> Citation desperately needed, and not random rantings, please.
It's just math. The amount of electricity needed to secure the network is directly proportional to the price (or more technically, the profitably of mining). This is because if you don't arbitrage out the profitability of mining, then the network is open to a 51% attack because the marginal cost of adding more hash power makes it profitable to keep adding more miners until you have control of the network. Basically the way the current POW is designed, BTC is only secure as long as it isn't obvious in advance whether or not mining at scale will be more profitable than buying BTC after it's been mined.
So given that for BTC to become a successful reserve currency it would need to be worth at least 100x what it's worth today, that means it would need to use at least 100x as much electricity. But that's more electricity than currently exists, and there's no way it would be feasible for BTC to even use a fraction of that.
This means that BTC can't actually ever reach those price levels, because if it did then it would no longer be secure, so would need to immediately drop back down in price in order to account for (and mitigate) the security risk.
> it would need to be worth at least 100x what it's worth today, that means it would need to use at least 100x as much electricity
Price and electricity usage ARE NOT perfectly elastic. Electricity usage is a product of total hashes mined and difficulty rate. These continue to go up, even when Bitcoin price is falling (see 2014-2015). Additionally, the electricity used did not rise 19x in 2017 even as the price did so.
Hashing generates a certain fixed number of bitcoins per hour, irrelevant of bitcoin or electricity prices. When the price of bitcoin goes 100x up, the potential mining revenue goes 100x in fiat, so rational investors will compete for that by increasing the hash rate of their rigs and buying more hardware that draws more electricity.
The algorithm will compensate and the difficulty will adjust so that the same number of bitcoins is generated, but the new equilibrium will happen at a point where 100x more electricity will be wasted compared to the original state.
The only thing that can change this equilibrium is the halving of the block reward happening every 4 years, or short term adjustments like the ones you mention, where the market is slowly building capacity or does not have enough trust in a price increase to invest in new capacity. On the long run, in a given 4 year window, these even out so that 100x price means 100x electricity.
He is arguing that if BTC price went up 100x, it would be so much more profitable to attack it that it would require a comparable increase in the hash rate (and therefore electricity usage) to deter would be attackers. So either hash rate increases, or BTC loses it's security.
Or the same thing, but stated the other way round, as the profitability of mining increases (due to price rises), more participants are attracted to the market, raising the hash rate and bringing profitability of mining back down to the marginal equilibrium.
Essentially the argument is that cost of mining/attacking is always in rough equilibrium with price, because whenever it isn't someone will take advantage of that in a way which will have the feedback of narrowing the gap again.
«So given that for BTC to become a successful reserve currency»
Your premise is wrong to start with... BTC could be very successful without necessarily being a major worldwide reserve currency!
«But that's more electricity than currently exists»
Not true. Bitcoin currently uses only about 0.2% of the world's electricity consumption (http://blog.zorinaq.com/bitcoin-electricity-consumption/#upd...). 100× would be 20%. Some miners are currently building their own power plants for their mining farms. Getting to 20% is definitely possible.
Doesn't this argument ignore the basic supply and demand of electricity? Even if the supply of electricity remained the same, if the price went up 100x, then that would allow for (1) current energy use of bitcoin, and (2) 100x price of bitcoin, which you said was impossible. That was simple.
Obviously the price of electricity is unlikely to 100x, but I think it's entirely reasonable that jurisdictions start placing taxes on electricity use for crypto miners specifically, which would have the same effect, without affecting the rest of the economy.
Miners will also probably start investing in, and operating, cheaper power sources that are not connected to the grid, if/when those taxes get too burdensome.
>> The amount of electricity needed to secure the network is directly proportional to the price
OK, this is a good argument, actually. But you are neglecting future improvements in energy, adoptions in solar, and the fact that electricity is not a statically-defined generation amount; there are many, many megawatts available that are not being tapped into - particularly in hydro - due to infeasibility of transmission. This is trivially evident in the number of people moving to Chelan County, Washington, as well as Quebec, amongst other initiatives and movements.
Your "just math" argument neglects... a lot of math, which is what I figured.
Not sure if I totally buy it, but the economic argument here [1] is interesting. Essentially the claim is that proof of stake actually takes just as much resources as proof of work (marginal cost = marginal revenue), as no participant in the market is able to extract a rent.
> But that's more electricity than currently exists
This is not a variable that will remain constant once it starts becoming profitable to invest in power generation solely for the purpose of bitcoin mining.
You may think that it's "just a finance system" but literally everything you touch except dirt and rocks got to where it was because of finance systems.
It's just math. The amount of electricity needed to secure the network is directly proportional to the price (or more technically, the profitably of mining). This is because if you don't arbitrage out the profitability of mining, then the network is open to a 51% attack because the marginal cost of adding more hash power makes it profitable to keep adding more miners until you have control of the network. Basically the way the current POW is designed, BTC is only secure as long as it isn't obvious in advance whether or not mining at scale will be more profitable than buying BTC after it's been mined.
So given that for BTC to become a successful reserve currency it would need to be worth at least 100x what it's worth today, that means it would need to use at least 100x as much electricity. But that's more electricity than currently exists, and there's no way it would be feasible for BTC to even use a fraction of that.
This means that BTC can't actually ever reach those price levels, because if it did then it would no longer be secure, so would need to immediately drop back down in price in order to account for (and mitigate) the security risk.