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Why cant the efficiency of a machine be 100%? We always see that there is some energy that is lost, mostly in the form of heat. But why is it so? Is it impossible to create a machine with 100% efficiency?

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by machine, i will assume here you mean a physical device with moving parts as opposed to, for instance, a current flowing through a superconducting loop.

the reason no machine with moving parts can be made dissipationless is that it is impossible to make truly frictionless surfaces which can rub or slide or rotate against one another, as well as moving through the air, without dissipating energy.

clever machine design can minimize frictional losses- as in, for example, the guts of a mechanically-driven wristwatch- but even with jeweled bearings, there is always going to be rubbing going on which will turn mechanical work into heat.

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