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this post was submitted on 04 Dec 2023
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Technology
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It seems I have fundamentally misunderstood how bitcoin mining works. Thanks for the correction.
I'm having a hard time wrapping my head around this. If the marginal energy cost of a transaction is 744kWh, shouldn't the transaction fees be astronomical?
The reward for mining a block is over a quarter of a million dollars these days. $250k / 4k transactions = apx $62.50 per transaction. Around $8 is from the transaction fee from the sender, the other $54 is from the block reward minted out of thin air.
Yeah, at current electricity prices where I live that would be just under £300,000 per transaction. Doesn't seem right.
Edit: as pointed out, I was out by a factor of 100. Electricity costs 40p per kWh here.
You sure you have the magnitude right on that? From a quick search, I think it should only be about £200 in e.g. London, with similar prices in big cities across the US. I thought those were relatively high prices to begin with.
You're right. It was late.
Unless I am mistaken, the total number the other comment is raising is how much power the entire network spent calculating the transaction, not how much the winner (the one who got paid out) spent. You calculate the energy consumption of the entire network because that power was still spent on the transaction even if the rest of the network wasn’t rewarded. I have no idea if the numbers presented are correct but the reasoning seems sensible. Maybe I’m wrong though. :)