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Author Topic: Peak hash rate ?  (Read 271 times)
mkc73
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August 18, 2017, 11:34:53 AM
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Disclaimer : apologies if /presumptuous/out of place/well considered already/naive/plain stupid/. Just finding out about bitcoin.

According to https://blockchain.info/charts/hash-rate?timespan=2years&daysAverageString=7 currently nearing worldwide rate of 6 * 10^18 hashes/s but growth has slowed over the last fortnight to nearly flat (Bitcoin cash effect).

I thought mining would be fun to try - Antminer S9 costs $2500 plus 1kW or so electricity (=$0.05*24*365=$500/year) for 12 *10^12 hashes/s. So would mine a block every 5 * 10^5 blocks or 10 years.  A 2 year lifetime with a current reward of 12.5 BTC or $40000 or so, plus say average of $10000 fees gives expected reward of $10000 compared with $3500 costs.

(Incidentally what is going on when  that Antpool mines blocks with no transaction fees in it i.e 481053).

So just profitable at the moment but BTC reward will reduce by half in 3 years time and BTC value fluctuates.

I guess that is a free market law : if very profitable then more will do it, if not profitable then will stop.

My question is : What happens when world hash power declines because not profitable to mine?

It seems to me that Bitcoin security is based on ever increasing hash power. If the value of BItcoin halved and the BTC reward halved then  the impetus to develop more hashrate  and faster machines would disappear and the world hashrate would decline. If a mothballed mining factory could muster more power than the future world hashrate wouldn't that undermine bitcoin security. I can't see that mining fees and BTC value growth are guaranteed  to cure the problem. Is BTC is a victim of its own success, generating too fast a growth in hash rate that is not sustainable?

Have we already seen peak hash rate?
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August 18, 2017, 12:50:03 PM
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My question is : What happens when world hash power declines because not profitable to mine?
Once the hashrate drops, the network is not able to try the hashes as quickly as before. After the 2016 block adjustment period, the nodes across the network will adjust the difficulty such that the criteria (target) for the block header to be considered is lowered. This ensures that the blocks are sustained at 10 minutes interval.
It seems to me that Bitcoin security is based on ever increasing hash power. If the value of BItcoin halved and the BTC reward halved then  the impetus to develop more hashrate  and faster machines would disappear and the world hashrate would decline dramatically. If a mothballed mining factory could muster more power than the future world hashrate wouldn't that undermine bitcoin security. I can't see that mining fees and BTC value growth are guaranteed  to cure the problem. Is BTC is a victim of its own success, generating too fast a growth in hash rate that is not sustainable?

Have we already seen peak hash rate?
Indeed, Bitcoin is highly dependent on the honest miners to deter those that wants to harm Bitcoin. Generally, the only risk that miners can pose is the 51% attack, the higher the total hash rate, the more expensive it will be to try to attack Bitcoin and thus makes it economically infeasible. Assuming that the ASICs can still get more efficient overtime and the electrical pricing will still be at this level for parts of the world, the whole mining industry will remain profitable.

nibor
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August 18, 2017, 01:05:06 PM
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Go back and look what happened to the price/difficulty over the period of the last 2 reward halves.

Was all very smooth - since they are predicable events everyone plans with them in mind.

So there is no price double on that day, the hash rate hardly changes etc...
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