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Author Topic: What would happen if bitcoin drops so low mining isn't worth it  (Read 2673 times)
Minsc
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September 01, 2011, 09:52:49 PM
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and transaction fees also aren't worth it and then everyone just stops mining?

And so there's no new transactions updated?  This might happen if bitcoin keeps dropping.

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ercolinux
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September 01, 2011, 10:07:13 PM
 #2

and transaction fees also aren't worth it and then everyone just stops mining?

And so there's no new transactions updated?  This might happen if bitcoin keeps dropping.

No it don't occour (even if there could be some trouble): when less people mine the difficult will drop so mining rate will remain pratically costant.
Indeed if a lot of people stops to mine in few days the correction of difficulty can took more time to occour so the transaction will slow down for a couple of weeks or so.

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September 02, 2011, 07:06:17 AM
 #3

and transaction fees also aren't worth it and then everyone just stops mining?

And so there's no new transactions updated?  This might happen if bitcoin keeps dropping.

No it don't occour (even if there could be some trouble): when less people mine the difficult will drop so mining rate will remain pratically costant.
Indeed if a lot of people stops to mine in few days the correction of difficulty can took more time to occour so the transaction will slow down for a couple of weeks or so.
To add to this statement; Then you would make more BTC/day, effectively balancing it out!

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September 02, 2011, 08:04:59 AM
 #4

and transaction fees also aren't worth it and then everyone just stops mining?

And so there's no new transactions updated?  This might happen if bitcoin keeps dropping.

No it don't occour (even if there could be some trouble): when less people mine the difficult will drop so mining rate will remain pratically costant.
Indeed if a lot of people stops to mine in few days the correction of difficulty can took more time to occour so the transaction will slow down for a couple of weeks or so.
To add to this statement; Then you would make more BTC/day, effectively balancing it out!

No you don't (or at least you don't at the beginning): let's say that 50% of miners stops to mine in the some day. Difficult will stay up for 2000block, but now it will take duoble the time to mine some number of blocks. So instead mining a block every 10minutes it will took 20minutes and the difficulty will adjust in 4 weeks instead 2.
And if the drop is higher is even worse: if 90% of miners stops it will took 100minutes to mine a block and so it will took about 5 months to adjust the difficulty level to the new network power.
Indeed is really low the probability that a big number of miners stop in few hours to mine.

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September 02, 2011, 08:25:43 AM
 #5

It's already unprofitable where electricity is expensive (Hawaii, California), so some miners will drop out.  That's already happening, which is why the difficulty is starting to drop.  I expect this will be a relatively slow process since there are a lot of miners who will keep mining even if it's slightly unprofitable.  The difficulty will keep gradually dropping as the exchange rates drop (roughly in proportion).

If a very large percentage of miners suddenly left we'd have a rough time for a bit.  That happened to NameCoin, and they had to get through some really slow blocks until the difficulty was adjusted.

If the problem was extreme (like, an overnight 99% drop in hashrate), we could push a new version of the bitcoin client that overrides the difficulty temporarily.  This is very unlikely to be necessary.

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September 02, 2011, 11:44:09 AM
 #6

It's already unprofitable where electricity is expensive (Hawaii, California), so some miners will drop out.  That's already happening, which is why the difficulty is starting to drop.  I expect this will be a relatively slow process since there are a lot of miners who will keep mining even if it's slightly unprofitable.  The difficulty will keep gradually dropping as the exchange rates drop (roughly in proportion).

If a very large percentage of miners suddenly left we'd have a rough time for a bit.  That happened to NameCoin, and they had to get through some really slow blocks until the difficulty was adjusted.

If the problem was extreme (like, an overnight 99% drop in hashrate), we could push a new version of the bitcoin client that overrides the difficulty temporarily.  This is very unlikely to be necessary.

The difficulty as of last has been quite stable between 10.000GH and 15.000. Where do you get that its dropping?
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September 02, 2011, 01:36:34 PM
 #7




Bigger: http://bitcoin.sipa.be/speed-lin.png
More: http://bitcoin.sipa.be/

It's not in freefall, but I expect a gradual decline that will last several quarters or more.  I don't expect the trend to change until the exchange rate rises, which I think will take a while (as discussed in other threads).  In any case, we've had two difficulty decreases in a row.

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September 05, 2011, 05:26:10 PM
 #8

it went down twice but I thought it went back up slightly this last week here back to the 1777777 (or whatever) it's at now?
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September 06, 2011, 05:09:55 AM
 #9

The difficulty as of last has been quite stable between 10.000GH and 15.000. Where do you get that its dropping?

that's not difficulty, that's hashrate. www.bitcoindifficulty.com
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September 06, 2011, 05:23:04 AM
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Mmmmm, speculation is sooo speculationy.  Tongue

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September 06, 2011, 05:44:09 AM
 #11

I stopped mining a week or 2 ago.  At around $8 it just isn't work running my electric bill to 500-600 a month and deal w\ the added noise and heat in the house.

I imagine alot of others have done the same despite network hash rate rising recently.
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September 06, 2011, 05:52:56 AM
 #12

You can see the difficulty history here:
http://btcserv.net/bitcoin/history/

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ovidiusoft
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September 06, 2011, 06:05:26 AM
 #13

Mining will always be "worth" it. It might not be proffitable for the current miners, but there will always be people willing to mine, even at an operational loss:

* believers in the system. If you dedicate a few hours a day to make Bitcoin succeed, you can pay a few dollars to keep a machine running all the time.

* businesses who are involved in the Bitcoin economy. If transactions stop, they can't do business, so they will keep e few GHs mining, and if mining at a loss, they will recover that from their proffits.

* people who don't pay for electricity/hardware and/or whose costs are already covered. I have a few servers in datacenters. Tha hardware and monthly costs are already paid for from the other operations, so it doesn't cost me anything to leave a miner running. Even if I only make 1 USD a month, that's proffit. Also, next time I buy a server, I might even get a system that will take two mining-worth GPUs.
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September 06, 2011, 06:46:08 AM
 #14

What would happen if bitcoin drops so low mining isn't worth it and transaction fees also aren't worth it and then everyone just stops mining?

We've already been there.  We refer to it as the "early adopter" period.

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September 06, 2011, 06:48:50 AM
 #15

You can see the difficulty history here:
http://btcserv.net/bitcoin/history/

So is expected an increase in difficulty...that's not good at all: I hear a lot of miners that will stop mining or mantain it at low level due to price drop even now, an increase in difficulty can stop even more people to mine (low MHash/sec miner in first place are not incetivate to continue mining: a 200MHash/s machine can produce less than 2BTC/month today, another increase can reduce of another 1-2% the reward). Or the BTC/$ grow at least of 10-15% in a couple of week I can easily predict a big drop in next difficulty rearrangement.

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September 06, 2011, 06:44:36 PM
 #16

We've already been there.  We refer to it as the "early adopter" period.
Bitcoin mining was quite a lot cheaper during the early adopter period, though - cheap enough that most miners could afford to do it just for the fun of it.

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September 07, 2011, 04:58:10 AM
 #17

Shutting my mining rig down tonight for the first time in over 4 months.  Last time I didn't bother, the visit to 6s was temporary.  This time looks like we'll flatline in the 7s (at best) before the next stairstep down.

Even at 4.6 cents/kwhr it's not worth the wear on the hardware.

Bring on the cost effective FPGA miners!

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September 07, 2011, 09:22:54 AM
 #18

So is expected an increase in difficulty...that's not good at all: I hear a lot of miners that will stop mining or mantain it at low level due to price drop even now, an increase in difficulty can stop even more people to mine (low MHash/sec miner in first place are not incetivate to continue mining: a 200MHash/s machine can produce less than 2BTC/month today, another increase can reduce of another 1-2% the reward). Or the BTC/$ grow at least of 10-15% in a couple of week I can easily predict a big drop in next difficulty rearrangement.
If your theory were true there would already be a big drop. The reason there isn't is that it's still profitable for some people to mine. When they see that others are dropping off they can expand their own mining operation because they don't need to fear a large difficulty increase.
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September 07, 2011, 09:38:27 AM
 #19

The difficulty as of last has been quite stable between 10.000GH and 15.000. Where do you get that its dropping?

that's not difficulty, that's hashrate. www.bitcoindifficulty.com


Correct. I meant to say hashrate. Difficulty has been stabilizing lately as well.
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September 07, 2011, 10:06:09 AM
 #20

So is expected an increase in difficulty...that's not good at all: I hear a lot of miners that will stop mining or mantain it at low level due to price drop even now, an increase in difficulty can stop even more people to mine (low MHash/sec miner in first place are not incetivate to continue mining: a 200MHash/s machine can produce less than 2BTC/month today, another increase can reduce of another 1-2% the reward). Or the BTC/$ grow at least of 10-15% in a couple of week I can easily predict a big drop in next difficulty rearrangement.
If your theory were true there would already be a big drop. The reason there isn't is that it's still profitable for some people to mine. When they see that others are dropping of they can expand their own mining operation because they don't need to fear a large difficulty increase.

Miner in a lot of country can still mine for profit even at 5$ so they sustain the total hashrate and some hardcore miner will probably mine even if is in red (and a couple of week of no earnings or small loss is sustainable for almost every one), but if in long term BTC still mantain a low price that's not feasible. Anyway BTC is again over 7$ (over the +10% I've put as premise to invalid my theory) and next difficulty will drop of 2%

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