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Author Topic: $-1000,000 a day could some one explain how this runs  (Read 1617 times)
jubalix
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September 02, 2013, 02:29:51 AM
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If I read the blockchain 24 hr report, it appears that the btc network costs about $1M a day more to run that it makes miners.

Could some one explain how this is feasible in the longterm say when there is no more seigniorage to be made eg BTC reaches market share cap.

Is is because the electricity is free people can leach of rental agreements, or priced into heating elements, so you would be using that power any way, eg everything that heats mines.

Or will BTC be forced to adopt the PPC mechanism for low power.

Or something else.

Open to your views thanks in advance.

also I would have searched but not sure what to search under.

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September 02, 2013, 02:34:26 AM
 #2

If I read the blockchain 24 hr report, it appears that the btc network costs about $1M a day more to run that it makes miners.

Could some one explain how this is feasible in the longterm say when there is no more seigniorage to be made eg BTC reaches market share cap.

Is is because the electricity is free people can leach of rental agreements, or priced into heating elements, so you would be using that power any way, eg everything that heats mines.

Or will BTC be forced to adopt the PPC mechanism for low power.

Or something else.

Open to your views thanks in advance.

also I would have searched but not sure what to search under.

1. Assuming you mean blockchain.info, their assumptions are nowhere near valid any longer.  They are based on GPU mining.
2. Block reward reduces by 50% every 4 years.
3. In the end game, mining will only be worth it for those who can put the generated heat to use.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
12jh3odyAAaR2XedPKZNCR4X4sebuotQzN
Bitobsessed
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September 02, 2013, 02:48:26 AM
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The cost to be a miner will continue to decrease with the advances in mining hardware.  Not to mention solar.  Of course it will be forced to adopt the mechanisms of low power (I like how you worded that).  Reducing power consumption is a natural goal of anything that has to do with computers today.  It was one of the main goals when ASICs were developed.  There will always be seigniorage in the bitcoin world as the transaction fees will support the miners when the block reward is virtually cut to zero. 
Stephen Gornick
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September 02, 2013, 02:51:56 AM
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There will always be seigniorage in the bitcoin world as the transaction fees will support the miners

But that isn't seigniorage.   That's simply fees paying the freight.

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September 02, 2013, 05:34:51 AM
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There will always be seigniorage in the bitcoin world as the transaction fees will support the miners

But that isn't seigniorage.   That's simply fees paying the freight.
Well then I will study some more.  Thanks.
wetroof
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September 03, 2013, 04:38:20 AM
 #6

just look up the definition of seigniorage. I think it means to mint coins or something.
Itcher
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September 03, 2013, 07:54:47 AM
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Mining will become less profitable, miners leave the game, the hash-rate goes down, miners need less energy, a new equilibrium will be found

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CMMPro
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September 03, 2013, 11:49:01 PM
 #8

Yes, very simple self balancing process.
DeathAndTaxes
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September 03, 2013, 11:56:17 PM
 #9

Blockchain.info is based on GPU mining.  Honestly it is incompetence that they leave such a misleading "stat" up.  If they can't be bothered to update it to more realistic assumptions then just remove it. 

Miners are paid a combination of block subsidy and fees.   In the long run energy consumption cost will be slightly below the total revenue of miners.  The miner compensation will be the difference minus ammortized hardware cost.

Still we are nowhere near the "electrical break even point".  For even the least efficient miners the break even point is north of 2 billion difficult.
https://bitcointalk.org/index.php?topic=281279.0
Taras
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September 18, 2013, 12:39:30 AM
 #10

Mining will become less profitable, miners leave the game, the hash-rate goes down, miners need less energy, a new equilibrium will be found
Or bitcoin's value rises as production rate falls, paying for the operation in the long run?

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September 18, 2013, 11:29:46 AM
 #11

Mining will become less profitable, miners leave the game, the hash-rate goes down, miners need less energy, a new equilibrium will be found
Or bitcoin's value rises as production rate falls, paying for the operation in the long run?

nope. most miners buy asics with bitcoin. If difficulty rises, the end up with less bitcoin as they invested.

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