Bitcoin Mining is unsustainable

[gollum]

The "Proof-Of-Work" type of mining in combination with decreasing rewards that Bitcoin and many coins use is a greedy algorithm which will create a huge problem in a few years.

In the initial phase of bitcoin a lot of early miners were attracted because of high rewards, and low competition (difficulty).
But over time the mining cost per produced coin has risen since the difficulty has gone up exponentially, and the block reward has halved.

The market will correct itself and this will over time lead to:
a) The price of BTC doubles each 4 years to compensate the miners
OR
b) The price of BTC remains stable but hashrate halves each 4 years since lot of miners go out of business

But both of these solution presents new problems:
a) The price of BTC cant double each 4 year for eternity, the market cap of BTC will be huger than all gold in the world in two decades
b) Halving of the hashrate is not sustainable either as it will make the network less secure

Therefore I believe Proo-Of-Work cryptos are not sustainable, bitcoin needs to change the mining to Proo-Of-Stake or some other sustainable method of mining.

More info:
https://en.bitcoin.it/wiki/Proof_of_Stake

[1715159626]

1715159626

[coastermonger]

  false dichotomies, false dichotomies everywhere.

Expecting the hash rate to halve is not realistic.  The reward rate will halve, but it doesn't imply that half of all the network power will suddenly or even gradually leave the system.  Mining is a competitive game, not a replacement for a regular living, and as time goes on it will gradually drift in and out of flux with being more or less profitable depending on how much power joins in.

Proof of stake has its own problems that I don't feel like dealing with.  It encourages economic stagnation by literally penalizing those who move their coins from one address to another.

[gollum]

Some of you may argue that "Moores Law" will give more hashrate for less investment and energy cost over time.
That is true but potential attackers will also benefit from Moores Law, so the hash rate actually needs to double each 18 months to keep the status quo against a potential 51% attack.

[hostmaster]

Agreeed,proof of stake can be much better for generalwise.

[gollum]

The good news is that my hypothesis implies that we can't have more than a few Proof-Of-Work cryptos.
Most of the 100+ PoW crypto coins will die over time as they will have too little hash rate as a protection against 51% attacks.

[gollum]

false dichotomies, false dichotomies everywhere.

Expecting the hash rate to halve is not realistic.  The reward rate will halve, but it doesn't imply that half of all the network power will suddenly or even gradually leave the system.  Mining is a competitive game, not a replacement for a regular living, and as time goes on it will gradually drift in and out of flux with being more or less profitable depending on how much power joins in.

Proof of stake has its own problems that I don't feel like dealing with.  It encourages economic stagnation by literally penalizing those who move their coins from one address to another.

My example was meant as two extremes [halving of hashrate each 4 years] vs [doubling of BTC price each 4 years]
The reality is probably somewhere between these two extremes.

I agree that PoS is not a perfect solution either, but it solves the major problem presented in this post.
I still see the crypto currences as a huge experiment, I don't think we will have an optimal solution for years to come...

[halcyon]

I think one problem in the future could be that there are less incentives to to mining
which results in less network security.

(not sure if transaction fees can make up for this)

[stompix]

Just how many times and how many threads were created claiming the bitcoin mining is unsustainable yet it is still working and people are still buying mining rigs?

[halcyon]

Just how many times and how many threads were created claiming the bitcoin mining is unsustainable yet it is still working and people are still buying mining rigs?

the problem is 20 years in the future... of course now mining is still rewarded enough to keep people mining

[stompix]

Just how many times and how many threads were created claiming the bitcoin mining is unsustainable yet it is still working and people are still buying mining rigs?

the problem is 20 years in the future... of course now mining is still rewarded enough to keep people mining

20 years in the future... that;s another era by cryptotime.
It's highly possible bitcoin won't be around by then

[franky1]

i think the OP is crying because he cannot afford asics, so he wants the protocol to change so he can buy GPU's.

bitcoin protocol works. making it easier to buy mining equipment will make it easier for people to gain enough hashrate to cause more chance of a 51% attack.

as for the crap about mining unsustainable. if bitcoin becomes too expensive to mine, then miners wont sell for anything less then their costs. and if they do, they are the losers and are not smart and deserve to lose out and stop mining.

as for the smart miners, they will hold out to get the price they need and deserve. by creating a demand (price rise). and this has nothing to do with the reward halving.

difficulty and demand has played a higher part in price rises then the reward halving has, so i wont even waste time ranting about that topic.

in 20 years bitcoin wants to be in a position of not doing 7 tx per second (4200 per block), but be able to handle hundreds of transactions a second, thus instead of a maximum income of 4200 pennies per block, miners would get alot more

[gollum]

Just how many times and how many threads were created claiming the bitcoin mining is unsustainable yet it is still working and people are still buying mining rigs?

the problem is 20 years in the future... of course now mining is still rewarded enough to keep people mining

20 years in the future... that;s another era by cryptotime.
It's highly possible bitcoin won't be around by then

It's not too late to evolve the functionality of bitcoin instead of letting it fade away in the competition by alt-coins.

[franky1]

bitcoin has already changed into a proof of stake... its call an altcoin.. go use it if you think its better.

oh wait, you want the market cap to follow over to the alt coin. well of alt coins that offer PoS were so great then the market cap would already be with that altcoin

[medUSA]

...<snip>
The market will correct itself and this will over time lead to:
a) The price of BTC doubles each 4 years to compensate the miners
  OR
b) The price of BTC remains stable but hashrate halves each 4 years since lot of miners go out of business

There are many more scenarios apart from your "a or b", at least one of them would be:
When block reward is halved, asic miners prices are expected to be halved too

Bitcoin mining can be sustainable.
I believe it hinges on the ratio of bitcoin price/price of asic miners/ and block reward

[Biomech]

In my arrogant opinion, there needs to be a lot more focus on getting people to use bitcoins to buy real world things. A LOT of real world things.

Right now, due to the past couple of years exposure, the mainstream is peripherally aware of bitcoin. It is growing by leaps and bounds in some areas, and not in others.

Imagine how many transactions are done every hour using just one organization: VISA. Capture 1 percent of that, and the TX fees will likely make the generation of coins a bonus to miners rather than the other way 'round as currently.

I would like to see some of the big players like Western Union and Moneygram start using bitcoin as their transfer medium. That alone would boost the hell out of transactions, and it would be easy for them to do. And profitable, while lowering their current fee structure.

That, among many other things, would solve this problem. Proof of Stake is counterintutive to me. It's basically interest on savings, and that really only works well when those savings are reinvested in something to GENERATE that interest.