Matrix——More Public Benefit for Crypto Mining (Part 1)

Bitcoin—A Great Financial Product

As news of Bitcoin price hitting 60,000 USD took financial media headlines by storm, the world was once again surprised by the growth potential of this novel financial asset. At the same time, crypto started attracting investment from mainstream financial institutions and tech visionaries (such as Elon Musk) alike. When the SEC announced it would approve Bitcoin ETFs, no one could deny anymore that Bitcoin had earned its place in mainstream institutions’ portfolios.

Picture: Bitcoin Price Chart

People call Bitcoin the greatest invention of the 21st century. This novel asset class invented by Satoshi Nakamoto has disrupted the financial sector and promises people a freer, fairer and more transparent financial life based on blockchain technology and PoW consensus mechanism.

The Original Sin of Crypto Mining

Despite being hailed as the greatest invention of the 21st century and a price skyrocketing 70 million times since its birth in January 2009, Bitcoin carries two original sins: energy waste and computing power waste.

Energy Waste

We all know that at the core of Bitcoin is the PoW consensus mechanism. This mechanism guarantees the security and fairness of blockchain networks, but this comes at the cost of energy waste.

Picture: Country Energy Consumption Compared with Bitcoin

If Bitcoin were a country, it would rank before Argentina as the 29th largest energy consumer in the world, and all the resources spent in mining could have been used for other socially beneficial causes instead.

Computing Power Waste

If we use floating-point operations per second (FLOPS) to calculate computing power, then Bitcoin mining consumed a total of 8.3×〖10〗^22 FLOPS in 2018.

Putting this in perspective, we have:

The total computing power available to Google: ~80P FLOPS = 8×〖10〗^16 FLOPS

The computing power output of 500 supercomputers: 672P FLOPS = 6.72×〖10〗^17 FLOPS

The total computing power available to the world: 1.2×〖10〗^23 FLOPS

As we can see, 70% of the world’s computing power is used for mining, and Bitcoin mining consumes a million times the computing power available to Google.

This is a huge waste because hash calculation in PoW mining is for encryption only. It guarantees Bitcoin transactions are accurate and immutable but does not create any other social value whatsoever. If this much computing power were used for scientific research, we might have already invented the artificial brain, which would be a quantum leap in science.

Controversy and Negative Impact

Although Bitcoin is getting accepted as a mainstream asset class, there are also criticisms. While Bitcoin bulls view energy wasteful mining as Bitcoin’s price anchor, bears argue that the waste is pointless and that Bitcoin doesn’t really have a price anchor. We can see this from Elon Musk’s attitude change towards Bitcoin.

Picture: Elon Musk Suspends Tesla Purchase Using Bitcoin

From Tesla buying 1.5 billion USD worth of Bitcoin to Musk announcing the suspension, merely three months have passed, and the news shocked crypto investors, causing Bitcoin price to halve in days.