Bitcoin mining is not profitable enough!

[MinoRaiola]

Bitcoin mining is the process that ensures and processes bitcoin blockchain transactions. If there is a bitcoin mine the bitcoin cryptocurrency will continue to stop working because no transaction will be confirmed those who work in the mining process are referred to as bitcoin miners and they provide their support to bitcoin users with a percentage of the transaction fees charged. Mining bitcoin can be an effective way to make extra money that's why traders think that bitcoin mining is profitable.

With all the current calculations, you must not forget when you want to sell the coins. Many calculate the values based on current rates, but few really sell directly after mining. Some trade, the others hodln and others invest in more hardware. Important are the costs for hardware, electricity and storage. This question will continue to ask many, the goal of the coins is hodln and use at the best possible price.

[BlackHatCoiner]

I don't understand. Why is everyone so particular about *maintaining* security?

A fair amount of people consider it the next store of value that will replace gold. It's generally considered something that will belong in the next societies due to its innovation; if you don't care, even to an excessive degree which I disagree that that's how I seemed, how will you convince me that it, indeed, has future?

The resources needed to attack Bitcoin is astronomical at it's current stage, to the point where it is ridiculous to be attacking Bitcoin, and we still have block rewards.

My point is that they aren't astronomical or won't be in the long term. If the security, let's say, drops by 50% in between two halvings, it quickly becomes far easier to be attacked.

There is simply no reason for people to still be running a full node, unless they intend to run a full node without any tangible benefits to themselves.

It is hard to pin down the valid way for Bitcoin to work properly mainly because each user sees it differently. If you ask me, I find it more than just a benefit to run a node. If you want to own Bitcoins, the keys aren't enough. You have to somehow verify that you transacted. Having someone telling me that I did defends its purpose.

Again, the way Bitcoin should work from the user's side is meant differently between its users.

Technological improvement has made manufacturing cheaper, and in a larger storage density. It simply doesn't make sense for us to not be keeping up with it as well. 1MB as a limit was arbitrarily defined, and it stuck for so long before Segwit got activated. Even the SW block sizes are underestimating the true capacity of the network.

I agree that it was an arbitrary choice. It's advisable to state that if we changed it, the new block size wouldn't be arbitrarily chosen, but calculated from much more factors than Satoshi did twelve years ago.

[Hippocrypto]

Maybe it wouldn't be profitable enough when you can't even build a rig that couldn't mine transactions efficiently, particular with the energy consumption. That's the a huge factor that affects our ROI, because some other mining farm used energy efficient mining equipments that competes with the evolution of cryptocurrency.
For those who mined transactions using less efficient than rigs, I guess they're struggling on overheads instead of earning much higher profit.

[DoublerHunter]

maybe this is because the current bitcoin price is still unstable so that miners have not received a significant profit from the bitcoins they invest.because the bitcoin price process is very influential with an investment that we are currently involved in so that it has not been able to provide the desired profit. relative to bitcoin miners in their investment

^ The number one problem of all miners is the energy source that they use in mining. If you have a high electricity bill, it is not ideal to pursue your in a crypto mining business because that is not worth it. I don't know technically how BTC being mine but for me, the energy power source is the main problem of those miners. I have a friend who said, it is better to mine altcoin because it has a big profit than mining BTC.

[eaLiTy]

~
By the time all the bitcoins are mined, which is going to be a very long time, there will be a solution to how miners are going to profit from the market. And by the way, by then there will be lots of transactions on the blockchain, and maybe the mining wouldn’t be as difficult and energy-wasting as it is now.

The concept was when all the coins are mined the miners would sustain with the transaction charges alone and the logic is bigger blocks to include more transactions so that the miners will have a fair share of the revenue. The difficulty in mining is a good aspect because it determines the strength of the network, but i still cannot understand what is the energy wastage because when you are powering a decentralized economy you need to spend energy to maintain the network and you cannot call them wastage. It is like asking the baking sector to shut down half of their branches to save electricity .

~
With all the current calculations, you must not forget when you want to sell the coins. Many calculate the values based on current rates, but few really sell directly after mining. Some trade, the others hodln and others invest in more hardware. Important are the costs for hardware, electricity and storage. This question will continue to ask many, the goal of the coins is hodln and use at the best possible price.

BTCitcoin is meant to be transacted and not hold till eternity. It is a game theory where the miners are spending money to maintain their farm and they cannot hold all the coin and they will be forced to circulate the coins in the market to maintain them unlike POS coins where you stake the coins and when you think you want to book your profit you can move on with the investment to other pastures. 

[ranochigo]

A fair amount of people consider it the next store of value that will replace gold. It's generally considered something that will belong in the next societies due to its innovation; if you don't care, even to an excessive degree which I disagree that that's how I seemed, how will you convince me that it, indeed, has future?

As in, there is no need for us to maintain the security or the difficulty of mining. The point is that: yes, it is great for us to make it more difficult for attackers to attack the chain. It only becomes an area of concern if you look at the chain at any point and tell me that it is easy for someone to attack it. As of now, that is not the case. We're still looking at the difficulty increasing at the current price and a limited block rewards.

My point is that they aren't astronomical or won't be in the long term. If the security, let's say, drops by 50% in between two halvings, it quickly becomes far easier to be attacked.

It has never really been the case at all. Each of the halving are so far spaced apart in time, there is always a more than sufficient time to ensure that the compensation is sufficient such that the difficulty drop is less than proportionate. As each of the halving are 0.5x the block rewards, you will start seeing the rewards being a lower composition of the miner's income. Subsequent halving should still result in a less than proportionate difficulty drop.

It is hard to pin down the valid way for Bitcoin to work properly mainly because each user sees it differently. If you ask me, I find it more than just a benefit to run a node. If you want to own Bitcoins, the keys aren't enough. You have to somehow verify that you transacted. Having someone telling me that I did defends its purpose.

I agree that it was an arbitrary choice. It's advisable to state that if we changed it, the new block size wouldn't be arbitrarily chosen, but calculated from much more factors than Satoshi did twelve years ago.

Yeah. I didn't really meant to say that a capacity increase should result in the majority being excluded. Simply no point to make up even more excuses to not make any improvements.

[pooya87]

But, Bitcoin didn't worth the same all these years. It's a false thought to compare 2012 with 2016 and then with 2020, 2021, unless you think that one Bitcoin will worth a billion dollars when the reward shrinks by a lot. If the price isn't doubling each halving, then the security will decrease.

Besides, OP didn't refer to the previous rewards, but when there won't be a reward.

I'm not comparing anything I'm just showing the trend and those prices are reported by the time of halving. Feel free to use any average price you like to see the same exact trend.

Also if you read my following line after the dates and prices I say that this is a trend that we had so far and there is no reason for it to change in the foreseeable future which is the next decade or two at least. What we can't predict is what will things be like after 100 years, saying anything about it is meaningless in my opinion.

[BlackHatCoiner]

I'm not comparing anything I'm just showing the trend and those prices are reported by the time of halving. Feel free to use any average price you like to see the same exact trend.

Indeed, you're picking dates between different halvings and compare the miner's income based on the price of each day. The problem with those examples is that the price was heavily fluctuating. Each halving affects the supply decreasingly compared with the previous one. If you notice it, the first halving made the highest increase, from $10 to $1300.

If the price keeps moving that way in each halving, yes, the security remains the same (or increases). But, the price won't keep moving likewise and I believe we should take it for granted that after a bunch of halvings in the future, the price will start stabilizing. The more the market cap becomes, the more the stabilization.

So, I repeat. If the price stops being so volatile, the computational power offered to the network will slowly decrease. This will happen sooner or later whether we increase the block size or not.

What we can't predict is what will things be like after 100 years, saying anything about it is meaningless in my opinion.

If you can predict what will happen in the far future based on the present's constants and you prefer not to, then it's inability to face the truth rather than meaninglessness.

It has never really been the case at all. Each of the halving are so far spaced apart in time, there is always a more than sufficient time to ensure that the compensation is sufficient such that the difficulty drop is less than proportionate.

In the first halving, the price did a 130x. In the second, a 10x and in this one, a 7x 'til now. That's why it has never been the case.

[ranochigo]

So, I repeat. If the price stops being so volatile, the computational power offered to the network will slowly decrease. This will happen sooner or later whether we increase the block size or not.
-snip-
In the first halving, the price did a 130x. In the second, a 10x and in this one, a 7x 'til now. That's why it has never been the case.

Help me understand. The resources used in PoW is a function of the income acquired from mining. If we were to assume that the price remains stable, then why wouldn't a capacity increase result in an increase in the fees. The main deterrence with Bitcoin achieving higher utility is only with the capacity as it is closely related to the costs per transaction. The transaction in Bitcoin is highly elastic, a change in the fees would result a greater than proportionate change in demand. If you were to accommodate more TXes per block, then it is not out of the realm of possibility that you will one day be able to substitute the block rewards with the fees.

The computational power is not a good metric to compare with the security of the network*, you will need to be looking at the costs of it. It is also not a good metric to compare using the previous halving. I'm estimating the block rewards to at least,be comprising of 8/10 of the miner's income at best, perhaps 9/10 at worst in the near future (within the next few halvings). You will see a smaller decrease in the drop in hashrate in the future, because fees start to compensate for the decreasing block rewards.

It has nothing to do with how Bitcoin's pricing being volatile or on an upward trend. There will be a point, in the future where the hashrate will stabilize, or at least have negligible change due to it. Fees are supposed to balance out the block rewards in the long run, you will absolutely be able to mitigate any issue with regards to the security if you are able to and want to increase on-chain capacity.

Even with the fees being a very minuscule part of miner's income, with the prices and improvement in efficiency of ASICs factored in, I'm still seeing a relatively stable hashrate throughout the past few halvings, latest halving being 2.74x. Again, think about how much better we can cushion it if fees were to form a larger percentage of the income.

*Ultimately, there is no good way to accurately measure it. So any predictions has to be done on a set of assumptions.

[BlackHatCoiner]

Help me understand. The resources used in PoW is a function of the income acquired from mining. If we were to assume that the price remains stable, then why wouldn't a capacity increase result in an increase in the fees.

What do you mean by “capacity”? The capacity of the block? If we increase its size, the median fee will decrease. The miner will be able to accumulate more coins than before and the users will pay less, since their transaction will take less space.

The miners will someday, indeed, substitute the block rewards with the fees. That's obvious. The problem is that while their reward cuts in half every few years, they'll earn less coins and thus, they'll have less incentive to secure the network. It doesn't matter if a miner earns 1 BTC from fees plus 0.09765625 BTC as a reward. The fact that they'll earn less and less overtime means that the resources used in PoW will drop off. And that's true if we assume that they'll fill each block with transactions while the price, of course, remains stable.

For instance, what will happen if there aren't enough transactions in the mempool? If the miners' income depends mostly on the fees, then there're lots of factors that affect the practicality of Bitcoin.


I didn't want to mean that the system will corrupt at some point in the future, I just want you to confirm me that the incentive will decrease over time and therefore, so will the security.

[ranochigo]

What do you mean by “capacity”? The capacity of the block? If we increase its size, the median fee will decrease. The miner will be able to accumulate more coins than before and the users will pay less, since their transaction will take less space.

That is actually quite a common misconception. Most people don't consider the elasticity of Bitcoin transactions when considering on-chain volumes. Bitcoin transactions are very elastic, if it doesn't prove to have far more benefits than other payment methods, they won't use it. This is the main issue that we're seeing right now. Price of Bitcoin is so high, yet actual transaction volume and real life usage is far lower than it should be. Fees has been high for a long time and it is obvious that the network won't be able to sustain larger TPS, and users have to resort to paying more fees, and at times waiting quite a few blocks before confirmation.

The miners will someday, indeed, substitute the block rewards with the fees. That's obvious. The problem is that while their reward cuts in half every few years, they'll earn less coins and thus, they'll have less incentive to secure the network. It doesn't matter if a miner earns 1 BTC from fees plus 0.09765625 BTC as a reward. The fact that they'll earn less and less overtime means that the resources used in PoW will drop off. And that's true if we assume that they'll fill each block with transactions while the price, of course, remains stable.

4 years is a long time. There is a point where smaller sub-groups of miners starts to drop off as soon as it becomes less profitable for them and reaching an equilibrium thereafter. There is a reason why the decrease in block rewards is the most significant at the start and starts to taper off as we reach more milestones. At no point in time, will we ever see 50% of the network drop off solely due to the block rewards being halved, so long as we're able to scale on-chain.

For instance, what will happen if there aren't enough transactions in the mempool? If the miners' income depends mostly on the fees, then there're lots of factors that affect the practicality of Bitcoin.

In 8 years, if we're facing a problem where we still don't have enough on-chain transactions or still cannot meet the needs, then I suggest that we should just ditch Bitcoin as an experiment.

I just want you to confirm me that the incentive will decrease over time and therefore, so will the security.

I don't agree that the incentives will decrease to the point that it becomes a threat to Bitcoin's security. The block rewards will decrease over-time, that isn't really disputable. Just look at the numbers. I don't agree that the drop in block rewards cannot be cushioned through other means.
I'd just like to seek your understanding on this concept; There is no reason for concern until we reach a point where it becomes easy or feasible for an attacker to attack Bitcoin. Do you agree?

[BlackHatCoiner]

4 years is a long time.

The first four years were a lot of time, when we brought into circulation 10.5M coins. The second four years were also a lot of time as we brought into circulation 5.25M coins. As time passes, the four years after a halving becomes less effective if you assume that time is what affects the supply. For instance, between 2036 and 2040, the supply will change by 82,031.25 BTC which is sixteen (!) times lower than this epoch's change.

So answering to this:

There is a reason why the decrease in block rewards is the most significant at the start and starts to taper off as we reach more milestones.

It is clearly a cause of the supply and the demand. Once the supply affects lesser over time and the demand will have reached a global scale, there won't be any milestones. There'll be stabilization. Thus, the drop off of those sub-groups won't be temporary.

As far as I've understood, they re-enter the game due to the price increase. Their earnings are far more than their costs.

In 8 years, if we're facing a problem where we still don't have enough on-chain transactions or still cannot meet the needs, then I suggest that we should just ditch Bitcoin as an experiment.

There will probably be lots of on-chain transaction with or without the development of off-chain solutions that satisfy mainly micro-payments. What are the needs you're talking about?

I don't agree that the incentives will decrease to the point that it becomes a threat to Bitcoin's security. The block rewards will decrease over-time, that isn't really disputable. Just look at the numbers. I don't agree that the drop in block rewards cannot be cushioned through other means.

I agree that it may not become a threat to Bitcoin's security. I disagree that I should make my assumptions by looking the numbers during the first years of its appearance.

There is no reason for concern until we reach a point where it becomes easy or feasible for an attacker to attack Bitcoin. Do you agree?

Do you agree that we should discuss about this possible scenario as a community and acknowledge our options? Even if it might never be feasible for an attacker to destroy Bitcoin that way, shouldn't we cover the arguments that go against it?

At least, if we're supporters of it.

[ranochigo]

It is clearly a cause of the supply and the demand. Once the supply affects lesser over time and the demand will have reached a global scale, there won't be any milestones. There'll be stabilization. Thus, the drop off of those sub-groups won't be temporary.

The reason being, there is no volume expected in the early stages of Bitcoin. The supply schedule is designed to compensate for being the only revenue for the miners and when it matures, then fees becomes the primary factor. As you've said, since there is a stabilization, we're far less likely to experience sudden drastic drops in hashrate as we go through each halving.

My point about "4 years being a long time" is that it is sufficient to explore capacity increases in every epoch. It is possible to try to increase the capacity (and the block rewards) to cushion, not eliminate the impacts of a block halving.

There will probably be lots of on-chain transaction with or without the development of off-chain solutions that satisfy mainly micro-payments. What are the needs you're talking about?

If there will probably be lots of on-chain transaction, then why would a lack of transactions be a problem? There will be an equilibrium for the miners as well.

The needs are the demand of the users.

Do you agree that we should discuss about this possible scenario as a community and acknowledge our options? Even if it might never be feasible for an attacker to destroy Bitcoin that way, shouldn't we cover the arguments that go against it?

At least, if we're supporters of it.

I do. So far, the consensus mainly maintains that it isn't a threat, economic wise. There is nothing that you can really do. The only solution out of this is to break the 21 million cap and maintain a tail emission system such that you don't get any supply-shock from a sudden drop in the block rewards. That is, if you assume that the fees aren't sufficient to cover this. So we'll have a fixed inflation every year, kind of like Monero.

If not, then there is nothing you can really do without radically changing Bitcoin. Bitcoin has a fixed market cap, and if you change that then you aren't using Bitcoin. It is more of a non-issue and I believe that there are still quite a bit of misconceptions about how fees dominated mining income would play out. My primary argument against these kinds of paranoia is that, the current scheme actually works. If we want to ensure that the Bitcoin network today consumes more of that yesterday, then that is never going to be realistic.

[Kittygalore]

If you can repurpose the heat that comes out of the mining rigs, probably you will be able to make some way to save your money and have a profitable mining. Or maybe you can make a way to have a free electricity, you can try installing a solsr panel that's exclusive for home use if you're on a budget or you can do the reverse and invest in solar power for your mining.

[conected]

maybe this is because the current bitcoin price is still unstable so that miners have not received a significant profit from the bitcoins they invest.because the bitcoin price process is very influential with an investment that we are currently involved in so that it has not been able to provide the desired profit. relative to bitcoin miners in their investment

- Bitcoin needs to at least go down to create an ideal environment for miners to revive their mining power and speed but since the historic collisions in 2018, bitcoin has no longer had the opportunity to go down too much, the river of bitcoin mining history has since disappeared little by little, equipment is damaged and liquidated quite a lot by old miners, new miners are also unlucky due to high demand for graphics cards, initial costs have been inflated. Now that bitcoin mining is very trickle, devices are also turning to altcoin mining areas with more computational potential

[qwertyup23]

Yes but my point is it doesn’t matter what the fee is in btc. If the fee would still be 0.000030BTC in 2121 but the fee alone if worth 100$ then you would not be willing to pay that. So it only matters what the fee is in $.

I think it also depends on a geographical standpoint on where the mining business resides. Obviously, if the mining equipments are placed on a cooler and breezy environment, that would reduce pollution and energy consumption. Now, for the fees, mining will always be on demand due to the number of transactions that take place everyday. Even if the prices of BTC skyrocket in the near future, lower and lower denominations of BTC would be required but its amount would be equal to around a couple hundred of $$$.

I remember there was this mining company where they placed their equipments on a mountain in order to reduce the heat garnering from the equipments.

[OgNasty]

When Bitcoin mining gets unprofitable there are 2 things that can happen to change that. 1) The Bitcoin price can go up and make it more profitable. 2) Miners can stop mining Bitcoin and that makes it more profitable for the rest of us.

If Bitcoin isn’t profitable enough for you and you don’t want to quit or hodl til the price goes up, get cheaper electricity.

[lalabotax]

Since 2018, mining activities were decreasing because many miners commonly consider that the result from mining is smaller and smaller again.
Many small miners decided to close their mining activities, moreover selling the mining tools and equipment.
Well, this may happen because of the smaller results got.
However, if they are big miners, maybe they still have a good chance, moreover, if they believe that mining can really give them something good in the future, they will be still continuing.

[Shasha80]

Since 2018, mining activities were decreasing because many miners commonly consider that the result from mining is smaller and smaller again.
Many small miners decided to close their mining activities, moreover selling the mining tools and equipment.
Well, this may happen because of the smaller results got.
However, if they are big miners, maybe they still have a good chance, moreover, if they believe that mining can really give them something good in the future, they will be still continuing.

Totally agree that the profit generated from Bitcoin mining is getting smaller nowadays, therefore many Bitcoin miners decide to stop and sell their
mining equipment. The profit generated from mining is not enough to cover maintenance and electricity costs. Forcing Bitcoin mining will only make us
lose more money than we make money. It's not surprising that more and more cloud mining scams are finally happening. So now to make money
in the crypto world, it is better to trade or staking than to risk mining Bitcoin.

[noorammak]

Your argument seems reasonable but consider the fact that the technology of devices is improving over time. Mining devices are more powerful, consume less electricity. Renewable energy will also play a big part in the evolution of miners' equipment. One thing I am sure of is that mining will stop if miners lose money so they will always find a way to fix it.