Bitcoin Forum
November 21, 2017, 02:21:29 PM *
News: Latest stable version of Bitcoin Core: 0.15.1  [Torrent].
 
   Home   Help Search Donate Login Register  
Pages: « 1 [2] 3 4 »  All
  Print  
Author Topic: What if mining suddenly becomes unprofitable for most miners?  (Read 6824 times)
Nekrobios
Moderator
Legendary
*
Offline Offline

Activity: 1694


Bitcoin Maximalist


View Profile
September 24, 2013, 05:06:53 PM
 #21

The reason it could be far more extreme this time is because of the massive list of preorders of ASICs. This creates a lag in the adding of appropriate hash power and makes it very easy for malinvestments to occur since noone knows exactly when he'll receive his ASIC, and thus, whether it will amortize at all.

With GPUs it was a different situation because your local hardware shop will have a different competency level compared to BFL or Avalon.

What makes this even more interesting is that ASICs have 0 value (apart from materials perhaps) besides generating Bitcoins, whereas GPUs used to be modern GPUs that could be reused and resold for gaming machines.
1511274089
Hero Member
*
Offline Offline

Posts: 1511274089

View Profile Personal Message (Offline)

Ignore
1511274089
Reply with quote  #2

1511274089
Report to moderator
"I'm sure that in 20 years there will either be very large transaction volume or no volume." -- Satoshi
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1511274089
Hero Member
*
Offline Offline

Posts: 1511274089

View Profile Personal Message (Offline)

Ignore
1511274089
Reply with quote  #2

1511274089
Report to moderator
1511274089
Hero Member
*
Offline Offline

Posts: 1511274089

View Profile Personal Message (Offline)

Ignore
1511274089
Reply with quote  #2

1511274089
Report to moderator
1511274089
Hero Member
*
Offline Offline

Posts: 1511274089

View Profile Personal Message (Offline)

Ignore
1511274089
Reply with quote  #2

1511274089
Report to moderator
niothor
Hero Member
*****
Offline Offline

Activity: 546


Niothor


View Profile WWW
September 24, 2013, 05:22:28 PM
 #22

Fud theory:

Mining becomes almost unprofitable. Nobody is investing in mining equipment but there is still a small gain to be made.
Somebody with deep enough pockets continues to buy equipment (although at a loss) just to drive and then keep the entire mining unprofitable for most miners at a certain loss even for themselves.
Eventually more miners quit and the mysterious organisation comes close to 51%.



And then bitcoin becomes worthless and they wasted all their money to steal worthless stuff.

It's a FUD theory , of course it ends with worthless bitcoins.

User705
Hero Member
*****
Offline Offline

Activity: 742



View Profile
September 24, 2013, 05:31:52 PM
 #23

Difficulty-adjustments will ensure that in the event of miners shutting down the difficulty goes down as well and mining profitability will increase again.

Exactly. Eventually the hardware will catch up with Moore's law and mining will be run by big corporations with access to cheap electricity and large data centres.

Bitcoin's future isn't related to the profitability of miners any more than gold's future is linked the to profitability Goldcorp etc. It is linked to wider adoption and the possibility that something better will come along.

That's not entirely correct.  I don't need a gold miner to trade gold but I need a bitcoin miner to trade bitcoins.
HighCommander
Jr. Member
*
Offline Offline

Activity: 38



View Profile
September 24, 2013, 05:50:51 PM
 #24

That's not entirely correct.  I don't need a gold miner to trade gold but I need a bitcoin miner to trade bitcoins.
Why? You don't need to have bitcoin miner to trade bitcoins.
Walsoraj
Hero Member
*****
Offline Offline

Activity: 686


Ultranode


View Profile
September 24, 2013, 05:54:33 PM
 #25

That's not entirely correct.  I don't need a gold miner to trade gold but I need a bitcoin miner to trade bitcoins.
Why? You don't need to have bitcoin miner to trade bitcoins.

Dear 'high'commander,

you are high and stupid and have missed the point completely. stfu and go die.
cbhelp
Jr. Member
*
Offline Offline

Activity: 56


View Profile
September 24, 2013, 05:57:26 PM
 #26

Mining already IS unprofitable for most miners.......

User705
Hero Member
*****
Offline Offline

Activity: 742



View Profile
September 24, 2013, 07:22:49 PM
 #27

That's not entirely correct.  I don't need a gold miner to trade gold but I need a bitcoin miner to trade bitcoins.
Why? You don't need to have bitcoin miner to trade bitcoins.
In order for me to send bitcoins I need to broadcast the transaction into the network and the miners need to record it in a block.  No miners = no transactions.
ArticMine
Legendary
*
Offline Offline

Activity: 2072


Monero Core Team


View Profile
September 24, 2013, 11:15:58 PM
 #28

...

What makes this even more interesting is that ASICs have 0 value (apart from materials perhaps) besides generating Bitcoins, whereas GPUs used to be modern GPUs that could be reused and resold for gaming machines.

This is not entirely correct. An ASIC can continue to have value as a space heater in winter partially subsidized by the BTC generated even after the marginal cost of electricity is well above the value of the BTC generated. This is because they are far more compact and portable than the typical GPU based mining rig.

Concerned that blockchain bloat will lead to centralization? Storing less than 4 GB of data once required the budget of a superpower and a warehouse full of punched cards. https://upload.wikimedia.org/wikipedia/commons/8/87/IBM_card_storage.NARA.jpg https://en.wikipedia.org/wiki/Punched_card
millsdmb
Sr. Member
****
Offline Offline

Activity: 308


View Profile
September 24, 2013, 11:24:07 PM
 #29

"What if mining suddenly becomes unprofitable".

...too late.

People will continue to mine, however. If not to protect the value of their BTC but also for tx fees.

Hitler Finds out about the Butterfly Labs Monarch http://www.youtube.com/watch?v=4jYNMKdv36w
Get $10 worth of BTC Free when you buy $100 worth at coinbase.com/?r=51dffa8970f85a53bd000034
HighCommander
Jr. Member
*
Offline Offline

Activity: 38



View Profile
September 25, 2013, 04:47:22 PM
 #30

Dear 'high'commander,

you are high and stupid and have missed the point completely. stfu and go die.
Really? You got the point - be real and prove it, or don't act like a single-celled organism.  Roll Eyes

User705,
Alright. Appreciate your response. Because I was aware of that and read about it on wiki a while ago. As I understood the following:
"When you send some bitcoins to someone, you create a message (transaction), attaching the new owner's public key to this amount of coins, and sign it with your private key. When this transaction is broadcast to the bitcoin network, this lets everyone know that the new owner of these coins is the owner of the new key. Your signature on the message verifies for everyone that the message is authentic. The complete history of transactions is kept by everyone, so anyone can verify who is the current owner of any particular group of coins."
Yes, everything that is broadcasted is being recorded by everyone, just like in any p2p network, but it doesn't say that peers MUST be mining. Is it understood/assumed so? If anyone can confirm that, would be good to know.
superduh
Hero Member
*****
Offline Offline

Activity: 602


View Profile
September 25, 2013, 04:57:09 PM
 #31

Difficulty-adjustments will ensure that in the event of miners shutting down the difficulty goes down as well and mining profitability will increase again.

Yes - but the adjustments don't happen immediately - and especially down adjustments will happen slowly.
as long as bitcoins are valuable the decrease in mining - people going offline should be slow since if there is an opportunity to make money people will turn on their devices

ok
Carlton Banks
Legendary
*
Offline Offline

Activity: 1820



View Profile
September 25, 2013, 05:28:17 PM
 #32

If speculators are smart, they will anticipate the difficulty correction, and try to set the price to reach an exponential apex to coincide with the beginning of the ROI-pocalypse. February/March 2014 if you asked me to guess.

Vires in numeris
niothor
Hero Member
*****
Offline Offline

Activity: 546


Niothor


View Profile WWW
September 25, 2013, 06:10:28 PM
 #33

Dear 'high'commander,

you are high and stupid and have missed the point completely. stfu and go die.
Really? You got the point - be real and prove it, or don't act like a single-celled organism.  Roll Eyes

User705,
Alright. Appreciate your response. Because I was aware of that and read about it on wiki a while ago. As I understood the following:
"When you send some bitcoins to someone, you create a message (transaction), attaching the new owner's public key to this amount of coins, and sign it with your private key. When this transaction is broadcast to the bitcoin network, this lets everyone know that the new owner of these coins is the owner of the new key. Your signature on the message verifies for everyone that the message is authentic. The complete history of transactions is kept by everyone, so anyone can verify who is the current owner of any particular group of coins."
Yes, everything that is broadcasted is being recorded by everyone, just like in any p2p network, but it doesn't say that peers MUST be mining. Is it understood/assumed so? If anyone can confirm that, would be good to know.


why didn't you read the next phrase

This complete record of transactions is kept in the block chain, which is a sequence of records called blocks.
No mining no blocks no transactions

notme
Legendary
*
Offline Offline

Activity: 1848


View Profile
September 25, 2013, 06:27:05 PM
 #34

We either need blocks or all the transactions can be stored in memory at every node.... But then the coins can't be spent again until they are in a block.  So, yeah, we need mining to keep this shit rolling.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
12jh3odyAAaR2XedPKZNCR4X4sebuotQzN
Nemesis
Sr. Member
****
Offline Offline

Activity: 462


View Profile
September 25, 2013, 07:00:02 PM
 #35

We either need blocks or all the transactions can be stored in memory at every node.... But then the coins can't be spent again until they are in a block.  So, yeah, we need mining to keep this shit rolling.

However so far the race of ASIC and bitcoin rush has made bunch of wasteful blocks... ouch.
Carlton Banks
Legendary
*
Offline Offline

Activity: 1820



View Profile
September 25, 2013, 08:19:48 PM
 #36

A curious scenario would be where the difficulty has wiped out any ROI in BTC terms, but a wild exchange rate rise makes mining profitable against running costs. I guess that's two definitions of mining profit: ROI above capital outlay for equipment, and then there's profiting on price/energy input against price/minings output. You'd be unwise not to make the most out of the second possibility while it existed.

Vires in numeris
HighCommander
Jr. Member
*
Offline Offline

Activity: 38



View Profile
September 25, 2013, 08:27:34 PM
 #37


why didn't you read the next phrase

This complete record of transactions is kept in the block chain, which is a sequence of records called blocks.
No mining no blocks no transactions

I did read that phrase. Yes, everything is recorded in the block chain, but again, as I understand how protocol works, miners DO NOT need to know how and where previously mined coins are being sent.  

Guys, think simple. Let's pretend almost all blocks are found and everyone decides to stop mining, nobody will be able to send and receive coins? Nonsense, right? Think again OR find a fact that clearly states that mining has to be in place in order to trade coins.
niothor
Hero Member
*****
Offline Offline

Activity: 546


Niothor


View Profile WWW
September 25, 2013, 08:43:22 PM
 #38


why didn't you read the next phrase

This complete record of transactions is kept in the block chain, which is a sequence of records called blocks.
No mining no blocks no transactions

I did read that phrase. Yes, everything is recorded in the block chain, but again, as I understand how protocol works, miners DO NOT need to know how and where previously mined coins are being sent.  

Guys, think simple. Let's pretend almost all blocks are found and everyone decides to stop mining, nobody will be able to send and receive coins? Nonsense, right? Think again OR find a fact that clearly states that mining has to be in place in order to trade coins.

You're mistaken rewards with blocks
In the end there will be no more bitcoins offered as a reward for mining a block but that doesn't mean blocks won't be mined anymore.

I hope this passage is as clear as it can be:

"Mining, or generating, is the process of adding transaction records to Bitcoin's public ledger of past transactions. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to respend coins that have already been spent elsewhere."


User705
Hero Member
*****
Offline Offline

Activity: 742



View Profile
September 25, 2013, 11:53:19 PM
 #39

A curious scenario would be where the difficulty has wiped out any ROI in BTC terms, but a wild exchange rate rise makes mining profitable against running costs. I guess that's two definitions of mining profit: ROI above capital outlay for equipment, and then there's profiting on price/energy input against price/minings output. You'd be unwise not to make the most out of the second possibility while it existed.
That's not possible.  I think you are thinking about high but stable difficulty but the only reason current roi projections all show negative is because of difficulty rising.  That will not be forever but no one can tell you when it stops.  A good endpoint to calculate is when pure electricity costs are higher then btc generated without even taking capital outlay into account.  At that point it's not unreasonable to assume not many new miners will come online and therefore difficulty will stabilize and then grow only with exchange rate growth.
Carlton Banks
Legendary
*
Offline Offline

Activity: 1820



View Profile
September 26, 2013, 12:23:41 AM
 #40

A curious scenario would be where the difficulty has wiped out any ROI in BTC terms, but a wild exchange rate rise makes mining profitable against running costs. I guess that's two definitions of mining profit: ROI above capital outlay for equipment, and then there's profiting on price/energy input against price/minings output. You'd be unwise not to make the most out of the second possibility while it existed.
That's not possible.  I think you are thinking about high but stable difficulty but the only reason current roi projections all show negative is because of difficulty rising.  That will not be forever but no one can tell you when it stops.  A good endpoint to calculate is when pure electricity costs are higher then btc generated without even taking capital outlay into account.  At that point it's not unreasonable to assume not many new miners will come online and therefore difficulty will stabilize and then grow only with exchange rate growth.

eh?

That's not impossible at all. If the price goes high enough, it takes the miner that's been pushed out at $140 (due to total monthly returns being worth less than the electricity costs) and puts them back in the profits above running costs territory. They'll still never hit ROI on the ASIC, but they'll at least nibble a little bit more back. The difficulty trend doesn't matter as long as the exchange rate increases enough.

Vires in numeris
Pages: « 1 [2] 3 4 »  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!