewable, and letting these resources lose themselves is not only a waste but also an irrational use of the local government’s economic growth. In other words, the introduction of some mining farms by the local government can not only stimulate local GDP growth but also fully absorb the excess wind power and electricity stored. This kind of thing that kills two birds with one stone is a good thing for everyone.

wind turbines

Decentralization itself is an act that contributes to and explores social value. All efforts in the process of achieving this goal are not in vain, and it should not be defined as a waste of social resources. For example, human beings have carried out a lot of actual gold mining, which also destroys the entire ecosystem and the environment. Mineral resources themselves have no value, only when people use it, so mining gold is used as a fixed circulation currency or The use in medicine, metallurgy, equipment manufacturing, physics and chemical research is a contribution to human civilization and technology, which of course cannot be defined as a waste of resources.

“No one would think that it was a waste to use incandescent bulbs for home lighting when Edison used them, but many people think that it is a waste to use incandescent bulbs for home lighting now. The representative significance of this example to waste is that it is necessary to consider the limitation of technical capabilities to determine whether there is waste in an activity. Old technology (such as incandescent light bulbs) cannot be said to be wasteful until stronger and more efficient technologies (such as cold light bulbs) appear.” from “Is Bitcoin mining a waste of resources?

Edison

The value of virtual currency or Bitcoin, as an emerging entity, has been questioned all the time. However, the changes brought about by its decentralized transactions have made it easier for many people, making all the value exchanges that were originally complex and subject to many restrictions obtained the simplest, most direct and effective circulation channels, which is progress and innovation.

So judge its worth. He must have some prerequisites:

  • Crypto mining needs to be located in some remote areas with rich hydropower and wind resources, which will not affect the normal people’s resource consumption in most major cities and regions;
  • Crypto mining needs to have the ability to control transaction risks, such as eliminating some illegal activities using virtual currency, such as money laundering, tax evasion, etc.;
  • In addition to being able to afford the power consumption brought by Crypto mining and the cost budget of the mining machine, the value increment that can generate benefits for absenteeism. You don’t need to be responsible to others, you only need to be responsible to yourself. There are many unreasonable phenomena in this world, but the investment that can bring you benefits within the framework of legal compliance is the right investment.
Bitcoin Banknote

Be your own Master

Anything is a waste of resources. But as long as it is organized, systematic, and scaled, and finally forms a complete set of methods, and can bring value to investors, then it is not waste. If Bitcoin succeeds and becomes widely used as a recognized world currency, the energy consumed by Bitcoin will be negligible compared to the human and material resources consumed by the fiat currency system. This is like the fact that the United States continues to create turmoil and wars around the world in order to maintain its dollar hegemony. This is also a blatant waste of resources for human civilization.

At least, I want to tell a story: you are a absenteeism, after weighing the benefits and investment, you bought a batch of machines, in order not to disturb your neighbors or some environmentalists, you put the machines in an abandoned house in the suburbs , and used the wind power saved locally to generate electricity. For this reason, you supported the electricity bill, paid the rent, and worked hard to take care of your investment and business. Then suddenly one day someone came out and told you that you are wasting resources, what would you do?

Finally, I would like to say that BTC itself is a resource, so why is there a waste of resources?

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