MIner Question

[Wind_FURY]

Hypothetical situation: The Chinese government pays miners to attack the network, and threatens those who don't comply with prison time. Wouldn't it be rational for Chinese miners to engage in the attack? I think so...

IT IS irrational. Sacrificing the fundamental nature of their business, ending it, and all potential future profits by being corrupted is rational?

Are you just trolling?

We're talking about a situation where the government is physically co-opting mining farms and threatening miners with prison time. Business concerns went out the window a long time ago...

Then do you truly believe that we should start clamoring for a POW-change? The Chinese government can do it anytime they want, you know.

[Dabs]

It is kinda hard to hide something of that scale, in case a prominent member of the Chinese mining community such as Jihan Wu (or anyone else for that matter) is threatened with prison time. Something is going to leak out.

The governments know that, so they won't do anything like co-opting mining farms. They can't even contain some of their territories ... (HK protests, etc.)

PoW algo change is one of the last things to change, if it ever gets to that point.

[figmentofmyass]

It is kinda hard to hide something of that scale, in case a prominent member of the Chinese mining community such as Jihan Wu (or anyone else for that matter) is threatened with prison time. Something is going to leak out.

The governments know that, so they won't do anything like co-opting mining farms. They can't even contain some of their territories ... (HK protests, etc.)

why would they care about a leak? i assume the point of such an attack would be to crush confidence in bitcoin. a state-backed attack might shake peoples' confidence all the more.

bitcoin miners in china are fairly concentrated and there's no comparison in numbers to a popular protest movement. large mining farms and pools would be much easier to control.

PoW algo change is one of the last things to change, if it ever gets to that point.

i'd prefer to think we could just "wait out" an attack like this rather than hard forking.

[Wind_FURY]

Then do you truly believe that we should start clamoring for a POW-change? The Chinese government can do it anytime they want, you know.

There's difference clamoring for PoW algorithm change and preparing for worst case scenario which forcing PoW algorithm change.
If Bitcoin community could agree on few critical things (which PoW algorithm should be used and should the hard-fork include other changes as well) for worst case scenario, it would significant decrease damage if such worst case scenario happened.

But from his point of view, I was asking him if he believes that it would be rational to start clamoring for a POW-change.

It is kinda hard to hide something of that scale, in case a prominent member of the Chinese mining community such as Jihan Wu (or anyone else for that matter) is threatened with prison time. Something is going to leak out.

The Chinese government could order to cut all electricity to all mining farms in their country immediately. Should we start clamoring for a POW-change?

[Dabs]

If mining farms don't have power or internet, then they won't be mining, leaving the rest of the world to continue the mining. Difficulty will go down a bit when that happens, but we'll just continue like normal.

I think the bigger Chinese crypto companies (exchanges, asic manufacturers) have offices in other countries for the purpose of avoiding government control.

[figmentofmyass]

The Chinese government could order to cut all electricity to all mining farms in their country immediately. Should we start clamoring for a POW-change?

that might cause hash rate to plummet and block times to become significantly longer. impatient people might start clamoring for an emergency difficulty adjustment, but a POW change? that wouldn't make sense.

even if the chinese government seized farms, miners, pools, chip fabrication factories, etc and performed sustained 51%/censorship attacks.....the electricity, overhead, and production costs would be real. they couldn't just sustain the attack indefinitely. so ideally there would still be no POW change---we could just let the attackers burn themselves out. i just hope that bitcoiners are patient enough to do that.

[Wind_FURY]

The Chinese government could order to cut all electricity to all mining farms in their country immediately. Should we start clamoring for a POW-change?

that might cause hash rate to plummet and block times to become significantly longer. impatient people might start clamoring for an emergency difficulty adjustment, but a POW change? that wouldn't make sense.

even if the chinese government seized farms, miners, pools, chip fabrication factories, etc and performed sustained 51%/censorship attacks.....the electricity, overhead, and production costs would be real. they couldn't just sustain the attack indefinitely. so ideally there would still be no POW change---we could just let the attackers burn themselves out. i just hope that bitcoiners are patient enough to do that.

Would you then say that whoever controls the large mining farms would start acting irrationally/collude to risk money/resources to attack the network, to do temporary damage?

[figmentofmyass]

even if the chinese government seized farms, miners, pools, chip fabrication factories, etc and performed sustained 51%/censorship attacks.....the electricity, overhead, and production costs would be real. they couldn't just sustain the attack indefinitely. so ideally there would still be no POW change---we could just let the attackers burn themselves out. i just hope that bitcoiners are patient enough to do that.

Would you then say that whoever controls the large mining farms would start acting irrationally/collude to risk money/resources to attack the network, to do temporary damage?

with an attack of this scale, the attackers might believe they are doing permanent damage. actually, that's the only way the attack makes sense: out-of-band incentives for miners, provided by attackers who are more interested in crushing bitcoin than profiting from it.

it seems like a long shot to me, but it's an interesting hypothetical to ponder. let's say they censor the chain so nobody could transact for a month---how would that affect user confidence and adoption? meanwhile, the proposed solution (a POW algo change) would destroy the mining infrastructure. billions of dollars in value in mining gear would be destroyed. after that, don't you think would-be miners would be very skeptical of risking capital on a new operation? not to mention that existing miners would be bankrupted. how secure (proof of work wise) do you think this new "bitcoin" will be?

[Wind_FURY]

even if the chinese government seized farms, miners, pools, chip fabrication factories, etc and performed sustained 51%/censorship attacks.....the electricity, overhead, and production costs would be real. they couldn't just sustain the attack indefinitely. so ideally there would still be no POW change---we could just let the attackers burn themselves out. i just hope that bitcoiners are patient enough to do that.

Would you then say that whoever controls the large mining farms would start acting irrationally/collude to risk money/resources to attack the network, to do temporary damage?

with an attack of this scale, the attackers might believe they are doing permanent damage. actually, that's the only way the attack makes sense: out-of-band incentives for miners, provided by attackers who are more interested in crushing bitcoin than profiting from it.

it seems like a long shot to me, but it's an interesting hypothetical to ponder. let's say they censor the chain so nobody could transact for a month---how would that affect user confidence and adoption? meanwhile, the proposed solution (a POW algo change) would destroy the mining infrastructure. billions of dollars in value in mining gear would be destroyed. after that, don't you think would-be miners would be very skeptical of risking capital on a new operation? not to mention that existing miners would be bankrupted.

That's exactly why I don't believe that someone/group/government who controls hundreds of millions in mining gear would be irrational. Their incentives would simply align with the success of the network.

how secure (proof of work wise) do you think this new "bitcoin" will be?

I don't know, honestly. It's something to ponder about, but I'm confident the community will come together, and mine altruistically. It aligns with our incentives, or else Bitcoin dies.

[DannyHamilton]

If the Chinese Gov cuts the power , you are looking at over 65% of the bitcoin mining disappear overnight.

Are you sure about that?  What proof do you have that 65% of the hash power is actually running on ASICs in China AND is running in farms that the Chinese government can identify, find, and shut off power?

This alone will freeze the network, and no transactions will be possible for months, unless the hard fork difficulty adjustment occurs.

Nonsense.  Even if we accept your assumption that China could identify and shut power off to 65% of the global hash power, that would simply increase the average confirmation time from 10 minutes per confirmation to 28.5 minutes per confirmation.  28 minute confirmations aren't going to "freeze the network" or result in "no transactions . . . possible for months".  That's just silly.

Furthermore, it's going to take less than 40 days until the normal difficulty adjustment gets things sped back up to an average of 1 confirmation every 10 minutes.

I think most people are going to be able to tolerate half hour confirmations for less than a month, especially since:

• The MAJORITY of confirmations will still take LESS THAN 28 minutes.
• Many transactions occur off-chain anyhow (through services such as Coinbase and/or through lightning network).
• People already tolerate long confirmation times during periods of high activity when low fee transactions are delayed.
• It will be clear that speed will return to normal again soon
• Professional mining organizations will learn to spread their risk around the globe more

* If Attackers are earning money by doublespending, then they can continue indefinitely by using their ill-gotten gains to fund future attacks.

First of all, I thought we were talking about shutting off power, not double spending.

Secondly, those attackers will need to:

• Gain more from the double spend than they would have from simply mining the block.
• Avoid getting caught by law enforcement for fraud/theft.
• Find a way to keep their double spending scam going after users learn to be MUCH more careful about avoiding scammers
• Risk angry victims finding and destroying their mining operations

The Traders will cause a blood letting like you never dreamed possible, in that scenario.
Anyone that waits patiently will hold nothing but broken dreams.

And I'll be able to pick up thousands (or millions) of bitcoins for pennies!  That way, I'll be quite wealthy when the system recovers after a decade or so.

See, I KNOW for a FACT that bitcoin will NEVER drop below an exchange rate of 100 BTC per $0.01.  I KNOW this because, at that price I will buy every bitcoin I can find.  This creates a permanent floor at that exchange rate, and creates a scarcity such that if ANYONE else wants ANY bitcoins at all, they'll have to pay AT LEAST that much.  I'm pretty confident that there are others with more resources that are willing to do the same at a higher exchange rate.  Therefore, there will be competition for the scarce bitcoins, and the price WILL eventually rise again.

[philipma1957]

The Chinese government could order to cut all electricity to all mining farms in their country immediately. Should we start clamoring for a POW-change?

that might cause hash rate to plummet and block times to become significantly longer. impatient people might start clamoring for an emergency difficulty adjustment, but a POW change? that wouldn't make sense.

even if the chinese government seized farms, miners, pools, chip fabrication factories, etc and performed sustained 51%/censorship attacks.....the electricity, overhead, and production costs would be real. they couldn't just sustain the attack indefinitely. so ideally there would still be no POW change---we could just let the attackers burn themselves out. i just hope that bitcoiners are patient enough to do that.

Difficulty adjustment is a Hard Fork.
Something the Devs has run away from doing.

If the Chinese Gov cuts the power , you are looking at over 65% of the bitcoin mining disappear overnight.
This alone will freeze the network, and no transactions will be possible for months, unless the hard fork difficulty adjustment occurs.

* Note a Difficulty adjustment change could be keyed in now, no reason to wait for China to smack bitcoin,
most other coins difficult #s adjusts per block, a difficulty adjust every two weeks only , has always been asking for trouble.*

* If Attackers are earning money by doublespending, then they can continue indefinitely by using their ill-gotten gains to fund future attacks.
How many people do you think can wait the 1 or 2 months needed before a utility disconnects the miners for non-payment.*
The Traders will cause a blood letting like you never dreamed possible, in that scenario.
Anyone that waits patiently will hold nothing but broken dreams.  

if the network drops 65% transactions dont freeze they slow by a factor of 3.

so block time turns into 30 minute not 10 minute .  the worst case is it is done on day 1 of a diff jump.

so a 14 day wait is 42 days.  it is not a big deal.  it would be a good thing as it would show the network is a tough thing to kill.

also i estimate more then 20eh of gear is shut off that can be turned on.

which means the drop would be from 100 eh to 35 eh add back  20 eh and we are at 55eh.

which worst case means diff wait of 13 or 14 days will stretch to only 25 - 30 days.

[DannyHamilton]

Bitcoin has existed for more than 11 years and has gone through 2 halvings already.

Is there risk that something that hasn't yet happened in past could happen in the future?  Sure.

However, I am left wondering why these things that you state could happen, haven't happened?  And if there hasn't yet been the proper incentives for these things to happen, then why do you feel that you can say with ANY confidence that the necessary incentives will ever exist in the future.

There are a million things that could happen in the future.  Many of them have nothing at all to do with Bitcoin.  The U.S. dollar could lose its dominance in the world.  Nuclear war could break out. Global climate change could wipe out humanity. A new Ice Age could wipe out humanity. We could colonize other planets. I could die an early death. We could run out of fossil fuels. A new source of cheap and clean energy could be discovered. Machines could become self-aware.

I'm not going to waste a lot of time thinking through all the repercussions and ramifications of all the "what ifs" of the world,

And I'm not going to waste a lot of time thinking through all the repercussions and ramifications of all the "what ifs" of Bitcoin.

Bitcoin has risks.  Bitcoin has potential.  From everything I've seen and heard over the past 8 years since I discovered Bitcoin, I beleive the potential VASTLY outweighs the risks.

If you have 0 bitcoin and it lives up to its potential, you've suffered a disaster (because you've missed out on an amazing opportunity).
If you have your entire life savings in bitcoin and it falls to its risks, then you've suffered a disaster (because you no longer have the resources to take advantage of other opportunities).

It seems obvious to me, that the right answer is to manage your risk based on your personal risk tolerance.  Own enough bitcoin that you'll reap worthwhile benefits if bitcoin lives up to its potential, but not so much that you'll suffer significantly if it falls to its risks.

As I said, if Bitcoin were to come completely crashing down, I wouldn't be devastated.  I have enough savings outside of bitcoin that I'll be okay and I'll buy up as much cheap bitcoin as I can afford.  However, if bitcoin lives up to its potential, I also have enough bitcoin that my life will be significantly better than it is today.

[figmentofmyass]

if the network drops 65% transactions dont freeze they slow by a factor of 3.

so block time turns into 30 minute not 10 minute .  the worst case is it is done on day 1 of a diff jump.

so a 14 day wait is 42 days.  it is not a big deal.  it would be a good thing as it would show the network is a tough thing to kill.

also i estimate more then 20eh of gear is shut off that can be turned on.

which means the drop would be from 100 eh to 35 eh add back  20 eh and we are at 55eh.

which worst case means diff wait of 13 or 14 days will stretch to only 25 - 30 days.

thanks for providing some numbers for perspective. indeed, the "plummeting hash rate" situation probably wouldn't be so dire at all. people often FUD about the necessity of an emergency difficulty adjustment, but just like the 51% attack situation outlined earlier ITT, in all likelihood the network could just wait it out.

[PrimeNumber7]

If the Chinese Gov cuts the power , you are looking at over 65% of the bitcoin mining disappear overnight.

Are you sure about that?  What proof do you have that 65% of the hash power is actually running on ASICs in China AND is running in farms that the Chinese government can identify, find, and shut off power?

I have no idea as to the accuracy of the 65% number khaos77 cited. The Chinese government knows a lot of information on their citizens and others within their country, it is known to put spyware on some tourists phones, and may have spyware on large portions of its citizens phones, or otherwise surveil its citizens.

I don't think the Chinese government could shut down, or commander 100% of the ASIC farms located within the country, but it could probably control nearly all of them. If the Chinese government was involved in some attack on bitcoin/crypto, I believe it would take control over miners, not shut them down. Shutting down miners would not be very effective for reasons you cited below, but controlling miners could harm confidence in bitcoin if many blocks are orphaned, and/or many transactions with confirmations become unconfirmed.

This alone will freeze the network, and no transactions will be possible for months, unless the hard fork difficulty adjustment occurs.

Nonsense.  Even if we accept your assumption that China could identify and shut power off to 65% of the global hash power, that would simply increase the average confirmation time from 10 minutes per confirmation to 28.5 minutes per confirmation.  28 minute confirmations aren't going to "freeze the network" or result in "no transactions . . . possible for months".  That's just silly.

Furthermore, it's going to take less than 40 days until the normal difficulty adjustment gets things sped back up to an average of 1 confirmation every 10 minutes.

There are currently some miners turned off because required operating costs (such as electricity) make them unprofitable to operate based on electric costs, estimated mining revenue, and the price of bitcoin. Some of these miners will be turned back on before the difficulty adjusts.

If the number of blocks per x time decreases, that means, the supply of block space also decreases, and all else being equal, when the supply of something goes down, its price goes up. This means the price per transaction will go up, which means the estimated mining revenue goes up (from transaction fees). The increased additional estimated mining revenue may cause some miners that were previously turned off to be turned back on.

[amishmanish]

--snip--
Due to the reward drop this year and the majority of fees moving to LN, Bitcoin status as the most profitable could decline verses the others.

The reward drop is a phenomena for the BCash and Craig Wright' indulgence coin too. That does not take the matter in favor of them. The fees that will love to LN does not limit the settlement fees for On-chain transactions.

In a scenario where LN is the norm for micropayments, higher value on-chain transactions will still serve as fee source for miners.

Bitcoin has risks.  Bitcoin has potential.  From everything I've seen and heard over the past 8 years since I discovered Bitcoin, I beleive the potential VASTLY outweighs the risks.

If you have 0 bitcoin and it lives up to its potential, you've suffered a disaster (because you've missed out on an amazing opportunity).
If you have your entire life savings in bitcoin and it falls to its risks, then you've suffered a disaster (because you no longer have the resources to take advantage of other opportunities).

It seems obvious to me, that the right answer is to manage your risk based on your personal risk tolerance.  Own enough bitcoin that you'll reap worthwhile benefits if bitcoin lives up to its potential, but not so much that you'll suffer significantly if it falls to its risks.

That is the sanest advice for people who are new to seeing cryptocurrency as an investment opportunity.

[judypug1956]

See, I KNOW for a FACT that bitcoin will NEVER drop below an exchange rate of 100 BTC per $0.01.  I KNOW this because, at that price I will buy every bitcoin I can find.  This creates a permanent floor at that exchange rate, and creates a scarcity such that if ANYONE else wants ANY bitcoins at all, they'll have to pay AT LEAST that much.  I'm pretty confident that there are others with more resources that are willing to do the same at a higher exchange rate.  Therefore, there will be competition for the scarce bitcoins, and the price WILL eventually rise again.

The majority of greater fools can buy a large chunk of bitcoin at $0.01 ,
but can you afford the hashrate to keep running it securely.
Answer there is no.

 

FYI:
Miners can't survive a month at $1000 per bitcoin, $.01 is laughable.
At the next halving , watch how many miners declare bankruptcy at over $7000 per bitcoin, and now you see the failure of the PoW design.

which worst case means diff wait of 13 or 14 days will stretch to only 25 - 30 days.

You are assuming that bitcoin has excess transaction capacity, and we all know that to be false.
Transaction fees would skyrocket to $100 in the frantic cash out that would occur and the price per coins dives lower.
The majority of users would have their money frozen by excessive fees, odds are the network dies before they could even withdraw it.

Then every miner there is outside of china would be making a fortune in fees.

 you are picking a strength showing you don't understand pow 's weakness.

The weakness has zero to do with high fees.

The weakness is block reward to tx fee  to price of coin ratio

ie if a block reward  is 50 coins  to .5 btc in tx rewards  price of coin is not too important.

but when you get to 3.125 coins to 1btc tx reward  the system has issues.

My opinion is 7-10 year 1/2 ing times would have been better then 4-5 year 1/2ing.

we are in for a rough ride on pow in 2028-2029.


1/2 ings are scheduled events not ifs.
and the 50 coin to 0.1- 0.5 tx ratio
dropped to 25 coin to .05- .07 tx ratio
dropped to 12.5 coin to 0.07 - 0.09 tax ratio
drops to 6.25 to ? tx id

i see problems below
drops to 3.125 to ? tx id
drops to 1.5625 to ? tx id

 long term btc price growth could save the day for miners down the road.

5nm mining gear is 20% better maybe 30%
3nm mining gear is 20% better maybe 30%

some bigger companies will build large solar arrays that last 20-30 years.

but it all points to an issue  of BTC down the road. will it continue to support mining.

[Wind_FURY]

--snip--
Due to the reward drop this year and the majority of fees moving to LN, Bitcoin status as the most profitable could decline verses the others.

The reward drop is a phenomena for the BCash and Craig Wright' indulgence coin too. That does not take the matter in favor of them.

Rogercoin's and Craigcoin's halving would make miners move somewhere they could mine profitably. Somewhere where they can collect higher fees.

Maybe the great exodus has started? Bitcoin's hashing power is ATH.

The fees that will love to LN does not limit the settlement fees for On-chain transactions.

Their concern is LN would "steal fees" from the miners. Why are the trolls very concerned on Bitcoin's fees? They should be concerned on their big blocks' fees. Or are they big blocks? They have small blocks! Hahaha.

[Dabs]

If bitcoin fails, your zeitcoin isn't going to do much better. Also, I've seen miners mine when the price was below $1000. Just a few short years ago, it was below $500.

It is highly unlikely the price will go that low in the long term. Perhaps a glitch maybe, but it's not going to stay below $1k for any significant amount of time. Support can be seen at around $7.

[squatter]

Even Jihan Wu, thinks the price of bitcoin is going below $6k , which is why he wants to lay off more staff.
It the Bitmain CEO does not have a good grasp of market movements considering he has access to asics purchase data and actual costs,
then what makes you think you know more than him.

That may not speak to Jihan Wu's price predictions. Bitmain might just be performing poorly and are tightening their belt.

You are missing the point , the fact is less blocks will be found which will also decrease rewards.
Franky1 pointed out many time , currently Miners care little for transactions fees as they earn the majority from the bitcoin rewards,
This means even if the fees skyrocket , this will not cover the cost of the loss in rewards prices.
In other words, the higher fees won't offset the difference and bitcoin is still fucked.

For a few weeks, until difficulty adjusts.

You think if block time increases, miners everywhere will just immediately give up and abandon their operations?

[PrimeNumber7]

Less blocks will increase awards because the cost to get transactions included in blocks will go up and blocks that are found will have more included transactions.