How would you value mining? What's the figure you'd assign to it? As the activity it is certainly valuable to ensure the validity of the blockchain. In my mind that's the function of the market to assign value. Of course with the technology being so new we can expect fluctuations, but I think eventually it'll settle down to some stable level that is acceptable to all market participants.
"As the activity it is certainly valuable to ensure the validity of the blockchain."
Not at the cost that it currently takes. Personally, I ascribe far, far, far less value (if any) to any cryptocurrency mining compared to using the energy for other stuff, or not using it (and not having the mark up on graphics cards).
"but I think eventually it'll settle down to some stable level that is acceptable to all market participants."
The "market participants" would only be those mining crypto, though.
Ah, but "personally" is the operative word here, other people obviously disagree.
> The "market participants" would only be those mining crypto, though.
Not only them. All people who would use bitcoin in some capacity and benefit from it, they all would be participants in that market. Miners could not exists without them, in the end of the day they get their pay from packing transactions into blocks, no transactions - no pay.
Except this stuff doesn't happen in a vacuum. Them deciding to waste a whole bunch of energy on something like cryptocurrency has very real effects on everyone else.
Ah, but you see their right to do what they want with what they own is holy you see. Can't touch that. That would be blasphemy, which is punishable with spending more of your tax dollars lobbying for stronger property rights and the state machinery to back it up.
> Based on what? And if people aren't getting value from using the blockchain, why are they using it?
It creates value for individuals at a bigger cost to society - a classic negative externality. Making drug dealing easier is immensely profitable and that's where all blockchain profits eventually come from - everything else is a smokescreen of intermediaries to create just enough deniability to let respectable business participate in the drug trade. It's just like outsourcing manufacturing to countries with lower environmental standards to profit from pollution (another example of something that's negative-value overall, but positive-value for the individual engaging in it).
Suppressing the drug trade is evidently something that society puts a high value on, given how much society spends on it.
> Do you have a source for this, or is this just what you believe?
Just looking at the whole blockchain ecosystem as a black box: any profit has to eventually come from outside, the rest is just moving that around. Speculators can move value around but aren't creating it. So who are the people getting something actually valuable in the real world from blockchain? I mean sure there's a bit of money laundering and evading capital controls, but the big one is drug dealing.
"Based on what? And if people aren't getting value from using the blockchain, why are they using it?"
You're assuming rationality. You're also assuming they're actually paying for the electricity. And you're forgetting that they're not paying for the negative externalities of their energy waste.
"Can you put a number on that, and justify it?"
Take the smallest number you can think of. Now, take a number smaller than that.
Then explain why the people using bitcoin are being irrational. Are the miners processing transactions and receiving fees in return being irrational? Are the people using bitcoin to send and receive funds being irrational? Please enlighten us (and them, apparently).
> You're also assuming they're actually paying for the electricity.
They are.
> And you're forgetting that they're not paying for the negative externalities of their energy waste.
Classic case of moving the goalposts. The same applies to any economic activity requiring the use of electricity.
> Take the smallest number you can think of. Now, take a number smaller than that.
I think the point is that cryptocurrency mining is not valuable, at least not compared to the amount of resources required for it.
"Saying that this activity is pointless just because you are not seeing any value does not mean that it is actually pointless."
It also doesn't mean that it's not pointless.
"If anything we should welcome higher and higher energy use because it means higher standard of living for the humankind."
No. That does not logically follow.
"And just to address 'waste' here, energy is not free so 'waste' that actually wastes resources cannot go on for long lest the waster goes bankrupt."
This also does not logically follow.