RE: What a waste of power!
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The reason I think this is that every new industry is going to have inefficiencies in it and like anything, the unit cost of production for the first units are astronomically expensive, until innovation advances the processes and tools and economies of scale are reached. For example, how much electricity does it take to mine HIVE? Well, that requires the nodes that process the transactions and the people using their computers and phones to interact with it, which because it is done on the surface at the second-layer, is effectively the same as the cost of surfing the internet.
No. The massive energy use is the whole point.
Proof-of-Work deliberately uses a great deal of energy because the sink cost of mining prevents a 51% attack. What means is that if there was no cost to mining a block, then in such a permissionless blockchain such as Bitcoin, a single entity could attack the network by signing a very large number of blocks with falsified information to undermine consensus. Because a proof of work is required, a 51% attack on Bitcoin would be prohibitively expensive.
Proof-of-Stake chains require acquired stake from block validators. Delegated-Proof-of-Stake requires delegated stake from block validators, which is essentially permission granted by stakeholders.
Bitcoin's value proposition is high security through high cost of mining.
Efficiencies have nothing to do with it. Your colleagues asked whether paying the price for Bitcoin's security is worth it. The answer depends on how much you believe in authority. I don't trust monetary authorities and governments not to fuck up the economy eventually. (See @taskmaster4450's posts about the corner the Fed has painted itself in a corner already in the 1990's by printing money excessively and creating a perpetual low interest rate environment leading to the over-financialization of the economy, zombie corporations and so on and so forth.)
I think you have misunderstood, as this is about the entire industry. Also, the mass of power isn't necessary for security, although that is the case now in regards to bitcoin.
Also, it is possible that the value of bitcoin already mined and being used is more attractive than mining the remaining bitcoin, where what is left in the ground just isn't worth it. Transactions still need to be signed though.
The large energy consumption in Bitcoin serves a purpose. To the extent Bitcoin will be used as collateral or pooled with other coins in liquidity pools its growing value will cause its energy consumption go up.
It is for PoW coins.
I'm not sure what will happen when all the bitcoins are mined in 2140 and transaction fees will be the only source of income for miners. I think they just stop receiving mining rewards but will still be forced to find correct type of hashes in order to get to sign blocks and collect the fees. How exactly that will affect the price of BTC I'm not sure about. But that's 119 years from now.
You misunderstand how the protocol works.
If the price of one BTC is higher than the cost of mining it, it incentivizes more mining power to be used for mining new bitcoins to be sold for profit. When the network detects an increase in total mining power, it adjusts the mining difficulty upward.
If the price of one BTC is lower than the cost of mining it, it disincentivizes mining power to be used for mining new bitcoins to be sold (at a loss). When the network detects an increase in total mining power, it adjusts the mining difficulty downward.
The cost of mining one BTC is attracted towards a level where it is slightly lower than the price of one BTC.
The more the market is willing to pay for one BTC, the higher the mining power used to mine it will be.
There is no scenario where bitcoins will be left unmined (except for the death of the network). The network will mint them according to a predetermined schedule until they're all mined. In 2140, the last bitcoin will be mined. After that, transaction fees will be the only income for miners in Bitcoin.
This is something I mentioned to them.
But will fractions of Bitcoins be enough to keep them mining? Bitcoin could effectively be mostly mined and then used to store in various ways and transact on sidechains, without the new coins adding being of much additional value. At some point, whether they are mined or not doesn't do much for the overall value?
Absolutely. Suppose the price of BTC is X. The cost of mining BTC self-adjusts to a level that is slightly below X so as to incentivize the miners. There will always be money to be made by mining blocks.
What increasing the stock-to-flow value means is that the value of every coin mined relative to what is already in circulation is diminished. But they will all be mined. The protocol will keep creating blocks every ten minutes for as long as it runs. Block rewards will keep being paid until they run out in 2140. Blocks will have to be mined through calculating valid hashes for as long as the chain runs. Only no block rewards will be paid after some date in 2140. Miners will have to cover their costs with transaction fees only, which are coins already minted.
I don't know if I explained this well - but in a scenario where for example 20.5M bitcoin are in the supply and they are worth a million each, does the additional half a million drive prices more than what the 20.5 are being used for?
The impact of newly minted coins to the price of BTC will be the smaller the fewer of them there are be minted per block. Every single one of them will be mined, however. And the mining (= computing hashes of the contents of a new block) will continue as long as there will be transactions.
Bitcoin will always be an energy hog for as long as people will want to pay a high price for space for their transactions on chain (= inside blocks on the Bitcoin blockchain).