Do not mine only for profit, but to prevent that the network gets hacked

[100raboveio]

This is a warning for those who mine for short term profit, and for those who provide online calculators to help them decide:

I have though of buying a small miner for my home, but I always fall into some "mining profitability" calculators that put me off.

I would like to provide a reminder that we mine not only to make short term gains, but also to prevent that the network gets a 51% attack and our bitcoin price goes to zero.

We see mining getting increasingly concentrated on few players. If you see https://christopherwolfram.com/projects/bitcoin-centralization/ site, until 2012, 1000 different miners produced consecutive 1000 blocks. Nowadays, we have 16 miners producing 1000 consecutive blocks. This is very alarming.

I was wondering how much mining power every BTC owner should have so that everyone can do their share of protecting the network.

Of course I cannot have the same THs as someone rich, but if everyone can have an amount proportional to their bitcoin market cap, this are a little more realistic.

Here are my calculations:

According to https://www.blockchain.com/explorer/charts/hash-rate, the current hashrate is 800 M, and the hash rate in TH/s increases more or less linearly with BTC price in USD.

How much TH/s should everyone provide in order to secure a part of the network proportional to its stake?

With 21 M BTCs avaiable, if you own 0.1 BTC (10 000 USD as for now), your share of the total bitcoins is 0.1 / 21 M = 4.76e-9. The current hashrate is 800M TH/s, so you should have 4.76e-9 * 800M TH/s = 3.8 TH/s

As far as I know, the most energy efficient small home miner is Bitaxe Gamma (corrent me if am wrong) and costs 245 USD. Each has around 1.2 TH/s, so you would need 3 of them, or 745 USD, to protect your own share of BTCs (assuming everyone does the same).

745 USD is 7% of your BTC value (10 000 USD, or 0.1 BTC in this case). If USD price double, probably the total TH/s will also double, so you would need double the THs power to keep up. This means, 7% of your BTC USD value should be in a small but cost efficient miner. no matter at which price BTC is.

7%!

I really dont think most of people have 7% of their BTC value invested in a small miner, showing that actually most of people don't do enough to protect their investment.

This is like having a 10 000 USD bike, with no locker to protect it against thieves. Some people have even 100 000 USD bikes, or 1 000 000 USD bikes with no lockers!

I suggest we should disencourage people from seeing mining just as a profit tool, but as a tool to prevent BTC from crashing.

To the owner of online BTC profit calculators: please make clear that mining is not only for short term profit, but that is also to protect the network. The opportunity cost of not mining yourself is allowing the network to be attacked and everything going to zero.

And please add the fact that BTC will appreaciate if it keeps safe (it appeciates in average 77% per year since 2012), so please also include this discount rate at your calculations, for those to insist on short term profits.

Remember that gold storage got centralized because it was cheaper on the short run, and that fractional reserve banks got famous because it let you get some interest rate for doing it. This all lead to the centralized and corrupted fiat system we have now. Dont let the same happen to bitcoin! Try to have 7% of your BTC investment in the most energy efficient small miner you can have

PS: I searched for the most efficient miner in terms of energy consumption, but I could have come below the 7% value if I had a website which takes my energy cost, and automatically goes thru a list of miners and their prices and power efficiency, and gives me back the miner with the highest ROI for my needed THs. If someone knows such a calculator, please tell me

[Alphakilo]

I suggest we should disencourage people from seeing mining just as a profit tool, but as a tool to prevent BTC from crashing.

I didn't know that aside the profit making side of mining, it is also functions to discourage Bitcoin from crash. This has brought a small confusion in my mind.

There are 21 million Bitcoins created. Some have been mined, some are in the wallets of some people and some missing. What will happen when all the Bitcoin gets mined? Will the price crash or will the network crash? This is in the context of the OP.

[philipma1957]

I suggest we should disencourage people from seeing mining just as a profit tool, but as a tool to prevent BTC from crashing.

I didn't know that aside the profit making side of mining, it is also functions to discourage Bitcoin from crash. This has brought a small confusion in my mind.

There are 21 million Bitcoins created. Some have been mined, some are in the wallets of some people and some missing. What will happen when all the Bitcoin gets mined? Will the price crash or will the network crash? This is in the context of the OP.

well is btc headed towards the end?

some think so.

some do not.

2012  we dropped to 25 coins a block              50.000% of coins mined
2016. we dropped to 12.5 coins a block           75.000% of coins mined
2020  we dropped to  6.25 coins a block          87.500% of coins mined
2024  we dropped to  3.125 coins a block         93.750% of coins mined


2028  we will drop to 1.5625  coins a block        96.8750% of coins mined
2032 we will drop to  0.78125 coins a block       98.4375% of coins mined
2036 we will drop to  0.390625 coins a block      99.21875% of coins mined

we will know what's up by 2036 I think.

[BlackHatCoiner]

Your numbers are off buddy, sorry. You consider the percentage of bitcoin holdings a person should spend for mining, but you completely overlook that not everyone has access to the same costs of electricity.

You should absolutely not mine if it's not profitable, unless you're curious to learn how mining works. It is the design such that once a source of cheap electricity is found, it can be used to reduce profitability of other miners. Such is bitcoin. Altruism makes shitcoins.

[ABCbits]

We see mining getting increasingly concentrated on few players. If you see https://christopherwolfram.com/projects/bitcoin-centralization/ site, until 2012, 1000 different miners produced consecutive 1000 blocks. Nowadays, we have 16 miners producing 1000 consecutive blocks. This is very alarming.

If you read the article more carefully, he actually imply there are 16 mining pools (who mine at least a block) in 1000 blocks in 2022.

TH/s
As far as I know, the most energy efficient small home miner is Bitaxe Gamma (corrent me if am wrong) and costs 245 USD. Each has around 1.2 TH/s, so you would need 3 of them, or 745 USD, to protect your own share of BTCs (assuming everyone does the same).

745 USD is 7% of your BTC value (10 000 USD, or 0.1 BTC in this case). If USD price double, probably the total TH/s will also double, so you would need double the THs power to keep up. This means, 7% of your BTC USD value should be in a small but cost efficient miner. no matter at which price BTC is.

Let's not forget that hashrate (usually) increase over time and we see more efficient ASIC chip every few years. So if someone were to follow your idea, they need to buy ASIC every few years just to keep up.

This is like having a 10 000 USD bike, with no locker to protect it against thieves. Some people have even 100 000 USD bikes, or 1 000 000 USD bikes with no lockers!

This analogy would work better if you talk about securing Bitcoin wallet by buying hardware wallet or device only for managing Bitcoin.

I suggest we should disencourage people from seeing mining just as a profit tool, but as a tool to prevent BTC from crashing.

To the owner of online BTC profit calculators: please make clear that mining is not only for short term profit, but that is also to protect the network. The opportunity cost of not mining yourself is allowing the network to be attacked and everything going to zero.

For most miner, mining is business. I don't think they would bother do more than moving from pool with high hashrate percentage to low ones.

[shield132]

I would like to provide a reminder that we mine not only to make short term gains, but also to prevent that the network gets a 51% attack and our bitcoin price goes to zero.

At this point, why would anyone try to do a 51% attack? It would require billions of dollars to get access to miners, which would give someone 51% of the network's mining hash rate. If someone invests billions of dollars into mining rigs, equipment, data centres and personnel, then why would someone attack and destroy a currency with a 2 Trillion dollars market cap? There are lots of billionaires with their own interests in the Bitcoin business, so I don't think anyone will let anyone to do 51% attack.

You should absolutely not mine if it's not profitable, unless you're curious to learn how mining works. It is the design such that once a source of cheap electricity is found, it can be used to reduce profitability of other miners. Such is bitcoin. Altruism makes shitcoins.

I agree with that. If we start mining Bitcoin, it will increase the mining difficulty and many miners will be forced to shut down their miners. Then only rich mining companies will be able to keep their miners on during unprofitability and this will be a huge threat of 51% attack to my mind.

[floridaman86]

Ok, I'll bite.

What exactly happens in a 51% attack?

I understand that miners have some kind of voting rights, but I don't understand exactly how they work, or what they vote on.

I been hearing of consolidation in the mining network for a while now. Instinctively it seems bad, but I don't fully understand the perceived risks to it

[BlackHatCoiner]

What exactly happens in a 51% attack?

An attacker is able to reverse any transaction, given enough time, or deem the network non-operational by mining empty blocks, if he owns the majority of the hashrate that is used for mining, hence "51% attack".

Read more in here: https://learnmeabitcoin.com/technical/blockchain/51-attack/.

[kekeck33]

I own some btc so I want a secure system (network) for my money. Who provides greater network security, your own full node or your small miner.
I run BTC full node and run 50THs miners, conencted on small pool (kano and ck).

[philipma1957]

I own some btc so I want a secure system (network) for my money. Who provides greater network security, your own full node or your small miner.
I run BTC full node and run 50THs miners, conencted on small pool (kano and ck).

the full node is more important than 50th on the btc network.

in theory we have 850,000,000 th mining worldwide so so 850,000,000/50 =17,000,000 so 17 million to one your hash not much.

I think we have under 1,000,000 full nodes so well under 1 million to one maybe 100,000 to one in the case of your node.

[kekeck33]

22.000 nodes
https://bitnodes.io/

[philipma1957]

22.000 nodes
https://bitnodes.io/

so 22,000 to 1 vs 17,000,000 to 1


if you want the hash to be at the same number you need way more.

850,000,000/1000= 850,000 to 1. far less than 22,000 to 1

850,000,000/40000 = 21,250

So you need 40 ph for same ratio

[mikeywith]

if you are not finding blocks and successfully chaining them to the blockchain your hashrate does nothing for Bitcoin, all those usb stick miners thinking they are protecting bitcoin -- they are not.

But by all means, if you want to gamble for a solo block, go ahead, but don't burn money mining at a loss thinking you are helping Bitcoin, you are only helping the miner maker and the electricity provider.  

[d5000]

I think @BlackHatCoiner is correct on a whole. Mining should be profitable, because if it's not, then the cost to attack the network would very likely drop or at least the hashrate could become unstable.

But I can relate a bit to the OP. Bitcoin's miners aren't only there to produce hashes and prevent 51% attacks. They also have a power position related to the protocol development, for example to approve softforks.

It is better if this power is more distributed. There are some scenarios where entities like governments, Central banks (when they buy enough Bitcoins as "strategic reserve"), ETF/ETP companies and other actors could buy mining power and launch marketing campaigns to push Bitcoin's development in a certain direction. The higher the participation of the "crowd", the better the protection against such "soft attacks".

On the other hand, a few altruists with a small miner would probably not really help. It would need a massive network of "near-altruist miners" to really change something in Bitcoin's power equilibrium. I think this is currently not realistic and thus I tend to the conclusion that the incentive model of "mining as profitable business" offers currently the best protection.

if you are not finding blocks and successfully chaining them to the blockchain your hashrate does nothing for Bitcoin, all those usb stick miners thinking they are protecting bitcoin -- they are not.

Correct if we have only a few altruists. A massive altruist mining wave could indeed help to protect Bitcoin, because eventually some of them would find a block and they are less prone to corruption than big mining companies so their power, even if only 10% of the hashrate, would be more "valuable" in some sense. The only difference to commercial mining farms is their ROI equation is lower than 1 or close to 1, instead of being really "profitable".

[mikeywith]

A massive altruist mining wave could indeed help to protect Bitcoin, because eventually some of them would find a block and they are less prone to corruption than big mining companies so their power, even if only 10% of the hashrate, would be more "valuable" in some sense. The only difference to commercial mining farms is their ROI equation is lower than 1 or close to 1, instead of being really "profitable".

how massive do you imagine it to be? the average usb miner is well below 1th but lets say its 1th, the current hashrate is 800,000,000th, we need 80m usb sticks to have a 10% which again is useless if its all what we have.

The kind of massive i imagine would be when most people start using btc then tech advances to the level of ( here is a light bulb that consumes a few extra cents and mines btc) or (stick this chip to your washer and let it hash everytime you wash your clothes) that kind of billions of chips massive not a very expensive usb stick.

[Synchronice]

To be honest, I'm not afraid of the network getting hacked but there was a time when I really thought about it as a potential threat but now I think that it doesn't make sense. First of all, why would someone do that? What would they gain? If someone attacks the network, we will know it before because at first they have to reach 45, 46... 49, 50% hashrate, right? So, if we know it, the price of Bitcoin might fall down. Attacker will have to invest lots of money, resources and workforce to collect 51% hashrate and why would anyone do that when there is nothing to gain on the table and even if they gain, it will be reversed very easily? In the end, they gain nothing but lose billions of dollars and reputation. 51% attack is like committing a suicide.

[ABCbits]

22.000 nodes
https://bitnodes.io/

I don't get your point, since OP talks about hashrate. If you also include nodes which doesn't accept incoming connection, current total nodes is about 94 thousand according to https://luke.dashjr.org/programs/bitcoin/files/charts/software.html.

[Outhue]

The profitability of Bitcoin mining plays a crucial role in preventing attacks. If mining Bitcoin is no longer profitable, it becomes easier for attacks to occur.

There’s little incentive to mine Bitcoin if it’s not profitable. Even if your goal is simply to learn how Bitcoin mining works, it’s reasonable to expect that it will take you at least a week to get a grasp of it, after which you should discontinue your efforts.

In the past, I was concerned about potential attacks, but those days are over. The hash rates are now distributed across various countries and locations, including China, the U.S., Nigeria, and others. It's too late to worry about that now.

Plugging in an outdated ASIC miner won't help Bitcoin if mining isn't profitable. If it’s not generating profit, it doesn’t contribute positively to the network.

[MaxLevCoin]

The profitability of Bitcoin mining plays a crucial role in preventing attacks. If mining Bitcoin is no longer profitable, it becomes easier for attacks to occur.

There’s little incentive to mine Bitcoin if it’s not profitable. Even if your goal is simply to learn how Bitcoin mining works, it’s reasonable to expect that it will take you at least a week to get a grasp of it, after which you should discontinue your efforts.

In the past, I was concerned about potential attacks, but those days are over. The hash rates are now distributed across various countries and locations, including China, the U.S., Nigeria, and others. It's too late to worry about that now.

Plugging in an outdated ASIC miner won't help Bitcoin if mining isn't profitable. If it’s not generating profit, it doesn’t contribute positively to the network.

I think bitcoin mining has to make money to keep things safe since us miners are the ones checking transactions and stopping bad stuff. If it's not worth it anymore, I worry fewer people like me will stick around and that could make the network shaky. But I love how bitcoin's spread out all over the world, it makes it tougher for anyone to mess with it. Even my old mining gear might not rake in cash but I figure it still helps keep things decentralized if I use it smart. Over time, I've seen bitcoin figure itself out as we all adjust to how the market swings.