zby (OP)
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September 24, 2013, 07:54:11 AM |
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I never followed mining too closely - but the difficulty grows like crazy It is quite possible that at this rate it suddenly outgrows the profitability level for most miners and if they decide to switch off the mining rigs - then bitcoin transfers become slow. This can undermine the bitcoin system causing the price to drop and lowering the mining profitability even more forcing people to switch off further rigs. In 2011 the system proved to be quite robust against price drops - many miners did not switch off immediately after the price made mining unprofitable - and the system was maybe slow at some point but not catastrophically so - but this time it might be different with the difficulty explosion.
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"The nature of Bitcoin is such that once version 0.1 was released, the
core design was set in stone for the rest of its lifetime." -- Satoshi
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SlaveInDebt
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September 24, 2013, 08:02:38 AM |
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"A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain." - Mark Twain
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Rannasha
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September 24, 2013, 08:13:29 AM |
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It is quite possible that at this rate it suddenly outgrows the profitability level for most miners and if they decide to switch off the mining rigs - then bitcoin transfers become slow. This can undermine the bitcoin system causing the price to drop and lowering the mining profitability even more forcing people to switch off further rigs.
Mining with already produced hardware only becomes unprofitable if the electricty costs outweigh the income from mining and for ASICs (which make up the vast majority of the network), this is not even remotely the case yet. What may happen is that the difficulty growth will slow down considerably as buying new hardware become less and less appealling, but as long as the network hashrate doesn't collapse all of the sudden there's no problem (a gradual decrease isn't an issue either). Difficulty-adjustments will ensure that in the event of miners shutting down the difficulty goes down as well and mining profitability will increase again.
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TheQuin
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September 24, 2013, 08:44:49 AM |
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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.
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zby (OP)
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September 24, 2013, 09:09:00 AM |
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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.
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ElectricMucus
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September 24, 2013, 09:26:43 AM |
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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. That's a reasonably good scenario for the Death of Bitcoin. It happened to Namecoin, prices fell faster than the difficulty could adjust making it decades till the difficulty would catch up. They barely limped to the next adjustment to use merged mining.
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Rannasha
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September 24, 2013, 09:42:39 AM |
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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. This is only an issue if a large amount of mining power is switched off at the same time. If the mining power is halved at the start of a new difficulty-cycle, it'll take 4 weeks for a downward adjustment, which is long, but still reasonable. And an instant 50% reduction of mining power is absurd outside of catastrophic incidents. Like I said before, existing miners won't be turned off anytime soon. And when they are finally turned off, old, less efficient miners, which will have a lower hashrate are turned off first, making any potential difficulty drop rather smooth. Scrypt alt-coins are far more susceptible, since they're at the mercy of profit-switchers moving large amounts of hashing power from one coin to the other. SHA-256 alts can be merge-mined with BTC if they have been setup for it, so they're more protected.
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wachtwoord
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September 24, 2013, 09:47:05 AM |
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There is nothing different in the current growth rate from the historic growth rate. Since its inception Bitcoin difficulty has grown exponentially and I expect this continue for some time.
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DoomDumas
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Bitcoin
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September 24, 2013, 01:32:55 PM |
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My GPUs where still minig at lost when BTC where exchanged at 2$ .. I sold those BTC over 200$.. So, I dont plan to stop mining as I will sell those over 2000 $ ; P
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wachtwoord
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September 24, 2013, 01:42:08 PM |
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My GPUs where still minig at lost when BTC where exchanged at 2$ .. I sold those BTC over 200$.. So, I dont plan to stop mining as I will sell those over 2000 $ ; P
Hint: Avoid selling.
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johnyj
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September 24, 2013, 02:05:19 PM |
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Those miners with electricity included in the rent won't bother, and those miners with high electricity cost will shutdown first and buy coins instead, that will drive up the exchange rate and in turn improve the rest of the miner's profitability
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zby (OP)
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September 24, 2013, 02:32:23 PM |
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My GPUs where still minig at lost when BTC where exchanged at 2$ .. I sold those BTC over 200$.. So, I dont plan to stop mining as I will sell those over 2000 $ ; P
Hmm - but instead of paying for your electricity you could buy BTC and you'd have them more than with mining. Then you could also sell them over 200$ and be better overall. There is no rational case for mining when you pay more for electricity than you'd pay for the BTC bought directly. Buy maybe your argument is that some people never get this idea that they could buy more BTC then they mine - so they will be mining BTC regardless of the economy of that. That's possible.
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notme
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September 24, 2013, 02:44:11 PM |
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My GPUs where still minig at lost when BTC where exchanged at 2$ .. I sold those BTC over 200$.. So, I dont plan to stop mining as I will sell those over 2000 $ ; P
Hmm - but instead of paying for your electricity you could buy BTC and you'd have them more than with mining. Then you could also sell them over 200$ and be better overall. There is no rational case for mining when you pay more for electricity than you'd pay for the BTC bought directly. Buy maybe your argument is that some people never get this idea that they could buy more BTC then they mine - so they will be mining BTC regardless of the economy of that. That's possible. People are lazy and it is easier to keep mining than figure out how to buy bitcoins.
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wormbog
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September 24, 2013, 03:03:49 PM |
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My GPUs where still minig at lost when BTC where exchanged at 2$ .. I sold those BTC over 200$.. So, I dont plan to stop mining as I will sell those over 2000 $ ; P
Hmm - but instead of paying for your electricity you could buy BTC and you'd have them more than with mining. Then you could also sell them over 200$ and be better overall. There is no rational case for mining when you pay more for electricity than you'd pay for the BTC bought directly. Buy maybe your argument is that some people never get this idea that they could buy more BTC then they mine - so they will be mining BTC regardless of the economy of that. That's possible. Mining is also about protecting the network from attack. If people stop mining because it is no longer profitable, and mining becomes too centralized and suffers a successful attack, everyone's bitcoin will quickly become worthless. There is no good reason to discourage people from bitcoin mining at this point. We're all still early adopters. There's a lot more to bitcoin than making the maximum return on your investment.
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ElectricMucus
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September 24, 2013, 03:24:00 PM |
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There's a lot more to bitcoin than making the maximum return on your investment.
I heard this rumor too.
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cp1
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September 24, 2013, 03:28:05 PM |
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The inefficient will be replaced by the efficient. Hashrate will still increase.
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Miz4r
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September 24, 2013, 03:51:32 PM |
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It's not like an on/off switch, when mining starts to become unprofitable the difficulty will adjust accordingly until mining becomes marginally profitable again for the average miner. The speed of the network is still increasing exponentially, but this will level off at some point and perhaps even decrease a bit for a while but it's not going to go to 0 or become so slow that it harms the verification process.
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Bitcoin = Gold on steroids
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niothor
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September 24, 2013, 04:02:50 PM |
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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%.
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cp1
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September 24, 2013, 04:41:50 PM |
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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.
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