Bitcoin Forum

Comrades, the current high difficulty and block chain split have heaped an unbearable burden upon the shoulders of the mining proletariat.

I propose the formation of a mining cartel of the main pools and the collectively lowering of hash rate to an agreed maximum.

This would:

1) Lower difficulty
2) Drive the price of Bitcoin up

While no one pool could be forced to restrict hash rate, transparency would expose any cheaters.

Not sure what blockchain split you're talking about,
but what would a lower difficulty be good for? It just makes it easier to "51%-attack" the network, which isn't a good thing.
And why would a lower difficulty drive the price of BTC up?

A high difficulty is a good thing, the higher, the better.

Reward split I meant, sorry.

Lower difficulty =  more mining reward per Joule

Lower difficulty wouldn't drive price up, but restricted bitcoin generation would, by the law of supply and demand.

Just think OPEC for bitcoin. It's achievable and in the miner's best interest

You want all the pools to get togeather, Become centralised, And Cap the growth of bitcoin to artificially boost the price?

Do you not understand the concept for bitcoins? Do you not realise why they were created?
Your on my ignore list because what your stating is

"lets turn the bitcoin free market into communistic currency control"

Ignore lists... what a stupid idea eh? Just bury your head in the sand.

Bitcoin is esentially still a toy and you can choose to ignore the cartel idea as a matter of principle.

But if the world were run by men of principle, then the present fiat system would be just fine.

As it stands, Bitcoin can and will be subverted by the cartel system, as far as I can tell.

Let's go a step further, and rid of mining altogether. We could simply announce transactions here in the forum, or in densely populated areas we can just yell from balconies. Transparency would expose any cheaters.

The rule of supply and demand: if we restrict supply and growth in demand remains the same, then the price will go up.

An excellent point well made!

If a portion of the network agrees to this, and decides to stop mining for 2.4 hours a day, the difficulty at the end of 2 weeks will not go down by 10%. All that will happen is the difficulty will go down 1%, and you just lost 10% of your earnings while everyone else lost 0%. Does that make it worth it? Hell no.

This idea was tossed about years ago, where they were wondering if a large farm could be more profitable by mining for 2 weeks, and then stopping for 2 weeks. If > 10% of the network shut itself off for one whole diff recalc period, and turned itself on when the difficulty went down by 10%, would the next 2 weeks be more profitable? Yes, those 2 weeks would be profitable, but it would not compensate for the 2 weeks of ZERO income. Over the 4 week period, you would lose out by 45%.

TL:DR
Trying to limit your hashrate to artificially lower the difficulty only hurts you and you're earnings, while everyone else mining 24/7 profits.

Unfortunately supply/demand dont work for a mostly traded currenty. Its not like a large fraction of whats traded is being mined anymore per day anyway..

That was a rather unnecessary insult :( I'm quite upset.

Though I understand your arguement, the key term is *consortium*. If the big pools or perhaps the ASIC manufacturers colluded  - consisting of say 90% total hashing power - then it can be very profitable for them.

It's a case of a ASIC manufacturers and a few pool heads sitting in a room and stating the obvious really.

And why do you think a lower difficulty would restrict bitcoin generation?
When Difficulty was around 8 when i started mining (yeah, i'm serious, it was 8!), the network created 1 block in ~10minutes,
today the difficulty is around 3million and guess what...the network still creates 1 block in ~10minutes.

The only thing that actually restricted bitcoin generation was the reward halving.

ROFL

You have misunderstood. Lower difficulty would result from restricted bitcoin generation (by agreement of the cartel), not the other way around.

More importantly, prices should also rise by restricting bitcoin generation. This is the real point.

These three variable systems are quite tricky to understand.

Well, ok then.
But what i still don't understand is how you would accomplish that restriction.

As you know, the network handles the generation by itself, by lowering or raising the difficulty to meet the ~10minute-target, there's no way to change that by any mining-cartel, pool-owner or anyone else. It would require a protocol change and most probably lead to a fork, or IOW another currency != bitcoin.

Price would actually stay the same when you restrict the supply at current levels and demand stays the same.

Read it again, I wrote: "growth in demand stays the same"

If Bitcoin became commonplace, we'd have a government run by a mining lobby using exactly this fact as an excuse as to why new artificial limits must be imposed. Cartels are stupid. It's already bad enough that we have pools.

Read it again: you can not restrict the supply.
A protocol change like that would just create another alternate cryptocurrency. It wouldn't be bitcoin anymore.
You are of course free to create a new cryptocurrency, but you'll have a hard time convincing people to use it.

Sorry I have to jump in but this just sounds stupid. Try getting a bunch of people who just spent millions on asic mining hardware to not run them 24/7 is an incredibly bad idea. Don't we want the network hash rate to be astronomically high? What about increased security? Let it go because it's just not gonna happen.

The entire point of this thread concerns restricting supply by forming a cartel to collectively lower hash rate.

By forming a cartel to collectively lower hash rate you don't restrict supply.
You can not change the supply at all, it's written in stone how many bitcoins there will be created on what timeframe.
A higher or lower hash rate doesn't change anything, except security.

If you change the supply, you create another alt-coin that probably noone will ever use.

That's a great reply, thanks buddy! Clearly I'm showing a degree of basic ignorance here.

Unless I'm mistaken, the cartel can restrict mining rate, but difficulty will lower accordingly and maintain the geometric hash rate.

That wraps this thread up for me unless someone else has some insight?

TY for explaining it in a way Bonker can finally understand.

Keep living in dream land dude.

Unfortunately I don't think I've seen anyone's Ignore button get so dark so quickly...so I guess that's new record there Bonker :(


Anyway, yay for getting answers  :)

PLEASE restrict your hash rate... You and everyone in your "cartel"

As a matter of fact, turn off your computer, unplug everything, and throw it, and everything with it, in the trash.

Also, If you came up with this idea all by yourself, please discontinue breathing... you are essentially an oxygen thief.

That's the important question, what is proposed here is that everybody understands what they did the oil producing countries in the 60's, the difference is that you can not control the generation of bitcoins as oil and that will continue to lead exactly 25 BTC every 10 minutes for the miners who are still in the network.

This idea is already made, but instead of FYC(Fuck Yourself(while I mint blocks)Coin) it called Reaper.
The crypto-currency that can't be mined, only bought.

Thanks to bonker for this shameful thread.

The Mining Cartel would be the biggest one, and the Cartel would agree to hash rate maximum of ~49.345% of the network

keeps the network honest?

of course anyone  is allowed to try and take over this "Mining Cartel"

so... this thread is all a moo point

Not quite dead, everyone was so busy attacking his newbie mistake that you may have missed another way that a cartel could operate.

You don't have to control mining supply, you only have to control the amount being released. So everybody in the cartel open partnership can agree to only sell a small fraction of their Mined BTC. This would constrain the market supply while allowing members to cover costs, but not cash out completely. To help drive market price even more there could be a second percentage of coins that Members will offer for sale at a premium price on exchanges and private party purchases. This would likely have a bandwagon effect among non-members as well.

Not sure if it is practical or if enough folks are interested to matter, but it might behoove us to design something very open and loose that will fill the gap where the "cartel" mentalityight live later. Even just a web page where folks could make their individual pledges and current thresholds for buy/sell could cover over the gap in an interesting way.

Another aspect I've been thinking about is either private or public sharing of expansion plans among members, with a specific goal to maximize their portion.

You're assuming that freshly mined BTC are the only BTC capable of being sold. There are already close to 11 million BTC in circulation, over 50% of the final number of BTC to be mined. Sitting on coins you mine would have a very small affect on the overall market.

Besides, this whole thread goes against the entire idea behind Bitcoin. It's a currency. It's meant to be traded and bought and sold and used to buy stuff. If everyone just sits on their coins waiting for the price to go up, then nothing even happens, and we all go home broke.

Hmmm, there's a thought too, although I think the network will have to be a bit more transaction saturated before that will really work unless you have a massive percentage of the hashing power.


No, I'm only assuming that SOME of the BTC sold are mined, and reduction in mining output would reduce total supply by some fraction, but I'm not naive enough to think that it will be 1:1. The bandwagon effect would most likely be bigger than the miners restricted supply if it took off.

For example, if the open mining partnership decided that they would hold all but 20% of their coins (assuming that 20% covers electricity and operating costs for members, the numbers would have to be workable, these are just thrown out there), offer 20% of the held coins listed at a published price 10% above market (specific number, not fluctuating all the time, changing daily, weekly or monthly as the group desires), 10% of the coins listed at a published price 20% over market, and the final 50% in cold storage for the future. If this mining group controls 20% of coin production then the impact to the coin supply from mining then over the next period of time only 84% of the potential coins (3600*.84=3024 coins a day) and that would be without anyone else choosing to save their coins.


I am not saying this is the most awesome idea in the world, or that we should do it for sure, but I've seen this topic come up a few times and I'm wondering if we can come up with something that scratches the "cartel itch" that some folks have, but without the secret dealings and mob-like mentality. So, can we find something to scratch the itch without giving the cartel guys a knife to stab us with later?

Lol why do you even need a cartel to do that, MtGox doesnt even have 1% of the existing bitcoins for sale. Probably >90% of the coins are being hoarded now.
They will eventually be released into the market, when the price is right. One thing to worry about though, is that in the event of any major negative news on Bitcoin(eg US outlaws Bitcoin, protocol flaw, superior competing currency etc..), the price crash would be very severe as >90% of these coins which are in hiding, suddenly appear on exchanges.