The mining paradox

[o_e_l_e_o]

So, is crazy to see people investing in farms of 10k or 20k miners knowing they will get obsolete in a short period of time.

Once you've paid the upfront cost to buy and set up the miners, they only become obsolete when the electricity cost outweighs the bitcoin income they generate. Given that a lot of farms generate their own renewable energy, which essentially costs nothing (again, after the initial set up cost), then these miners will continue to run until they fail and are no longer economical to repair.

Like i told you before, the only way bitcoin would reach 100k this quickly is because of the USD collapsing, not bitcoin suddenly becoming so valuable.

I never said anything about bitcoin reaching $100k quickly. It's got decades to reach that level.

You think a hundred years is too far away but Bitcoin is already becoming unprofitable to mine, and the reward becoming so low most people will just stop doing it.

And yet, hashrate continues to hit new all time highs every week.

So its not a 100 years away, its a decade at most. Most bitcoins have already been made.

In a decade the block reward will be 1.5625 BTC. Given what I said above, that just last year miners were quite happy to mine with a block reward of $37,500, we only need bitcoin to be $24,000 for the block reward in a decade to be higher then it was back then, and that's not even counting the profit from fees which will be 8x higher at $24k than they were at $3k. I don't think $24,000 in 10 years is at all unrealistic.

[pixie85]

I think it will be mostly point 1 with a slight difference.

The price will keep increasing while the cost of mining per hash will keep going down. In other words, you will still have to pay more as time goes by but you will be gettimg much more cost efficient units, possibly powered with green energy as solar panels get cheaper.

10 years from now you'll be able to achieve the same mining power for a fraction of the price and 1 BTC will be worth a  few times more. Everything will stay in balance.

[Crypto_lion]

The increase in hashing rate has definitely left a lot of small miners helpless and they had to shutdown . Now it's completely controlled by big corporations like Bitmain who own majority of mining power. I wonder if this is what Satoshi foresee.

[pooya87]

Like i told you before, the only way bitcoin would reach 100k this quickly is because of the USD collapsing, not bitcoin suddenly becoming so valuable.

well, people were saying the same thing when bitcoin price was about a US cent and they would say USD has to collapse for bitcoin price to reach $10.
the reality is that devaluation of fiat currencies plays an important role in price of bitcoin against them but it is not the main or biggest reason why bitcoin price keeps rising. that is purely because of adoption and so far we had only very little adoption which is why nothing crazy is needed to reach a price like $100k. just plain old adoption.

Bitcoin is already becoming unprofitable to mine

that's just not true!
bitcoin has always been profitable to mine for majority of those who keep mining it. that is one of the reasons why the hashrate keeps growing in long term.

[Lucius]

When I read the posts of some members, I wonder if it is really only the future of the USD that will determine the future price of Bitcoin? What will happen if the EUR fails for some reason, or if the Chinese manage to impose their digital yuan, which is in the final stages of testing?

It is also completely unfounded to say that BTC mining is already unprofitable today, so do all those who invest hundreds of millions of dollars or euros in such mining farms do so out of love for BTC or for profit? How is it not worth it today for the Chinese to mine BTC when they have the cheapest electricity in the world, local production of mining equipment and at least $5000-$6000 profit for each mined BTC?

Gold and Bitcoin mining have nothing in common, stories about it are just fairy tales that are constantly repeated, and the amount of gold is actually unlimited if we take into account that sooner or later someone will start mining on some other planets/asteroids, in addition to having it on our planet in such quantities that it will be mined for hundreds of years after the last Bitcoin was mined.

[KIZILAGA]

Mining GOLD at asteroids is a joke.Can you calculate the cost of mining and transport from astroids lol.

Bitcoin mining is limited and it will be unfeasible after 2024 halving,yet GOLD is infinitive supply and mined thousands year and priced with that mining cost and with steady constant inflation.

Bitcoin is not FUNGİBLE,GOLD is the ultimate FUngible asset what it makes the last ultimate money thousand years.

Bitcoin with dying mining period,relying only fees? you pay  5 usd fee for a 7 usd payment?? Adoption is out of the window thus.

Those Bitcoin maximalists is a bunch of guys,who mined and found early Bitcoin,they want to preserve their early-owned bitcoin wealth,they dont care give a fck about people freedom or privacy.Yet they blame every

project with badmouth,ignoring other developers who want to improve tech and science.

And suddenly main stream media and some wallstreet richie rich guys discover BİTCOİN,headlines all over that it will stay 100 years? Oh really?

When it was 200 usd same richie rich guys were telling people it was a gambler token 6 years ago.

facebook,uber,alibaba or internet all network effects and guess what,Bitcoin miners wont be around after 2024 halving.

https://www.blockchain.com/charts/miners-revenue

[o_e_l_e_o]

Mining GOLD at asteroids is a joke.Can you calculate the cost of mining and transport from astroids lol.

And yet, it will happen eventually. Mining oil was too expensive once. Solar panels were too expensive once. Launching satellites was too expensive once. Once elements such as gold, silver, platinum, copper, start running out on Earth, asteroid mining won't be too expensive any more (not to mention the advances in technology). A amount of materials that can be mined from a single small asteroid are estimated to be worth $20 trillion

Bitcoin mining is limited and it will be unfeasible after 2024 halving

We all heard the same story for the 5 months of this year, how bitcoin was going to die after the halving. And yet here we are, with the highest hashrate ever.

[Lucius]

And yet, it will happen eventually.

It will only take years to research, and some mission that would really enable the exploitation of such an asteroid is not realistic in my opinion in the next 15 to 20 years, unless someone is secretly working on the technology that he needed for such an endeavor.

It is known that NASA and Musk plan to send a mission to an asteroid called 16 Psyche, which is estimated to contain about $15,8 quadrillion worth of gold, nickel, platinum. In case such gold is really mined, it is no secret that so much gold would result in a fall in the price of gold, so this is just another reason not to compare gold with Bitcoin, which has a limited supply, and no one will be able to find it on an asteroid or on some other planet.

We all heard the same story for the 5 months of this year, how bitcoin was going to die after the halving.

Not just 5 months ago, even 5 years ago, some people on this forum predicted the death of Bitcoin, and said it would never reach the price of $1000 again - and nothing has changed today, the same stories with changed numbers.

[KIZILAGA]

yes myspace was king once upon a time,bought by the Mogul of usa media..Thinking tech blockchain will stay same  and people not move on better things is funyy.

[amishmanish]

First of all, halvings happen once every 4 years, but they do a huge damage to those farms. Spending $20k everyday and earning (let's say) 3BTC would mean that after a halving, the pool will reward you with 1.5BTC, so those people won't be able to continue mining, unless price increased.

Speaking from a hardware spec perspective, I think we are still in the beginning stage of developing the mining hardware machines --snip--
The S19 Pro which ships in Jan 2021 is itself a beast in making and has quite a few advancements apart from hash rate increase over the S19 series if I am not wrong.

Further advances in ASIC miners will remain limited to the advances in lithography process. They are already at the cutting edge with 7 nm technology and further reductions will come in this decade down to around 2 nanometer. This does mean that faster miners with lower power consumption will be available but because of the inevitable hardware race between mining farms, the hash rate will also rise in the same proportion.

More efficient miners may mean slightly lower operation cost because of increments in efficiency but the capital investment to keep buying the new hardware to stay ahead in the race will also be significant. The ASIC manufacturers will have to decide if investing on deploying a lower lithography process is justified. It may even be possible that the "race" for faster ASIC hardware will reach an equilibrium and stop at some point in the future because the pie is going to become smaller with time.

[serjent05]

Hashrate may drop after next halving but not so dramaticly. ASICs are getting better and better with every year. Old one will become outdated and miners will buy new ASICs with x2 power for the same price

Or the hashrate may increase depending on the price of BTC and the advancement of the crypto mining machine. As you said ASIC will get better and better every year, thus making the hashing power 2 to 3 times more powerful than the previous one for the same price and at cheaper electricity cost for operation.  Aside from that, the possibility of Bitcoin price getting higher is always at the door step, encouraging crypto investors to join the crypto mining activities.

[Artemis3]

So, is crazy to see people investing in farms of 10k or 20k miners knowing they will get obsolete in a short period of time.

Once you've paid the upfront cost to buy and set up the miners, they only become obsolete when the electricity cost outweighs the bitcoin income they generate. Given that a lot of farms generate their own renewable energy, which essentially costs nothing (again, after the initial set up cost), then these miners will continue to run until they fail and are no longer economical to repair.

Like i told you before, the only way bitcoin would reach 100k this quickly is because of the USD collapsing, not bitcoin suddenly becoming so valuable.

I never said anything about bitcoin reaching $100k quickly. It's got decades to reach that level.

You think a hundred years is too far away but Bitcoin is already becoming unprofitable to mine, and the reward becoming so low most people will just stop doing it.

And yet, hashrate continues to hit new all time highs every week.

So its not a 100 years away, its a decade at most. Most bitcoins have already been made.

In a decade the block reward will be 1.5625 BTC. Given what I said above, that just last year miners were quite happy to mine with a block reward of $37,500, we only need bitcoin to be $24,000 for the block reward in a decade to be higher then it was back then, and that's not even counting the profit from fees which will be 8x higher at $24k than they were at $3k. I don't think $24,000 in 10 years is at all unrealistic.

This is reasonable, but it doesn't mean its "that" profitable. It might remain technically profitable for years to come, just not in most countries. And of course, if you already have "free" electricity, it remains profitable as along as the scale remains small, otherwise you may never see the ROI from investing in a large renewable installation unless its combined with you selling clean electricity to a factory or something.

This is nearly the last chance, and yes hashrate is rising like crazy. Some may consider it the last swan song. This action in itself is pushing more miners out of the game, and eventually themselves (the whale miners). Who remains? The smaller ones who can use free electricity or have some other business keeping the mining because the owner wants to, for example a power plant.

We know by Jan 2021 those 2000 S19s Bitmain promised to his 8000 units client will be delivered. What do you think the difficulty becomes then? And profitability? The guys working on margin will just stop, as it has been happening all these years.

This is like the peak oil theory. It not an on/off switch, it happens gradually, but it DOES happen. In fact its logarithmic, but i wont deviate.

So to remain "profitable" (while still paying the grid) your Kw/h will have to be 3¢ then 2¢, then 1¢, then 0.5¢, etc.

Yes, its possible to find gold in an asteroid, but not bitcoin. In a hundred years a lot of things may happen... How about using energy to make gold?

[o_e_l_e_o]

So to remain "profitable" (while still paying the grid) your Kw/h will have to be 3¢ then 2¢, then 1¢, then 0.5¢, etc.

Is that so unrealistic? Solar panels continue to be made cheaper and more efficient. As with all technology, we will reach a point where they become trivial to mass produce. The first commercial mobile phone cost $4,000 - less than 40 years later, I can buy a much more powerful one for less than 10 bucks, a 99.75% reduction in price. The HP 3000 computer cost $95,000 in 1972. 50 years later I can buy a much more powerful Raspberry Pi for $40 - a 99.96% reduction in price. I don't think it is unrealistic to suspect that in 50 years mass produced, cheap, and efficient solar panels (or other renewables) will be the norm.

In a hundred years a lot of things may happen... How about using energy to make gold?

Again, I think that is entirely possible. We've already turned other elements in to gold - radioactive gold as far back as the 1920s, and stable gold in the 1980s. In 100 years we could probably develop and build a cost effective way to create gold out of other elements if we really wanted, but there isn't much demand for it when there is still an abundant supply of gold to be mined.