The State of Cryptocurrency Mining by David Vorick (Sia)

[d57heinz]

People with dollar signs for brains have been giving interest free loans to their competition since late 2012.  Couple that with a system DESIGNED as a near zero sum game and then ask yourself "what the fuck could possibly go wrong with this scenario".

It's what humans do though, we push the boundaries, we exploit the smallest advantages, we work within systems to maximize our value.  When a system is designed to reward those with the biggest advantage (ie lowest capital cost of equipment and overhead) then we should expect those with the greatest advantage to exploit it at every turn, because we are human.

I'm not saying that there isn't some people who wouldn't exploit a system if they could.  Lots of reasons exist to not exploit something you care about, but it is naive at best to think a system such as this won't be exploited by the vast majority of people that CAN.  It's also interesting to see how many people who don't have the proper advantages try to "exploit" the system.

The current trend of "centralizing" miners in the hands of the manufacture (or large enterprise level farms) should be expected to continue unabated as their is currently no reason to NOT continue as is!

Note exploit in context could also be read as "work within a system designed to favour those with certain advantages".

Edit:  When someone figures out how Bitmain (or any company) can make MORE profits selling only to home miners and NOT by mining themselves AND selling to ANYONE with a couple satoshi's then and only then perhaps can we start to discuss true decentralization of POW mining.

Honestly I wish this wasn’t driven mostly by get rich traders.  They give two shits about how the system should be working. Honestly price should continue to head down as the whole idea of bitcoins worth is at jeopardy(decentralization).  It should be nearing 0$ per bitcoin.  Bitmain owns entirely too much of this space.  The only way to remedy this situation is for all devs to stand together for the betterment of mankind.  Not their own personal wealth.  EVERYONE!  If we just all walk away and ignore them what power do they have?  ZERO!    If we all succeed we all do better.  When the money lies in only the hands of a few well it don’t take a long look at history to see how that plays out.  Def a turning point for me whether this whole thing is a bust or will make it. 

BR

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[Flying Hellfish]

Honestly I wish this wasn’t driven mostly by get rich traders.  They give two shits about how the system should be working. Honestly price should continue to head down as the whole idea of bitcoins worth is at jeopardy(decentralization).  It should be nearing 0$ per bitcoin.  Bitmain owns entirely too much of this space.  The only way to remedy this situation is for all devs to stand together for the betterment of mankind.  Not their own personal wealth.  EVERYONE!  If we just all walk away and ignore them what power do they have?  ZERO!    If we all succeed we all do better.  When the money lies in only the hands of a few well it don’t take a long look at history to see how that plays out.  Def a turning point for me whether this whole thing is a bust or will make it.  

BR

The people have ALWAYS had the power, who do you think back in 2012 was funding BFL and Avalon with millions in interest free loans?  It wasn't investment bankers!!!

Those earlier bitcoiners may have believed in the idea but they funded those companies because they saw an opportunity to work within the system to gain a MAJOR advantage over the other users.

Imagine if people said hey we won't give interest free loans to strangers on some wild west cowboy forum.  If people had simply never supported this kind of business model it wouldn't work LOL it really is not that complicated! But that isn't realistic, because people!

Bitcoin may yet become a "victim of it's own success" but everyone is playing within the coded rules so one might even argue it's working as intended.

I wonder how many bitcoiners know anything about mining other than it "secures the network".  This site is FULL of users new and old that simply now NOTHING about mining.  Extrapolate that to the general public of bitcoin users and it's doesn't seem hard to imagine mining is somewhat irrelevant to them.  Short sighted approach I think but also very plausible IMO.

[BenRickert]

Yes.....and if with the snap of a finger....all firearms could be removed from existence then no one else will be shot. Not gonna happen. I fantasize about Crypto terrorist groups forming and destroying the electric grids and networks of these fucking scum. Like the "Greenpeace" of Crypto. Alas, it is only a dream.......maybe.

BR

[buwaytress]

Yes.....and if with the snap of a finger....all firearms could be removed from existence then no one else will be shot. Not gonna happen. I fantasize about Crypto terrorist groups forming and destroying the electric grids and networks of these fucking scum. Like the "Greenpeace" of Crypto. Alas, it is only a dream.......maybe.

I actually wondered many times myself when the next Hollywood blockbuster would move away from Bitcoin and crypto as just simple tools used for crime, and focus instead on some of these unlikely cataclysmic events just as you mention. Cyber terrorists/hacktivists secretly taking over all Bitmain equipment and one day taking control over all of it to destroy it with a virus. Maybe several large EMP attacks all over the industrial rigs. But yeah, I'm surprised someone else thought of Greenpeace-like radicals doing something like this. Waiting to be turned into a book/script/film.

[BenRickert]

I actually wondered many times myself when the next Hollywood blockbuster would move away from Bitcoin and crypto as just simple tools used for crime, and focus instead on some of these unlikely cataclysmic events just as you mention. Cyber terrorists/hacktivists secretly taking over all Bitmain equipment and one day taking control over all of it to destroy it with a virus. Maybe several large EMP attacks all over the industrial rigs. But yeah, I'm surprised someone else thought of Greenpeace-like radicals doing something like this. Waiting to be turned into a book/script/film.

It would be SO cool. Especially if it were based on a "true story".

[DooMAD]

Honestly I wish this wasn’t driven mostly by get rich traders.  They give two shits about how the system should be working. Honestly price should continue to head down as the whole idea of bitcoins worth is at jeopardy(decentralization).  It should be nearing 0$ per bitcoin.  Bitmain owns entirely too much of this space.  The only way to remedy this situation is for all devs to stand together for the betterment of mankind.  Not their own personal wealth.  EVERYONE!  If we just all walk away and ignore them what power do they have?  ZERO!    If we all succeed we all do better.  When the money lies in only the hands of a few well it don’t take a long look at history to see how that plays out.  Def a turning point for me whether this whole thing is a bust or will make it.  

BR

The people have ALWAYS had the power, who do you think back in 2012 was funding BFL and Avalon with millions in interest free loans?  It wasn't investment bankers!!!

Those earlier bitcoiners may have believed in the idea but they funded those companies because they saw an opportunity to work within the system to gain a MAJOR advantage over the other users.

Imagine if people said hey we won't give interest free loans to strangers on some wild west cowboy forum.  If people had simply never supported this kind of business model it wouldn't work LOL it really is not that complicated! But that isn't realistic, because people!

Indeed.  It seems like people forget there were plenty of other manufacturers.  I'm certainly no expert on mining, but even I know that KnC, BFL, GAW, HashFast, etc all had their various issues (to put it mildly in some cases) over the years.  Some of them were involved in some shady behaviour, others simply weren't profitable operations.  They were either marred by criminal proceedings, went bankrupt, or both.  Bitmain effectively won by default, simply because they didn't have much in the way of serious opposition.  I don't know why some people think it's a damn conspiracy.  It's just basic market forces at work.

Honestly if you are not willing to play dirty against bitmain, you already lost.

Yeah, sorry, but no.  That's precisely what caused many of them to fail.  They played dirty, they suffered the consequences.  Consequences like their customers gave them negative publicity because the goods were delivered late, or worse still, never arrived at all.  Consequences like the owners got arrested.  Things like that.  Cause and effect.  This isn't revelatory stuff here.  Sad to say, but Bitcoin has simply had a pretty sordid history when it comes to hardware manufacturers.  Any one of those failed companies mentioned above could have done things differently and maybe we wouldn't have that one dominant company with a monopoly like we do.

[gentlemand]

https://medium.com/@salva.enkidu_89587/how-bitmain-indeed-mines-coins-in-secret-2ea179e7ab75

Another Sia fan writing a lengthy piece of loathing about Bitmain's tactics. I think at this point even if Bitmain were benevolent, they're such a lumbering beast that any smaller coin that attracts its attentions immediately starts foaming at the mouth and keels over.

[stompix]

The only way to remedy this situation is for all devs to stand together for the betterment of mankind.  Not their own personal wealth.  EVERYONE!  

Keep dreaming...

From the last article gentlemand posted:

Among those who purchased the A3 on the Bitmain’s flash sale, there were contributors, coders and moderators as well. The perfect storm.

The Sia community got betrayed by their own members, what do you expect from people that don't know anything about the past of Bitmain or their practices?
Do you think they will care about morality and stop thinking about $?

If it were like that Zara and H&M and the others would close their factories in South Asia, people would stop buying iPhones made by suicideconn, and the single real competitor that might be able to take on Bitmain, Samsung would be disbanded just like zaibatsus were after the ww2.

I've always said it, 99% of the world thinks and acts based on how much the balance and the possible balance in their wallet might be.

[d57heinz]

The only way to remedy this situation is for all devs to stand together for the betterment of mankind.  Not their own personal wealth.  EVERYONE!  

Keep dreaming...

From the last article gentlemand posted:

Among those who purchased the A3 on the Bitmain’s flash sale, there were contributors, coders and moderators as well. The perfect storm.

The Sia community got betrayed by their own members, what do you expect from people that don't know anything about the past of Bitmain or their practices?
Do you think they will care about morality and stop thinking about $?

If it were like that Zara and H&M and the others would close their factories in South Asia, people would stop buying iPhones made by suicideconn, and the single real competitor that might be able to take on Bitmain, Samsung would be disbanded just like zaibatsus were after the ww2.

I've always said it, 99% of the world thinks and acts based on how much the balance and the possible balance in their wallet might be.

I’ll sum up the state in one word.  FUCKED!!!  Excuse my French

Br

[gentlemand]

Proof of Work mining will never be sustainable long-term.

If BTC onboards enough old school finance then its dominance will be sealed forever. It's not exactly threatened by anything as is and I've heard very few of them talk about any altcoin. Though they should be thinking about sustainability, that's the last thing any of them will care about and I'm sure more than a few won't understand what mining actually is. There'll always be miners ready to step up.

The best that can happen is that it drives development in renewables and miners get more efficient.

[d57heinz]

Here's your Proof of Decentralization folks:  http://anticoins.org/

Thank you for this.  I haven’t time to read it all yet but just the beginning sentence already has me intrigued.  If this is possible in a world that is full of manipulation is yet to be seen. Look what happen to bitcoin.  I’m still trying to figure out why I’m so pessimistic about it’s outcome when I thought for sure this was a beautifully laid out idea.  I see now that no matter how good an idea money comes in and taints the shit outta it.  It’s sad that we allow this type of manipulation. Nothing should have this type of control over your lives.  Everything in moderation and that includes your wealth.  If you have a disporportionate amount means someone else is doing without.   In a free market this maybe is ok. Yet to be seen. But in today’s world the mainupation with money has everything fucking backwards.  How we come out of this on top hasn’t come to me yet.  Sure won’t be bitcoin I know that now. It’s sad.  

BR

[DooMAD]

Nice topic I like everyone's efforts on this topic.  But I have a concern is their a single legit site which offers cloud mining and actually pays.

I have came across many sites at first they offer free hashpower to start mining but when you reach to the withdrawal limit it will either ask you to get a upgrade or will reject your withdrawal request with one or another reason.

It's really a big mess.

I've always maintained a healthy distance from cloud mining.  Too many risks, too little reward.  And that's just for the genuine, reputable companies, never mind all the scams out there.  For the few fortunate people who did manage to make some money from it, many of them are now reporting that they aren't earning anymore.  Tread carefully before you hand over any money.

[d57heinz]

If this is possible in a world that is full of manipulation is yet to be seen. Look what happen to bitcoin.  I’m still trying to figure out why I’m so pessimistic about it’s outcome when I thought for sure this was a beautifully laid out idea.  I see now that no matter how good an idea money comes in and taints the shit outta it

Hmm now where have I seen this before?😊

BR

[NotFuzzyWarm]

I see now that no matter how good an idea money comes in and taints the shit outta it

Um, in this case cryptocurrency *is* money. That makes ^^ a rather redundant statement...

[gentlemand]

Who would have thought that the all new currencies will end up where all things end up.
In the hands of big money. There where no safeguards planned in, not even to protect the very people the coin was designed for.

I did.

What else would anyone expect? Money and power congregates into small pools everywhere. Even if a coin's creator goes all out to prevent it the chances are someone will find a way around if there's the incentive to do it.

It's going to take someone or something exceptional to come up with a system that prevents it.

[dutchlincoln]

Ah, nice read from David, the biggest Conman himself....

Pitty he lives that far. i'd be happy to throw my A3 through his windows...

[Blongen]

https://blog.sia.tech/the-state-of-cryptocurrency-mining-538004a37f9b

A fine overall read here from someone close to the front lines.

TLDR - unless you're Bitmain or someone similar you're probably eventual toast.

So how do you ensure the network stays decentralized? Or are we just set for centralized blockchains?

How does that affect your perception of the ecosystem?

Ah, nice read from David, the biggest Conman himself....

Pitty he lives that far. i'd be happy to throw my A3 through his windows...

Wow! That's a lot of Hate! This guy must have pissed you off!

[gentlemand]

So how do you ensure the network stays decentralized? Or are we just set for centralized blockchains?

How does that affect your perception of the ecosystem?

There are people with way more understanding of the nuts and bolts and dynamics of it than myself. But as time passes it should becoming increasingly clear that at least maintaining the appearance of decentralisation is vital. Without it the whole thing is worthless.

Shitcoins like Bcash/BCH/BCHSV/BCHABC have effectively given up on it and that's going to bite them big time eventually or they'll remain insignificant enough for people not to care which is the case for most of them. BTC doesn't and shouldn't have that luxury.

There'll be ever more powerful factions. If there are enough of them then that maintains decentralisation. If there aren't then at least let's hope they won't be dim enough to rock the boat. Any overt assertion of power from one group would either turn the whole thing to dust or, hopefully, drive the effort towards less centralisation.

Unfortunately since humans are humans they may require a brutal lesson in why it's important before it's taken seriously enough. There's lots of posing about it. Not much action.

[d57heinz]

I put 0 trust that humans won’t fuck this up in order to keep their magic afloat.  Hipocracy in this world manifested by capitalism will be the downfall of humanity.  Whilst you all fight to keep it decentralized and lose your shirts I might add the ones in power with real money will centralize this.  Hell look at ibm they aren’t even gonna touch bitcoin. They made their own blockchain.  Ego’s at their finest. I can do it better no I can. Let’s not just all get together and figure this out. Capitalism has it to where we fight amongst ourselves even with a common goal.  How fucking sad is that!  

BR

[bdbabiak77]

I've been in bitcoin since 2012. Apparently, I was frightened about centralization, and I made a GitHub project in 2013 that I thought would solve this.

I know this sounds really stupid, and probably wouldn't do anything, but my idea was that when you spend the coins in any way, the value is divided by the balance squared of the address. My idea was that coins would be repelling each other like similarly charged electric particles.

I have forgotten about this for a while until reading this, but would this do anything to frustrate ASICs or disrupt centralization?

I apologize for wasting everyone's time. My programming is pretty weak and my ideas are probably fantastical.