Bitcoin Forum

I've been reading this thread https://bitcointalk.org/index.php?topic=36687.0 (https://bitcointalk.org/index.php?topic=36687.0) [Reddit] The Real cost of Bitcoin? - Breaking Down the Math I agree with a few of the posters that the numbers are manipulated in the fact that the bitcoin system can handle many more transactions than what is currently used, without any increased overall cost, resulting in a decreased cost per transaction.

This highlights a problem with 'miners' though.  Their supply far exceeds the demand.  They have to consume massive resources in order to obtain the 50 BTC reward and in order to become profitable they need to sell BTC at gouged rate on the markets.  The plain fact of the matter is that BTC is not worth that much, and that much power is not necessary to sustain the system.

It's expected that after the mining pool is tapped at 21,000,000 BTC that the miners will hemorrhage unnecessary miners as supply falls to meet demand levels.  The current situation though is that as 'miners' pump more processing power into the pool, they will have to gouge the price of BTC to keep running at a profit.

Quite simply I don't think it's ethical to be purchasing BTC at these rates unless you have a legitimate need for them.  I also speculate that this will catch up with miners, they are essentially pegging the bitcoin to the electricity and equipment involved (not unreasonable) and then throwing in as much electricity and equipment as they can get their hands on (in essence, the decentralized bank can do stupid shit too when the buyers let it.)

Dear Simply:

Where do you people come from?

You've been a member of this forum for 12 days.

And you've picked up a lot of knowledge on your "journey".

Thanks for sharing.  :P

I was following you until the last paragraph. How or why is it unethical exactly?

Welcome to the game, I have been saying this for a month now. The direct buyer at the exchange are feeding the miners fat and happy. The problem is that the direct buyer doesn't understand economics. My tip is to start reading the mining sector of this forum.

This was the equilibrium posited by Satoshi in his paper, and you have it wrong. In fact, price drives mining, not the other way around. Whether there are 5 miners or 5000 the supply will be the same. The large moves in the market make plain that speculators, not miners, are the ones setting prices.

You are right "sometimes". The problem is this, when the mining sector of the Bitcoin economy gets to big, the direct buyer starts feeding the beast (the miners), they want and need to have their money back from their investment, and the only way to do this is to attack the direct buyer at the exchanges. You could say that it is a constant fight between the direct buyer and the miners. My belief right now is that the miners are in desperate need to get their money back and that is the reason we see the price hit new lows. If the direct buyer were smart, we would already have hit equilibrium, but the direct buyer is greedy and don't understand economics.

The heavy investments was all made in May and June of this year. Before the money of those investments are not taken home from the direct buyer we will see a continued downturn and pressure on price. That was the reason I said it will hit 5-6 dollars when it cost 12 dollars a couple of weeks ago.

I probably should have been more specific.  With miners consuming massive resources being the economy's need, I feel it's unethical to support and fund this ecologically wasteful behavior.  These resources are namely electricity, equipment, and the resources used to create both.  In essence I'm taking a Green stand on purchasing bitcoin.

I would also like to add before the troll have a chance to chime in about how such things sound like government regulation.  I'm exercising the principles of voting with my dollars and using free speech to advocate my beliefs.  I don't think this needs a programming fix or some kind of authority pegging bitcoin to a reasonable price.  I think this needs a 'let's get our head's out of our asses' fix.

Edit-

*Hands foggyb some troll chow and scratches behind it's ears* Thanks for the feedback

I assume you take the same stand on banks and credit cards, right?

Supply of Miners and processing power is the problem, not the supply of Bitcoin. We have excessively more processing power than we need.  And yes, speculators are the ones feeding the beast so to say.  I think the money is recycling itself though, miners and those who understand mining are seeing bitcoin forced below profitability by the market and buying it expecting it to sell profitably based on the cost of mining.

Miners and those who made a lot of money on the BTC speculation bubble are likely, in my opinion, recycling the money over and over again and hemorrhaging it out of the economy with speculation.


In my case that is a very safe assumption.  I do not do business with either, for many reasons.

How do you figure this? The daily supply of bitcoins is around 7300. The daily trade volume for bitcoing is in the 20-40 thousand range depending on the day (in the last 24 hours it's been about 24 thousand, but I've seen it higher this week). Clearly more people are buying than there are coins being mined.

I'm not sure you can take volumes at MtGox as a reliable proxy for number of coins having traded hands at the end of the day.  There's a lot of froth being caused by bots playing with each other as a result of reduced commissions.   And day traders are all on mtgox, since no other exchange has enough volume or volatility for anything over $1000 in play money.   I strongly doubt $73000 new dollars are finding their way to mtgox a day let alone 5-20x that.

Only the operator of mtgox has a clear picture of how many bitcoins vs how many dollars are being deposited as opposed to being taken out, and as a result what % of newly minted coins are being hoarded in comparison to the historic 80%+ levels.  I'm one of those jonny-come-lately miners, and I can tell you all I'm doing is depositing bitcoins and receiving dollars.  I have no reason to believe my behavior is atypical of the other 3/4 of the mining power.

What I think happened as a result of 3/4 mining power being added since June is a shift from a mining demographic content to hoard most and sell a small % to those of us wanting to sell most and hoard very little.  This IMO is not a bad thing.

To re-iterate my point, it is the supply of Miners (or particularly processing power), not the supply of bitcoin, that I am concerned with.  Mining requires massive amounts of power which should serve to limit the amount of miners joining the pool.  Instead the market buy-side adjusts to protect the miners profitability. 

An Example. You could eliminate half the processing power of the system and it wouldn't effect the supply of BTC one iota, but the amount of power used to process transactions (and mint BTC) would be massively reduced.  The Demand for 'Miners' comes from transactions, there need to be enough miners to swiftly process all transactions currently on the system.  Which we currently have many THz of processing power going to transact something like a few hundred transactions during peak transaction times.

Bingo.  If someone is willing to pay $1,000,000 for it, how is that unethical?  People place the value they want to place upon something.  Nobody is forcing them to buy, and yet, they are buying.

I could charge you $1,000,000 per BTC, and even then, how would that be unethical?  If you don't want it, don't buy it. 

Speculation can add a lot of value.  A deflationary currency assumes that over time, it's value will eventually increase far beyond it's current level.  So, buyers will sacrifice additional short-term risk for the potential of long-term profit.

How does "market buy-side adjusts to protect the miners profitability." ?  This does not happen.  Just last week, when BTC went down below $10 and stayed there, many miners got out.  The network total hashrate went from over 15 THashes/s to below 12.  Right this second it's at 11.925 Thashes/s

Mining follows price, not the other way around.

The "market buy-side" protects it's own profitability, not the miner's.  That's just basic economics.  BTC traders trade because they think THEY can make money.  They buy or sell to enrich themselves.  They are not some charity for miners.

And what do you know, I'm not buying, I don't see why you are arguing my point.  Unless you think that speculation is the only reason a person would buy or sell.


Markets are a two way street.  That is basic economics.  You're example about the Hash Rate falling is exactly what I'm talking about.  My ethics say 11.9 is way too fucking much resource consumption for something that will still produce just fine a 2 or 3.  I plan to advocate that until the price reaches a point low enough to force our obese bitcoin miner baby to a healthy rate.

You guys forgot to mention network security (look up the 51% attack) What is the cost of security and how do you even go about measuring it?

Your response is irrelevant to what I said.  I said "they" are buying -- i.e. other people are buying.  You are not, but others are.  Value is embedded in the relationship between a subject (you) and the object (Bitcoin).  Your decision to perceive Bitcoin as less valuable than its current trading value is irrelevant to the value others place upon Bitcoin, and it's because of the value that others place upon it that the trading price is currently at ~$10.  If others placed the value much lower, then the trading value would be much lower.

Did I say speculation is the only reason a person would buy or sell?  I said that it can add to perceived value, and I think this is quite evident given the relatively small number of Bitcoin merchants.  Buyers can buy to purchase goods, or because they think there will be more goods available (i.e. a growing Bitcoin economy), or because they think it is a better alternative to traditional currency, or because they think it's value will increase and they can "buy" more USD, or any other reason.  Nonetheless, they are buying, and apparently, Bitcoins are simply "worth" the value at which they buy them, and that value is determined subjectively.

You must have weird a weird definition of ethics.  I don't see how "11.9" for BTC that requires "too fucking much resource consumption" is worse than "2 or 3" for BTC that requires "too fucking much resource consumption.  Wouldn't 11.9 be better than 2 or 3?  At least then people better appreciate the product derived from "too fucking much resource consumption."  Moreover, I don't get how this is tied into what is objectively wrong or right.

"I value my 2008 Saturn Aura at 50 grand.  I won't sell it to you for less"
"How fucking dare you!  It required too much fucking resource consumption to make!  It should be $2 or $3!"
"Ok, I'll buy 20,000 of them from you then."

Edit:  By the way, I'm pretty sure chopping down millions of trees to produce fiat currency (the production of which, by the way, also requires more fiat currency to fund it) fits into the category of "too fucking much resource consumption."  Then again, I have no problem going back to a straight bartering system, but then you can kiss global commerce goodbye.

I fail to see how "ethics" applies to capitalism at all.  We are dealing with raw capitalism here, not your feelings.  If people can make money at it, they will do it.

I thought that too, but then I realized his ethical argument was tied into "too much fucking resource consumption."  In other words, he thinks its morally wrong to rape the planet of its resources for Bitcoins.

That may or may not be, but that has zero effect on the price of BTC.

He means the electricity used in mining?  Jesus, that's a drop in the bucket compared to just about anything else.  The air conditioners in the USA right now, or driving to work, or all the TV's on right now in the USA alone.  Or the power used at Disneyland.

Get over it dude, you can pick on a million more important things.

Tree hugger.   ::)  (that last was a joke - Ridi seems kinds thick, so I wanted to make it explicit  ;D )

Ya, and even if that were an issue, $10 per BTC is better than $2 or $3 per BTC since there's a higher appreciation of the resources used. 

On a side note, I thought that there's always a constant output of electricity in the power grid to prevent power shortages such that the output would always be the same regardless of miners had their GPUs running or not.  Or, is this extra energy simply recycled back into the grid?

I realize this is on the FAQ, but when whining about power used to run the bitcoin network have you considered the power used to run banks?  The gasoline used by bank tellers to commute every day?  The amount of industrial waste generated when producing armored cars, credit cards, deposit slips and even uniforms and guns for police acting as a deterrent to bank robbery?

Bitcoins are by far the most eco-friendly currency at the moment.  The amount of resources to support the entire bitcoin network is could very well be less than the total carbon footprint of a *SINGLE* bank branch office let alone something like the Citibank headquarters.

If your argument boils down to being green then you'd be a completely "unethical" hypocrite if you didn't convert all your conventional currency into bitcoin this instant.

Nice point.

Bitcoin is technology for the future, like the Internet was created and used by a rising number of people for several years before going fully mainstream.

If you count all the ways us humans produce energy today (fossil, wind, nuclear etc) that's still only 1/20000th (yes, really) of the energy that reaches earth from the sun alone, and we're well on our way to be able to use all that energy.

Now, there are two forms of Greens. Some are green, and happily cheer the above development. Some are in reality more like watermelons, red on the inside, and would rather like to stop all technological development.

Which category do you belong to?

I don't use banks, I think bitcoin is awesome and makes far more sense than fiat. I'm just not going to offset miners costs when they system could run much more efficiently.  It's like paying a taxi to get you somewhere the longest way possible.  I still use BTC whenever I have the chance.  I just don't buy from miners.


This is the only comment that added any value whatsoever to the notion that we should have as much Hashing power as we do.

The most efficient and 'green' means of exchange is straight bartering.  You don't get any more efficient than that.  And like I said, kiss global commerce goodbye.  This is a give and take problem allowing caveats for algae farms in the shorter term, and nuclear fusion in the longer term.

BTC is worth whatever people want to pay for it, like everything else in a capitalistic society.

What will make Bitcoin work is people setting up businesses and trading, hoarding and speculating will not attract the masses, they just want a simple cheap fast wayto buystuff, if they can stick two fingers up to the establishment at the same time that makes it more attractive.
Most people will not be interested in speculating.
Setting up businesses are the most important thing.

How do you add or remove your dollars from Trade Hill when you use it & where from/to just out of interest?
Who's lil Dema?

Your argument is crap because you rely on "feelings" and "ethics" when human beings and the market are driven by pure capitalism and greed, especially where BTC is concerned.

You say we don't need so much hashing power, that we are wasting electricity with it.  I say I'm getting my mining proceeds and paying my power bill.

If there is money to be made, even a little, people will do it.  If there is not money to be made, people (probably) won't do it. (unless it's fun, and mining kinda is fun  ;D )

Capitalists will tell you that capitalism is based on ethics, that its the most ethical system.

Ridi, you are an idiot.  Allow me to explain.

1) There will not be 21 mil BTC until the 2030s. 
2) It's expected that at time, there will be 10% to 165% more idiots like you in the world.
3) this idea: ("['miners'] supply far exceeds demand" leading to "gouged rate on the markets") is one that only an idiot's brain could accommodate, let alone create.

Thank you. You're Welcome.

Is this thread serious?

First, Bitcoin is worth whatever someone is willing to pay. Nothing more, nothing less.
Second, You're concerned about the pittance of electricity Bitcoin uses to secure it's network? Really?
Third, anytime you buy a Bitcoin, you're buying it from a miner. That's where they all came from.
Fourth, Go hug a tree, this has to be the stupidest thing I've seen in quite a while.

Miners do not control the price, buyers do. So shouldn't you be complaining about them that you can't buy Bitcoins cheap? That is what this comes down to, right?

Bitcoin: worse than man made *giggle* global warming!!

I keep seeing trolls drag out the same dead argument, that the network and miners cannot support a price of $200 per coin, and once we bust that...  It's game over. 
 
Look at how stupid the person sounds who claims that the miners won't support prices of $10, $9, or $8.  That's how stupid the same arguments will sound in a few years about $200, $150, etc. 
 
As Mr Freeze above me said, it's the buyers who determine price, not the miners.

Always great to see these old threads. I agree mostly, but remain cautious because we can't know if we're really headed up in the long-term! We could very well still go down.
That being said: Keep in mind that the comments in this thread were made prior to the crash to almost below $1!!!

how, big farms can support single digit tells me? there is no way, they must shut down or reduce a large number of their power hashing, and at that point everyone will performs a 51%, the network will be too vulnerable and bitcoin will die

I'm really not afraid of all those 51% scenarios... Thing is: Bitcoin has always been a technology that's highly self-regulating. If the network hash rate goes down, it becomes profitable again for smaller miners, thus the networks remains secure, and vice-versa. It's kinda beautiful, actually!

 
 
Dude, what the fuck are you talking about?   
 
If everyone performs a 51% attack, IT'S NO LONGER A 51 % ATTACK!

not in that sense come on.... but in the sense that everyone has the possibility to do it, and they are not all good people like "gigahas.io", that reached 43+ if i'm not mistaken

what i mean is that with a lower price the hashrate will be lower too along with the diff, diff too low means that, even one random guy with 10 tera can perform a 51%

Not exactly. They've hit the 51% mark as far as I know (if not multiple times). You're right though. This is only a problem when we have bad guys in play. This is why people should be using p2pools, but it looks like they don't care enough.
If the difficulty indeed does lower, someone could turn on a massive farm and try to do such an attack. Although I'm pretty sure that someone will turn his on too to protect the investment, so I don't see this scenario really as realistic.
As far as the price goes, OP is spreading FUD. If you don't value your coins, how about you sell me yours for $11 a piece? I'm even being generous.

Update: Yes the thread is very old. It is not against the rules to revive it as long as the posts are relevant I think.

this was a 4 yr old thread until today; there are some serious necrophiliacs here

That is exactly what is is, a self regulating system. Big ass time miners going out the business because they cry about low price? thats OK, it only means we the individual users can start making profit again by mining individually, until the price goes back up and then they will come back with their mining operations. It's a never ending cycle. We'll be dead before Bitcoin dies, time to assume this fact.

If a company like UBER has a bigger marketcap than Bitcoin, that alone should tell you how early on in the game you are. Of course, most people think the opposite and realize after missing the boat.

but there is one huge difference, we aren't stuck with machines like those that come from bfl in 2011, now we have asic that mine at one tera... see the difference? you can't say it would be the same as before

if for example the diff will fall to 7M the network would be around 25k giga, so one antminer s5 could control 1/25 of the network, which is 4%, and that with only one antminer...now imagines a small farm....

good question

I generally don't like necro threads either, but sometimes it is fun to see that the same things we argue about today have been argued about since the start.

Bitcoin has grown a lot since the OP and hopefully will continue to grow and help people transmit money in a safe and low cost way.

Ah. It is a good question. The network does have disincentives that make a 51% attack illogical. If you have that much hash power you could attack and crash the market. It will destroy the price temporarily and your fake coins will be not be valuable enough to pay for the operation. In other words you could do it at a huge loss. Or you could use your hash power to create real coins with value and make a profit. Only an evil miner with money to lose launches a %51% attack. It would not end BTC either, it would be disruptive and hurt, but not kill. So why do it?  

The only one having a true incentive to disturb the network in such a way would be a government or some entity who was trying to destroy BTC for good. In that case money wouldn't matter because they would be doing it out of some other reason.

The beauty of bitcoin as a self regulating system is that there is no incentive to destroy, since after putting all that time, effort and energy into it, you would benefit more from keeping it alive and being part of the network. Andreas Antonopulous explains it nicely in one of his speeches.

But what if it threatens you somehow? What if you are a bank and believe your business model is seriously threatened by Bitcoin? Or you are a country that feels the need to being able to control the monetary supply? You could then decide to attack Bitcoin in any way you can think of.

I guess he meant anyone will be able to do 51% attack, not that everyone will 51% attack, what would make no sense

hahahahaha GREAT BUMP. show these bears some perspective.