Do you think it's possible to have a blockchain that has the five pillars of a fair currency while there's no mining?

[inaudible] [AUDIENCE] Do you think it's possible to have a blockchain that has the five pillars of a fair currency... while there's no mining? [ANDREAS] Umm, [one that] has no mining? Possibly. [One that] has no energy consumption? No. People misunderstand the energy consumption of systems like Bitcoin. First, people say it's a "waste" to use energy [for Bitcoin], which is a subjective perspective. It is a "waste" to you, but obviously for the people using that energy and paying for it, it is not a waste. They call it an investment. What [those people] are trying to say is, "I am going to [insert] my decision of what the market should do." There is a dangerous path there. We are not talking about energy generation, but energy consumption, which are two very different things [to focus on]. Energy isn't a bad thing; energy produced from polluting sources is the bad thing. Consumption of energy from solar is a wonderful thing. You just invested in [the production of] all these solar panels that can [also] be used for other purposes. You reduced the unit cost of solar energy. That is magnanimously wonderful! It matters where energy is coming from; if we have a problem with where energy is coming from, let's address that problem. Let's start deciding that some forms of energy [generation] are harmful and some are not. That means [accounting for] the externalities of carbon and pricing them; depending on your political leanings, [that] is either the worst form of communism or it's the libertarian solution of creating markets for carbon. It doesn't matter. If the problem is carbon and climate change, address the problem, not Bitcoin.

It is a bit hypocritical to say, This form of energy consumption, which I'm not using, is wasteful!

It is a bit [hypocritical] to say, "This form of energy consumption, which I'm not using, is wasteful!" "But Christmas lights are pretty!" [Laughter] Christmas lights actually consume a significant percentage of U.S. energy every year, and for what? I remember this funny movie where a guy [decorates] his entire [house and neighborhood], [grabs] two very high voltage cables, and [heaves to connect the power cables]. The whole neighborhood lights up. Then the camera zooms out to this [other] guy on the International Space Station (ISS); [He looks down and] says, "What is that?!" They can see the house [lights] from space. Americans do this every year. Maybe Christmas is "sacred" and we shouldn't really bash Christmas... because the lights are pretty. So I have a few other [examples] for you: How about war? How about the U.S. Department of Defense, the greatest polluter on the planet by far? How about [crony] capitalism and the amount of junk we dump into rivers to extract cobalt for your iPhone? Lithium, gold, or all of the other things that we are doing to our planet?

We must decide if we are going to start prescribing to markets what is a good or bad use of energy

We [must] decide [if we] are going to start prescribing to markets what is a good or bad use of energy. The real problem is, who decides? I will not even go into the [energy cost of] printing, shipping, and guarding paper money. Handling [fraud protection for] credit cards consumes a far greater amount of energy than Bitcoin, while at the same time, eating away at our democracy. I won't even go there. The real problem is, who decides? If you [determine for everyone that] "this use of energy is bad," "this use of energy is good," you are a dictator. That is a decision that markets should make, [particularly by] the person consuming the energy. If you want to tell me that there are externalities [for certain sources which] have not been accounted for... in the price and the market isn't working, great. Let's price those externalities. Let's bill for carbon. In which case, Bitcoin mining -- as the most fungible and transportable form of consumption -- would [be incentivised to] immediately migrate [more] to the low-cost alternatives. [In many cases], you are scavenging energy that would otherwise be wasted... because it cannot be transported effectively to other locations, especially alternative forms of energy. You are depreciating the capital cost of building [that infrastructure] in the first place. [Let's say you plan to build a] solar [plant]. It delivers 15 megawatts, but [the nearby] community only needs 5 megawatts. It will take [a few] years to pay for that [plant] by [supporting] this community. [The energy] can't be shipped too far or [a lot] will get lost in the high-voltage cables. Then some guy comes along and says, "I will [install] five thousand Bitcoin miners here." "We will plug them in and can use 15 megawatts right now. We will pay for this plant in a year." What do you do? You build two plants. Then you build three plants. Now we have stopped burning dinosaurs. We're no longer burning fossil fuels. The least transportable energy, least matched with demand, is alternative energy. Before you go blaming Bitcoin mining for the end of civilization, at least do the math properly!

They did the math wrong

The other problem [with these statements] is the [attempts at] extrapolation. "Bitcoin is using this much energy and it has this many transactions." "Divide the amount of energy by the number of the transactions." Therefore, if the number of transactions grows by this much [in this many years], Bitcion will use-" Bullshit! That is not the real math. That is not a valid extrapolation! The amount of energy used in mining has no bearing on the number of transactions you can process. The same [kind of bad] math as "my fourteen-year-old has grown four inches so far this year." "By the time he is twenty-five years old, he will be forty-five feet tall." [Laughter] That kind of shoddy math just got published in [a "study" cited by] Forbes, Bloomberg, CNN, CNBC... All over the place with gloating and gleeful analysts. "See? I told you Bitcoin will destroy the planet." There is one last thing I would like to say: they [did] the same thing [with] the internet. A lot of the things they say about Bitcoin, [were also said] about the internet. "A haven of terrorists, pornographers, and pedophiles," of course, but they also "did the math." They would say, "Google uses [x] data centers to process [x] search queries." "By the year 2020, the internet will consume 30% of U.S. energy." The actual percentage has dropped to less than 2%. It [helped] deliver a level of productivity... and life improvement that far outweighs that consumption of energy. They did the math wrong. Or they [just] lied, to make sure that their parasitic bosses could keep sucking on that [data] pipe. [Applause]