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Author Topic: What will happen when people stop mining?  (Read 3219 times)
fsvo
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June 18, 2011, 12:48:54 PM
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With the increasing difficulty, relatively high power cost, and even falling value of the BTC (at least for now) the general feel is that mining is not worth it anymore, people are selling cards and some even stating they've given up.

Is it correct to make the simple assumption that if people stop mining, demand/availability(price) will rise, again making mining slightly more profiting, again people start mining and prices fall again....
I'm not that knowledgeable in economy so how would this repeating cycle stabilize in the normal case?

My best guess is that mining will later this year stabilize to generate very little income and only be profiting for a selected few able to optimize their BTC/(Watt+Investment) or even just FPGA.

  • So what are your thougths on mining and its effect on the growth of BTC and vise versa.
  • Also what would happen if BTC went really mainstream with people who have no clue what mining is start using it like a PayPal? Could you assume a great boost in mining profitability then?
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Rob P.
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June 18, 2011, 01:20:43 PM
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If people stop mining, Bitcoin will die.

Miners confirm transactions by adding them to the Block Chain.  If no one is doing that, there is no Bitcoin.

Miners won't stop mining because they get to earn all of the transaction fees on the transactions in the blocks they add to the Block Chain.

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June 18, 2011, 01:35:46 PM
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First the price of each BTC will rise to the sky, because there are no new BTC created (deflation scenario)!

But like Rob P. said, without Miners, there are no transaction possible.

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BitCoinsForGold
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June 18, 2011, 01:38:56 PM
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Theres something said about transaction fee's. But i think it will be a very difficult time for bitcoins, or bitcoins will go thru the roof. Either or
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June 18, 2011, 01:48:39 PM
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There aren't enough use cases for bitcoins right now which would support either a large number or a high enough transaction fee.  At least nowhere near the payout of a 50 btc reward for confirming a block today.  We can safely ignore the influence of fees -- several pools keep the fees and only split the reward and nobody cares very much about it.

It's happened before, on a much smaller scale.  We'll see what the current effects are next difficulty increase or the one after that.  The supply of bitcoins entering the bitcoin economy isn't as important as the supply of new dollars or new tradable goods being available for bitcoins.  Short term I believe the first (dollars) may be affected as all the newcomers attracted to bitcoins when it was a way to make a few bucks on the side get bored and leave.
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June 18, 2011, 02:04:56 PM
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There aren't enough use cases for bitcoins right now which would support either a large number or a high enough transaction fee.  At least nowhere near the payout of a 50 btc reward for confirming a block today.  We can safely ignore the influence of fees -- several pools keep the fees and only split the reward and nobody cares very much about it.

We're a LONG way from not having bounties on Block confirmations.  Next year some time, it will get cut in half (25 BTC), but assuming BTC haven't crashed back to the sub $0.05 level, that will still be enough to keep miners interested.  As BTC grows, the number of transactions will grow, as people start using it, they'll want their transactions confirmed quickly, so they'll include transactions fees.  As the number of transactions appearing in a single block grows (the transactions per second (tps)) the fees will increase.

If it all works out and BTC is successful, the transaction fees will FAR outweigh even the current 50 BTC bounty.  However, at that stage (2030?) there will only be professional miners, because the hashrate will be so high that casuals won't be able to compete.

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