My rebuttal to the fairness of proof-of-work launch (Monero's holier than thou)

[iamnotback]

Such as In many cases it makes economic sense to run an electric space heater when it is -40 C or F outside.

How many times have I pointed out that using electricity for heating is not economic. We use carbon based fuels for heating. There is an orders-of-magnitude difference in efficiency. If you are a Physicist and don't know this, I am flabbergast.

[ArticMine]

Such as In many cases it makes economic sense to run an electric space heater when it is -40 C or F outside.

How many times have I pointed out that using electricity for heating is not economic. We use carbon based fuels for heating. There is an orders-of-magnitude difference in efficiency. If you are a Physicist and don't know this, I am flabbergast.

You can ignore reality if you wish.  Take a pure carbon fuel such as coal. The efficiency of a coal fired power plant is upwards of 30% in some cases 40%. The efficiency of a coal fireplace as a source of heat maybe 5%. I used to live in the UK where coal was commonly used to heat homes even in the 1970's It is been phased out because it is so inefficient.

Edi 1t: Repeating the same erroneous statement over and over again does not make it correct. Here is Canada there is a large number of residences and businesses that are heated with electricity. Furthermore even if one were to use a fuel such as natural gas, it still has a cost and if that cost is displaced by the POW mining operation, this an economic advantage that only works if the mining is decentralized. All of this is basic thermodynamics.

Edit 2: You are also ignoring cooling and air conditioning costs. Setting the value of the heat produced as a by product of POW mining to zero makes zero economic sense. The heat produced has a positive or negative value that depends on the weather. It also depends on the heating needs of the miner. If one produces more heat that is needed to heat one's home then there is no or negative value on the excess heat. This is where that small player can have high advantage since scaling to a larger POW mining operation actually increases the per unit cost.

[twunkle]

Such as In many cases it makes economic sense to run an electric space heater when it is -40 C or F outside.

How many times have I pointed out that using electricity for heating is not economic. We use carbon based fuels for heating. There is an orders-of-magnitude difference in efficiency. If you are a Physicist and don't know this, I am flabbergast.

does it matter its where we wanna be, lets burn some powow and make sure there is plenty of electricity

[twunkle]

like a business, i install it, you get heat i mine coins? IoT ? lots of buildings have no choice/not allowed, plenty of people dont care also

[iamnotback]

Such as In many cases it makes economic sense to run an electric space heater when it is -40 C or F outside.

How many times have I pointed out that using electricity for heating is not economic. We use carbon based fuels for heating. There is an orders-of-magnitude difference in efficiency. If you are a Physicist and don't know this, I am flabbergast.

You can ignore reality if you wish.

Natural gas is 1/3 the cost of electric heating:

http://homeguides.sfgate.com/comparing-cost-gas-furnace-vs-electric-heater-61395.html

So if someone is using electric heating, then it is because the cost is irrelevant to them. Thus mining a CC to recover a small fraction of that cost is ludicrous. Remember the mining farms near hydroelectric power (or free subsidized electricity alleged in China) will eliminate any possibility of getting much income from your residential mining rig.

Edi 1t: Repeating the same erroneous statement over and over again does not make it correct.

Exactly. Come on man, up your game to producing well researched white papers and stop throwing these poorly contemplated theories at me. I find I am often wasting time rebuking these half-baked concepts that you haven't really thought out well.

Don't tell me the current Satoshi proof-of-work is any where near a fair, competitive free market distribution scheme:

Remember ZIRP-pusher Larry Summers (the same guy alleged to have gone to Russia after the fall of the Soviet Union to arrange the transfer of nationalized assets to newly anointed oligarchs), is on the board of 21 Inc.

As an example of the potential power of its pool, 21's mining operations generated approximately 5,700 BTC in 2013 and 69,000 BTC the following year, according to the document.

By the time its chips were to be embedded into Internet of Things (IoT) devices, 21 projected its cost to produce 1 BTC could be as low as $7.45.

So we pay $600 per BTC, and 21 Inc. will pay $8.

[ArticMine]

Such as In many cases it makes economic sense to run an electric space heater when it is -40 C or F outside.

How many times have I pointed out that using electricity for heating is not economic. We use carbon based fuels for heating. There is an orders-of-magnitude difference in efficiency. If you are a Physicist and don't know this, I am flabbergast.

You can ignore reality if you wish.

Natural gas is 1/3 the cost of electric heating:

http://homeguides.sfgate.com/comparing-cost-gas-furnace-vs-electric-heater-61395.html

So if someone is using electric heating, then it is because the cost is irrelevant to them. Thus mining a CC to recover a small fraction of that cost is ludicrous. Remember the mining farms near hydroelectric power (or free subsidized electricity alleged in China) will eliminate any possibility of getting much income from your residential mining rig.

Edi 1t: Repeating the same erroneous statement over and over again does not make it correct.

Exactly. Come on man, up your game to producing well researched white papers and stop throwing these poorly contemplated theories at me. I find I am often wasting time rebuking these half-baked concepts that you haven't really thought out well.

Don't tell me the current Satoshi proof-of-work is any where near a fair, competitive free market distribution scheme:

Remember ZIRP-pusher Larry Summers (the same guy alleged to have gone to Russia after the fall of the Soviet Union to arrange the transfer of nationalized assets to newly anointed oligarchs), is on the board of 21 Inc.

As an example of the potential power of its pool, 21's mining operations generated approximately 5,700 BTC in 2013 and 69,000 BTC the following year, according to the document.

By the time its chips were to be embedded into Internet of Things (IoT) devices, 21 projected its cost to produce 1 BTC could be as low as $7.45.

So we pay $600 per BTC, and 21 Inc. will pay $8.

By your own figures you are still reducing the mining cost by 33%, the cost of the natural gas, so ignoring this does not make economic sense. As to whether natural gas or electric heat is the better option there are a host of issues above the cost of the energy it self. two major ones are:
1) Capital cost are higher with natural gas
2) With electric heat is easy target specific areas rather than the whole house, business etc. This is where electric heat can have big gains over natural gas.
My point remains. As long as electric heat is part of the equation there is the opportunity for 100% savings. If it is not then the savings can range from 25% to 70%. or more

Edit 1: Here is an example at http://www.csmonitor.com/Environment/2012/1207/Cheapest-way-to-heat-your-home-Four-fuels-compared/Natural-gas-1-024 Natural gas comes in at 78% of the electricity cost.

Edit 2: About the only case where you could have a case is passive solar heating; however even there can be a small electrical component.

[iamnotback]

ArticMine you entirely didn't address my point that if marginal cost of mining one CC token is $600 (yet the mining farms such a 21 Inc. project a $8 cost for themselves), then if suddenly millions are mining to pay some portion of their electric bill, then the market price of the CC token is going to fall down closer to the actual cost of production $8 because those are millions of sellers (if they don't sell, they don't lower then electric bill).

Mining equipment has a capital cost also. If they are unwilling to pay the capital cost for natural gas, why would they be willing to pay capital cost for mining equipment to lower then electric bill by less than switching to gas will.

Besides, once we turn mining into a race to consume the most electricity in the most ways possible, then it means we will drive the electricity costs of producing a transaction up to the value of a transaction, because block rewards decline to the miniscule tail reward (or 0 in Bitcoin's case), so the only revenue remaining are the transactions.

This is 21 Inc's strategic mistake also. I have a design that will render all of 21 Inc's plans uneconomic.

[ArticMine]

ArticMine you entirely didn't address my point that if marginal cost of mining one CC token is $600 (yet the mining farms such a 21 Inc. project a $8 cost for themselves), then if suddenly millions are mining to pay some portion of their electric bill, then the market price of the CC token is going to fall down closer to the actual cost of production $8 because those are millions of sellers (if they don't sell, they don't lower then electric bill).

Mining equipment has a capital cost also. If they are unwilling to pay the capital cost for natural gas, why would they be willing to pay capital cost for mining equipment to lower then electric bill by less than switching to gas will.

Once we turn mining into a race to consume the most electricity in the most ways possible, then it means we will drive the electricity costs of producing a transaction up to the value of a transaction, because block rewards decline to tail reward (or 0 in Bitcoin's case), so the only revenue remaining are the transactions.

This is 21 Inc's strategic mistake also. I am going to obliterate 21 Inc.

What you are describing here is a new generation of ASIC that has a 75x efficiency advantage over the previous generation. Even in this case the old ASIC is still competitive in the 100% electric heating case since 1) The old ASIC has zero capital cost since it has already being depreciated and 2) There is zero effective electricity cost.

The real issues here are
1) The builders of the ASICs are also the operators of the ASICs
2) The Bitcoin at 1MB block size is too small relative to the Bitcoin 10 min block time. This allows 1) above to happen, by minimizing the impact of the Great Firewall of China.
3) The whole POW mining algorithm in Bitcoin is broken regardless of how Bitcoin is mined, since the emission in Bitcoin will go to zero over time. We can debate forever how Bitcoin will fail over this, but I understand that we are in agreement that this will cause the eventual failure of Bitcoin. Even with fixed 1 MB blocks I fail to see how the "fee market" in Bitcoin is supposed to work.

[iamnotback]

There is zero effective electricity cost.

Incorrect. Do the math. You entirely ignored the main point of my prior post.

Any way it is pointless because unprofitable PoW is coming... so it is pointless for me to debate what will be deprecated later this year.

[ArticMine]

There is zero effective electricity cost.

Incorrect. Do the math. You entirely ignored the main point of my prior post.

I said in the 100% electric heat case not the natural gas case.

[iamnotback]

There is zero effective electricity cost.

Incorrect. Do the math. You entirely ignored the main point of my prior post.

I said in the 100% electric heat case not the natural gas case.

If 11.7 cents of electricity only nets 1 cent of income, it is pointless.

[ArticMine]

...

If 11.7 cents of electricity only nets 1 cent of income, it is pointless.

If 11.7 cents of electricity nets 11.7 cents worth of heat plus 1 for cent of income for 12.7 cents total it is not pointless. Why do you have such difficulty understanding what the free market is saying? There are situations where it makes economic sense to  operate an electric space heater. As long as these things are sold, and people buy them and operate them, then my case stands.  

[iamnotback]

...

If 11.7 cents of electricity only nets 1 cent of income, it is pointless.

If 11.7 cents of electricity nets 11.7 cents worth of heat plus 1 for cent of income for 12.7 cents total it is not pointless.

It is pointless because it is a pita. Why bother. As I pointed out, all your global neighbors will compete with you for that 1 cents, so it declines asymptotically towards 0.

You don't seem to understand economics at all. Please learn about the essential Economics 101 term "opportunity cost".

I don't think I should be required to give remedial course in Economics 101. Perhaps it has been decades since you took that course and need a refresher.

[ArticMine]

...

If 11.7 cents of electricity only nets 1 cent of income, it is pointless.

If 11.7 cents of electricity nets 11.7 cents worth of heat plus 1 for cent of income for 12.7 cents total it is not pointless.

It is pointless because it is a pita. Why bother. As I pointed out, all your global neighbors will compete with you for that 1 cents, so it declines asymptotically towards 0.

You don't seem to understand economics at all. Please learn about the essential Economics 101 term "opportunity cost".

I don't think I should be required to give remedial course in Economics 101. Perhaps it has been decades since you took that course and need a refresher.

Actually what is pointless is this entire debate. You started a thread about Monero's launch, and Monero is currently mined with CPUs and GPUs. So what is even the point of arguing what will happen when the latest generation of Bitcoin, ASIC miners becomes obsolete?

[iamnotback]

Natural gas is 1/3 the cost of electric heating:

http://homeguides.sfgate.com/comparing-cost-gas-furnace-vs-electric-heater-61395.html

So if someone is using electric heating, then it is because the cost is irrelevant to them. Thus mining a CC to recover a small fraction of that cost is ludicrous. Remember the mining farms near hydroelectric power (or free subsidized electricity alleged in China) will eliminate any possibility of getting much income from your residential mining rig.

Mining equipment has a capital cost also. If they are unwilling to pay the capital cost for natural gas, why would they be willing to pay capital cost for mining equipment to lower then electric bill by less than switching to gas will.

There is zero effective electricity cost.

Incorrect. Do the math. You entirely ignored the main point of my prior post.

I said in the 100% electric heat case not the natural gas case.

If 11.7 cents of electricity only nets 1 cent of income, it is pointless.

ArticMine doesn't correctly apply the basic Economics 101 concepts of opportunity cost (above), supply&demand, and marginal cost (below).

ArticMine you entirely didn't address my point that if marginal cost of mining one CC token is $600 (yet the mining farms such a 21 Inc. project a $8 cost for themselves), then if suddenly millions are mining to pay some portion of their electric bill, then the market price of the CC token is going to fall down closer to the actual cost of production $8 because those are millions of sellers (if they don't sell, they don't lower then electric bill).

What you are describing here is a new generation of ASIC that has a 75x efficiency advantage over the previous generation. Even in this case the old ASIC is still competitive in the 100% electric heating case since 1) The old ASIC has zero capital cost since it has already being depreciated

The bolded (my added emphasis) portion of the quote is incorrect because (if you were correct about your erroneous claim of it being economically worthwhile) then the demand for the obsolete mining equipment would rise and thus the selling price (and thus unused depreciation) would also rise. You seem to not factor into your thinking the concept of how when a good becomes newly substitutable then its supply/demand/price changes.

[iamnotback]

Very interesting. The trouble is there is no way he can compete with someone using obsolete XBT mining equipment for space heating, where the effective cost of electricity becomes negative, regardless of the price of electricity.

Making POW useful requires nothing more a than changing the mindset. There are many situations where the heat produced has more value than the electricity consumed. Ever used electricity to produce heat? If the objective is to use electricity to produce heat, then POW mining of crypto currency becomes simply a way to reduce costs.

Once and for all, you are irrefutably rebutted:

“We will re-use the PoW as a heater…”

First, reusing work is always a smart idea; second, humans do need heat. Third, such an arrangement is highly conducive to Bitcoin’s goal (of achieving a Bittorrent-like resistance to coercive manipulation).

However, what is the effect on the MC and MR? Instead of an expected ($100 BTC) per x hashes, we’d move to ($100 BTC) + ($5 worth of heat) per x hashes. If $100 were previously being spent (at the hardware-efficient frontier), spending would be drawn upward toward $105 (eventually Bitcoin’s difficulty would adjust). Inefficient miners (those who didn’t use their waste heat) would be put out of business, but the total spending would still equal $100 (producing $95 BTC + $5 Heat).

The “Mining Heater” is just another increase in hardware-efficiency, resulting in a higher difficulty and an increase in ( energy_used / block ).

Proof-of-Work as Space Heaters Belies Economics of Specialization

Specialization enables economies-of-scale.

An example of an erroneous posited caveat[4] that proof-of-work mining resources would not become power-law distribution centralized due to the posited high electrical cost of dissipating heat in centralized mining farms coupled with the posited free electricity cost of using the “waste” heat of ASIC mining equipment as space heaters, is (in hindsight) incorrect because:

• Two-phase immersion cooling is 4000 times more efficient at removing heat from high-power density data centers[5], reducing the 30 - 50% electricity overhead to 1%[6].
• Electricity proximate to hydroelectric generation or subsidized electriciy costs approximately 50 - 75% less than the average electricity cost.
• Heating is rarely needed year-round, 24 hours daily, at full output. Not running mining hardware at full output continuously renders its purchase cost depreciation much less economic because the systemic hashrate is always increasing and (because) ASIC efficiency is always increasing[7]. The posited purchase of obsolete mining equipment[8] is incorrect because `MR = MC` so a combination of increased demand for obsolete mining raising its price and weighted profit at the margins increasing thus increasing the mining difficulty so that savings due to waste heat is offset. Closer to home, to make it profitable enough to be worthwhile (to justify the pita of jerry–rigging a space heater for equipment not designed for the purpose) requires running so many 10s or 100s of kWH of relatively much less efficient (i.e. obsolete) hardware generating more heat than can be typically utilized (unless infernos are in sufficient decentralized demand).
  

[4] https://blog.ethereum.org/2014/06/19/mining/
[5] http://www.allied-control.com/immersion-cooling
[6] http://www.allied-control.com/publications/Analysis_of_Large-Scale_Bitcoin_Mining_Operations.pdf#page=9
[7] https://www.reddit.com/r/Bitcoin/comments/335107/i_am_thinking_of_using_a_bitcoin_miner_to_heat_my/

[8]	https://bitcointalk.org/index.php?topic=918758.msg10109255#msg10109255 https://bitcointalk.org/index.php?topic=1527954.msg16816538#msg16816538