• Sus [none/use name]
    ·
    4 years ago

    Firstly: bitcoins waste so much energy because they rely on hash functions. A hash function is a function where an input will have a randomized output that cannot be used to determine the input. The same input always has the same output but you cannot tell what the input was based on the output alone. Cryptography shit.

    Bitcoins are created when "blocks" are mined. Blocks are new additions to the decentralized ledger, the collective knowledge of where all the bitcoins currently are. Mining is the process of attempting to add a new block to the ledger.

    To add a new block to the ledger, the miner needs to find the right pattern of hash, which involves finding the right input via random guessing - recall you can't discover an input from its output.

    Once a miner finds the right input, everyone else on the network verifies it and goes "Yeah good work, you get the newly created coins". On top of that, miners control what transactions are included on the block as it's added to the ledger (thereby verifying they happened). They'll always pick the transactions with the highest fees for them since it's additional profit.

    So the problems: there's a limited supply of bitcoins. Every new block hands out fewer than the one before it and eventually that goes to zero. So the mining reward gets lower and the miners seek to maintain profit by only selecting transactions with higher transaction fees.

    Another problem is that as you keep going it becomes harder and harder to guess the right pattern of hash (e.g. a zero followed by 99 random characters is really easy to find by brute force, but fifty zeroes followed by 50 random chars is really, really, really hard). Bitcoin does this intentionally to prevent the 51% attack (i.e. if one person controls 51% of the network they can just say whatever about the bitcoin supply and force majority agreement).

    The combination here is that every bitcoin transacted costs more in fees and wastes more energy every time and takes longer to transact, getting worse every single day as network difficulty goes up.