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Author Topic: How fast the system will accomodate if the price makes mining uneconomical?  (Read 3298 times)
zby
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August 12, 2011, 05:41:04 AM
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The title says it all - what if the suddenly price falls below the economic threshold for most miners and they switch off.  Sending bitcoins will suddenly became very slow - how long that will last?
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hugolp
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August 12, 2011, 09:44:05 AM
 #2

The title says it all - what if the suddenly price falls below the economic threshold for most miners and they switch off.  Sending bitcoins will suddenly became very slow - how long that will last?

The price would have to collapse for something like this to happen. The most probable outcome would be a progressive decrease of the hashing rate with the difficulty addapting itself.

Also, some miners might want to continue mining expecting higher prices in the future.
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August 12, 2011, 11:50:17 AM
 #3

I think the mining market would be more stable if there were a parallel market in which you can "compute for bitcoins" like the one described here:

https://bitcointalk.org/index.php?topic=36242.msg448647#msg448647

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
zby
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August 12, 2011, 11:54:09 AM
 #4

The title says it all - what if the suddenly price falls below the economic threshold for most miners and they switch off.  Sending bitcoins will suddenly became very slow - how long that will last?

The price would have to collapse for something like this to happen. The most probable outcome would be a progressive decrease of the hashing rate with the difficulty addapting itself.

Yeah - I know it is not very probable - I just wanted to know the exact numbers.  What is the delay between hashing rate and difficulty.  I think I've read somewhere that it is asymmetrical - that is if hashing rate grows then the difficulty follows pretty quickly, but not the other way around for some security reasons.
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August 12, 2011, 11:56:08 AM
 #5

The title says it all - what if the suddenly price falls below the economic threshold for most miners and they switch off.  Sending bitcoins will suddenly became very slow - how long that will last?

The price would have to collapse for something like this to happen. The most probable outcome would be a progressive decrease of the hashing rate with the difficulty addapting itself.

Yeah - I know it is not very probable - I just wanted to know the exact numbers.  What is the delay between hashing rate and difficulty.  I think I've read somewhere that it is asymetrical - that is if hashing rate grows then the difficulty follows pretty quickly, but not the other way around for some security reasons.

2000 and something blocks. If a block is found every 10 minutes exactly it takes 14 days to revise the difficulty.
zby
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August 12, 2011, 12:40:01 PM
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Yeah - I know it is not very probable - I just wanted to know the exact numbers.  What is the delay between hashing rate and difficulty.  I think I've read somewhere that it is asymetrical - that is if hashing rate grows then the difficulty follows pretty quickly, but not the other way around for some security reasons.

2000 and something blocks. If a block is found every 10 minutes exactly it takes 14 days to revise the difficulty.
Hmm - but if miners quit - then waiting for new blocks will take longer then 10 minutes average.
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August 12, 2011, 12:52:25 PM
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Unless this is a desaster style quitting (like in namecoin) it may then take like 12 minutes or so... this already isa  significant drop. But nothing that is a desaster for miners.
Raoul Duke
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August 12, 2011, 01:16:43 PM
 #8

Unless this is a desaster style quitting (like in namecoin) it may then take like 12 minutes or so... this already isa  significant drop. But nothing that is a desaster for miners.

It's already taking 12min...

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August 12, 2011, 02:18:54 PM
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Unless this is a desaster style quitting (like in namecoin) it may then take like 12 minutes or so... this already isa  significant drop. But nothing that is a desaster for miners.

It's already taking 12min...

Only sometimes, and then this is a decent approach down. Let it take 2 minutes for another 2-3 rounds - a slow slide down.

Look at how long namecoin take now to see a desaster for the chain.
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August 12, 2011, 02:36:01 PM
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Unless this is a desaster style quitting (like in namecoin) it may then take like 12 minutes or so... this already isa  significant drop. But nothing that is a desaster for miners.

It's already taking 12min...

Only sometimes, and then this is a decent approach down. Let it take 2 minutes for another 2-3 rounds - a slow slide down.

Look at how long namecoin take now to see a desaster for the chain.

No, it's not "only sometimes", it's on average. Don't feel like searching for the thread, but someone already made the analisys and for the last 2 days or so the average is 12ish minutes.

EDIT: Found the thread https://bitcointalk.org/index.php?topic=36585.0
Just in case you thought i was talking nonsense... Roll Eyes

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August 12, 2011, 03:04:19 PM
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If the average block time is 12 minutes, then it will take about 12 * 2016 minutes = 16.8 days = 2.4 weeks to make the next adjustment.

I wouldn't worry much unless something like 75% of the network power (or more) evaporates very quickly.

p2pcoin: a USB/CD/PXE p2pool miner - 1N8ZXx2cuMzqBYSK72X4DAy1UdDbZQNPLf - todo
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August 15, 2011, 10:56:44 PM
 #12

The title says it all - what if the suddenly price falls below the economic threshold for most miners and they switch off.  Sending bitcoins will suddenly became very slow - how long that will last?

Nothing much happens at all. You wait a few days for the difficulty to come down and transactions speed up again.
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August 21, 2011, 04:03:03 AM
 #13

Once again, UNLESS it's like namecoin.  The only scenario I could see causing this would be a competing GPU compute application paying out vastly more than bitcoin.  And even then you'd probably see a slow leak even for a 3x payout.  It would take days to weeks for most people to switch, giving the network time to adjust difficulty down (although there is a cap of 4x drop or rise every 2016 blocks). 

Once again, I base this on namecoin.  Even when looking at a 2-3x the payout for mining namecoin only about 10-15% of the bitcoin mining power switches for the few days it is profitable, and a pretty good chunk of namecoin miners stick around for the other few months where they're giving up 40% of their processing power.
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August 22, 2011, 02:00:07 AM
 #14

The more I read between the lines in this forums the more likely I think exactly this is going to happen...

People are nuts.
"Mining companies" popping up, selling hashrate for payment in advance, and if you think of it the only way this could even remotely profitable (for these "companies") is if price & difficulty were to drop slowly but steadily.
The worst part is people actually use these services... its a gamble I know either you win or they win but, I think in the long run both loose.

First they ignore you, then they laugh at you, then they keep laughing, then they start choking on their laughter, and then they go and catch their breath. Then they start laughing even more.
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August 28, 2011, 07:51:46 AM
 #15

The more I read between the lines in this forums the more likely I think exactly this is going to happen...

People are nuts.
"Mining companies" popping up, selling hashrate for payment in advance, and if you think of it the only way this could even remotely profitable (for these "companies") is if price & difficulty were to drop slowly but steadily.
The worst part is people actually use these services... its a gamble I know either you win or they win but, I think in the long run both loose.
Mining companies don't loose. The person buying the contract buys the company its hardware and probably pays for the electricity, at the end of the contract, The company has a bunch of hardware which can
A; be re rented at the same/ simmilar rate or sold. Either way, its profit
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September 01, 2011, 02:02:39 PM
 #16

There is a lot of computing power being devoted to generating bitcoins, this wont fall away quickly - many people are parasiting electricity usage. I myself do a little bit of mining, only 15 mhash out of interest. I pay the electricity bill, but at a flat rate in our offices...

... what might take this away is if a new more profitable source becomes available. I am surprised drug companies haven't begun tapping the computing power of many spare PC's But at some point, somebody might need spare computing power a great deal and be willing to pay for it. That might make people switch from bitcoin mining to something else.

Steven Dobbs, co founder of thunderworks ltd
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September 01, 2011, 06:15:38 PM
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I've said it on these forums many times, but it begs repeating as long as these threads keep popping up.

People will continue to mine for Bitcoins even if they cross the point of being unprofitable. The reasoning behind this is that if you look at projects like SETI@home or Folding@home, that ask users to basically run the same (if not more) computationally expensive tasks on their CPU/GPU in the game on non-profit research.

These people are indirectly giving these projects a $20-$30 per month donation in electricity costs with getting nothing in return.

Now take Bitcoin. You'll be getting SOMETHING in return that you think MIGHT be worth something again one day.

You might see a drop off of large scale miners, or people who feel they've made their money... but I doubt we'll see a dramatic drop in hashrate.
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September 01, 2011, 06:28:46 PM
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I've said it on these forums many times, but it begs repeating as long as these threads keep popping up.

People will continue to mine for Bitcoins even if they cross the point of being unprofitable. The reasoning behind this is that if you look at projects like SETI@home or Folding@home, that ask users to basically run the same (if not more) computationally expensive tasks on their CPU/GPU in the game on non-profit research.

These people are indirectly giving these projects a $20-$30 per month donation in electricity costs with getting nothing in return.

Now take Bitcoin. You'll be getting SOMETHING in return that you think MIGHT be worth something again one day.

You might see a drop off of large scale miners, or people who feel they've made their money... but I doubt we'll see a dramatic drop in hashrate.
Yeah but people running rigs of gpus will go under.... and they are a significant part of the hashrate.
Not that this is a problem for me  Tongue

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September 07, 2011, 01:41:07 PM
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If the global hashrate were to suddenly drop, there'd a a huge uptick in the value of a single miner - e.g. my 400MH/s would suddenly be able to generate blocks quite quickly and I'd earn several hundred BTC in a fraction of the time it takes now.  Good for me, bad for the network, but I'd be happy with it for awhile. 

At which point, people would see the value in it again, and the global hashrate would increase.

I tend to think the only way the system would collapse completely is the way ANY financial system collapses completely: A complete and total loss of confidence.  Where in the real world with Fiat currency that means economic and social collapse, here it simply means miners turning off their programs and stop visiting the forum.

Many online ventures have died such an inauspicious death.

So long as some of us believe Bitcoin and crypto-currencies like it have a future, and we keep working toward it, I don't see that happening.

Me, I'm trying to get as much USD into the exchangers as I can to snap up the now-ultra-cheap BTC flooding the market.  If my bets are right, the BTC I'm buying today for $6.50 will be worth 3x as much come the end of next year, maybe more.  And I'll actually be able to pay our hosting costs (which are not small) using the BTC we earn, instead of having to put it on a bloody credit card.

I kick myself for not acting on Bitcoin when I started hearing about it back in January.  I could have thousands of bitcoins now, generated from my own mining.

One can dream.
zby
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September 07, 2011, 08:02:35 PM
 #20

If the global hashrate were to suddenly drop, there'd a a huge uptick in the value of a single miner - e.g. my 400MH/s would suddenly be able to generate blocks quite quickly and I'd earn several hundred BTC in a fraction of the time it takes now.
Well - my question was how quickly this would happen, because if you think that this would happen immediately - then you are mistaken.
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