Thread by @SBF_Alameda

1) So on energy usage of BTC:

The profile will change long-term. Right now the main driver is from block rewards.

But as block rewards exponentially decay, those will become less relevant.

Long-term, there are really two core drivers.

2) First, transaction fees.

There's limited block space, and transactions will basically be bidding in auctions for those.

That means that greater demand for BTC transfers --> higher tx fees --> breakeven point with more miners --> more energy used.

3) So long-term energy used by BTC will scale with total demand for BTC transfers.

The other thing it scales with is security.

If anyone accumulates 51% hashrate they can attack the network.

So for BTC to be secure, it has to be prohibitively expensive to get 51% hashrate.

4) The payoff from attacking the network scales roughly linearly in BTC price (market cap and/or $ value of xfers per block).

So I think this scaling is similar to the tx fee scaling.

5) Which means that:

a) most of the current energy usage will decay away as block rewards go down

b) the rest of the energy usage will scale ~linearly with BTC price

6) All of this being said:

a) right now crypto doesn't use a large % of global energy

b) you have to look at the other side--how much do we waste powering middlemen in inefficient systems as is?

c) even if BTC is value it might not be how most tx's happen

7) But I think there _is_ long-term pressure to find a chain with great long-term scaling, that can power billions of users' transfers at minimal cost and latency.

Anyone know a chain that fits that description?

8) (@elonmusk you should check out @solana; 50k TPS @ $0.0001 per xfer, ability to scale to millions of TPS, etc.)