Is mining doomed to end in big farms?

[?QuestionMark?]

Hope I'm in the right board here but I guess the mining board is more about hardware.

As we know the more miners the more difficult it gets to mine. So when there are for example 1Million pc's mining it doesn't matter if they are all in one basement or spread each across the world (Technical not fairness or whatsoever related). So the reason why bitcoin mining got so competitive and non usable with a normal desktop pc was because it got harder to mine. So how then does the vision of satoshi, that everyone validates and mines with his pc makes scene,  when its doomed to end in a few big mining farms? (In expectation of getting really popular) . Because due to the high difficulty nobody could mine on a pc, even if everyone would mine on a single desktop pc.

Please correct me. Maybe I have to read again into mining.

[ranochigo]

As we know the more miners the more difficult it gets to mine. So when there are for example 1Million pc's mining it doesn't matter if they are all in one basement or spread each across the world (Technical not fairness or whatsoever related). So the reason why bitcoin mining got so competitive and non usable with a normal desktop pc was because it got harder to mine. So how then does the vision of satoshi, that everyone validates and mines with his pc makes scene,  when its doomed to end in a few big mining farms? (In expectation of getting really popular) . Because due to the high difficulty nobody could mine on a pc, even if everyone would mine on a single desktop pc.

The vision that Satoshi had with mining died once ASICs were introduced. The use of specialized equipment to mine basically removes the possibility of the average user to mine with their PC and expecting any profits. One CPU One Vote was built on the idea that every computer has somewhat equal chance to mine a block and expect a profit at the end. This doesn't hold true once Bitcoin took off and arguably POW schemes are not ideal for such assumptions, is there really any that would've worked?

The profit margin depends on the expenses incurred and the type of equipment used. Mining farms are great at it because they can afford to rent a huge space and have access to cheaper ASICs in bulk. Everyone can still validate transactions/blocks on their PC, that doesn't change with the difficulty of mining.

[bob123]

So how then does the vision of satoshi, that everyone validates and mines with his pc makes scene,  when its doomed to end in a few big mining farms?

If i am not mistaken, satoshi himself said that mining will be somewhat concentrated in the future.

And this does not contradict with the fact that every person running a full node validates the complete blockchain, every block and every transaction coming in.
Validating is not mining.

Mining at home with your pc isn't feasible for quite some years now. And IMO there is nothing wrong with it.

[?QuestionMark?]

Everyone can still validate transactions/blocks on their PC, that doesn't change with the difficulty of mining.

And this does not contradict with the fact that every person running a full node validates the complete blockchain, every block and every transaction coming in.
Validating is not mining.

Sry, I have expressed myself inaccurately. I don't mean full nodes as we know them today. I'm running one myself. I meant a full node according to the whitepaper which is a validator and miner.

[odolvlobo]

I don't really care about Satoshi's "vision", or her ideals, or the sanctity of her words, but in the interest of accuracy ...

At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.

[tinopener]

I think that big farms that use green electricity will be the only way crypto will survive.

When the coronavirus crisis is over, Greta is coming for Bitcoin...

[Twentyonepaylots]

That's just bound to happen with all these farms hogging all the available bitcoins to be mined, us small-timers will need to exert effort by means of upgraded hardware in order to make it happen, otherwise we will not be able to profit from it no matter hiw hard we try. There are several sites like F2POOL which allows you to pool your processing power with others for bitcoin and ethereum, which could be the last bastion of bitcoin mining.

I think that big farms that use green electricity will be the only way crypto will survive.

When the coronavirus crisis is over, Greta is coming for Bitcoin...

That's bound to happen, greenhouse emissions from mining has since skyrocketed after bitcoin's ATH, and fossil fuels aren't renewable resources, so solar energy is seen to be the most definitive answer to this question.

[tinopener]

That's bound to happen, greenhouse emissions from mining has since skyrocketed after bitcoin's ATH, and fossil fuels aren't renewable resources, so solar energy is seen to be the most definitive answer to this question.

If Bitcoin becomes totally green - and provides extra green value, then that could become another of the intrinsic values of Bitcoin.

There is a bitcoin miner in Sweden that uses the heat from CPU fans to heat greenhouses. The energy probably comes from hydro in the first place.

As long as cryptocurrency offsets its carbon footprint in the short term, then that will be acceptable.

However... there are many eco virtue-signalers who will still want to tear it down, assuming that the same electricity could be substituted for something more worthwhile. And this notion is a fallacy in itself.

We need some new eco-Satoshi scientist guy to come up with an equation for the crypto-ecosphere.

[squatter]

Yes.

Once bitcoins attained a high enough value, mining them became feasible as a professional, industrial scale business activity. Once that dynamic took hold, economies of scale quickly became the dominant factor in a very competitive mining industry.

This dynamic applies to all economically productive activities, not just Bitcoin mining. It's a simple economic truth. A consolidated mining industry was always inevitable if Bitcoin were to catch on in society.

[odolvlobo]

Once bitcoins attained a high enough value, mining them became feasible as a professional, industrial scale business activity. Once that dynamic took hold, economies of scale quickly became the dominant factor in a very competitive mining industry.

Can you point me to data that shows that economies of scale are a dominant factor? I would love to see it because it is important to know.

[squatter]

Once bitcoins attained a high enough value, mining them became feasible as a professional, industrial scale business activity. Once that dynamic took hold, economies of scale quickly became the dominant factor in a very competitive mining industry.

Can you point me to data that shows that economies of scale are a dominant factor? I would love to see it because it is important to know.

Look at how the hash rate and the composition of the mining network have progressed over time. As hash rate rose exponentially, casual home miners were forced off the network due to lack of profitability: If you’re mining bitcoin from home, you’re now losing money

It's no coincidence that during China's rainy season, half of the world's mining power is concentrated in southwestern China due to its extremely cheap hydro-electric power. The large hash rate fluctuations concentrated around China's seasons is indicative of the dynamic. Mining profitability margins are low enough now that miners generally need to relocate to regions where electricity is cheap -- obviously not an option for casual miners. This is why the world's largest mining farms are located in places like Russia, China, and Washington State (US). Those economies of scale -- in addition to considerations like cheaper and faster access to new generation mining chips -- are why there are single mining farms like Bitmain's Dalian farm that supposedly control 3% of the hash rate.

How could small scale miners ever compete in that environment, aside from rare cases like free electricity?

[Steamtyme]

Hope I'm in the right board here but I guess the mining board is more about hardware.

You would have been fine posting in mining speculation, though it probably would have garnered less speculation and more blunt facts.

In short no mining will never be only for large farms. Now Highly profitable mining is localized to regions with inexpensive power. So if you have enough money you can set up large farms and mine away to your hearts content. Best thing about being a large miner is you order current gen gear at a discount, because of bulk purchases. While still making profits of older gen gear, which you can either run until it die or sell off as you upgrade. This is a wash rinse repeat cycle, and even into last year I noticed mare entities growing large farms, as well as launching pools.

There are also certain localised regions where electricity isn't cheap but government subsidies or other agreements make it viable to plant a large farm down.

I used to mine fulltime year round. Last summer was the last time I'll likely run machines full-time, as my electricity costs make it a losing play. Sure I could buy the nexgen gear at full price, and hope it arrives on time and runs flawlessly until I begin to reach a profit, because it's gotta pay for itself or what was the point. That's the real kicker for a small time miner, the lost opportunity if 1 of 1 piece of gear breaks down, where as a large farm might have 20 of 1500 miners go down until they can repair it.

Home miners or small operations have to look for niches. For instance I mine in the winter to heat my home. It's the last act of a dying farm.

[Searing]

Yes. When I turned on my 1st newbie miner on October 18th, 2013, Bitcoin at least 'some-time' that day was $150.00 even when I looked and I made about

1 BTC a day. The miner was a KNC Jupiter 550gh Bitcoin Miner and cost to the USA from Sweden with shipping exactly $5,131.80 pre-order from 7/1/2013.

Now doing the math (philipma1957 in another thread did the math) using Bitmain's new AntRacks monster units that ship 3/2021 supposedly and NOT counting

the import/tariff of 26.7% to the USA, nor shipping, nor install fees, and NO electricity.

Well, the price to just have the equipment to make 1 BTC a day is 'supposedly' by the math: $4,500,000.00 USD investment.

If that does not tell you 'big farms' are not the future, not sure what will. The big farms also probably by now need 2c-3c kWh electric 'at least' to boot!

Brad

[squatter]

The big farms also probably by now need 2c-3c kWh electric 'at least' to boot!

Indeed, recent reports suggest that load balancing arrangements with local power grids and other forms of subsidized electricity are very important for mining operation margins. That's another avenue where small scale miners simply can't compete.

Now doing the math (philipma1957 in another thread did the math) using Bitmain's new AntRacks monster units that ship 3/2021 supposedly and NOT counting

the import/tariff of 26.7% to the USA, nor shipping, nor install fees, and NO electricity.

Well, the price to just have the equipment to make 1 BTC a day is 'supposedly' by the math: $4,500,000.00 USD investment.

That's truly incredible. The capital barrier to entry is even higher than I thought!

[sallybein987]

Yes. When I turned on my 1st newbie miner on October 18th, 2013, Bitcoin at least 'some-time' that day was $150.00 even when I looked and I made about

1 BTC a day. The miner was a KNC Jupiter 550gh Bitcoin Miner and cost to the USA from Sweden with shipping exactly $5,131.80 pre-order from 7/1/2013.

Now doing the math (philipma1957 in another thread did the math) using Bitmain's new AntRacks monster units that ship 3/2021 supposedly and NOT counting

the import/tariff of 26.7% to the USA, nor shipping, nor install fees, and NO electricity.

Well, the price to just have the equipment to make 1 BTC a day is 'supposedly' by the math: $4,500,000.00 USD investment.

If that does not tell you 'big farms' are not the future, not sure what will. The big farms also probably by now need 2c-3c kWh electric 'at least' to boot!

Brad

Wow, what a story tale  with clear numbers without water. Thank you a lot!

[UmbrageGarry]

Difficulties are in every craft, so it is with mining. Mining is becoming more difficult, but look at the forecasts, if Bitcoin really grows to such numbers, then all these difficulties will be justified.

[odolvlobo]

Yes. When I turned on my 1st newbie miner on October 18th, 2013, Bitcoin at least 'some-time' that day was $150.00 even when I looked and I made about
1 BTC a day....Well, the price to just have the equipment to make 1 BTC a day is 'supposedly' by the math: $4,500,000.00 USD investment.
If that does not tell you 'big farms' are not the future, not sure what will. The big farms also probably by now need 2c-3c kWh electric 'at least' to boot!

You are comparing the cost to make $150 then against the cost to make $35000 today. How much would the equipment cost to make $150 today, or $35000 then? Those would be fair comparisons.

[jjdub7]

For the leading coins like Bitcoin, Litecoin, Ethereum (staking), yes, it's doomed for the small player and will feed up only the biggest players.

But we still have a chance as early adopters for GPU coins. Follow the Announcement sections and try your luck

[maculeth]

Hope I'm in the right board here but I guess the mining board is more about hardware.

As we know the more miners the more difficult it gets to mine. So when there are for example 1Million pc's mining it doesn't matter if they are all in one basement or spread each across the world (Technical not fairness or whatsoever related). So the reason why bitcoin mining got so competitive and non usable with a normal desktop pc was because it got harder to mine. So how then does the vision of satoshi, that everyone validates and mines with his pc makes scene,  when its doomed to end in a few big mining farms? (In expectation of getting really popular) . Because due to the high difficulty nobody could mine on a pc, even if everyone would mine on a single desktop pc.

Please correct me. Maybe I have to read again into mining.

I also don't know any knowledge about mining, but what I do know is that crypto mining requires a high-quality device, and for sure it's very expensive. I am also confused by the concept, why is a normal PC not able to do that? maybe what you say is true, because bitcoin mining is so competitive and finally access to it becomes difficult and requires a high spec device. it could be because the price of bitcoin is increasingly expensive and makes mining competitive.

[Wenbing]

As already analyzed by others, here are summarized points while crypto mining will end in big farm.

1. Capital intensive:
The econometric model of btc mining would be this.
Btc Min =f(Rig, Elect., Kn, GovtReg, Hav, eror term (U))

When you look at the variables, we have Rigs to be purchased, electricity, knowledge, government regulations, having and other variables, these made mining to be very expensive.

2. Economic of scope and scale.

As the mining business gravitate into pooling of resources together, the economic chain reaction will be what we call economic of scale and economic of scale.

Conclusively, it's only few big farms that would mine in the future.