The day mining become unprofitable!

[Thekool1s]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made?

[inBitweTrust]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made? Sorry if these questions are already answered

Mining is self regulating. If electricity ever exceeds the cost of the reward than miners can simply take some of there older asics temporarily offline.
The laws of supply and demand will incentivize miners when the block reward drops. The market will likely anticipate the lack of supply and the price of BTC will bubble up before the next halfing in 2015, so even though miners will only be rewarded 12.5 instead of 25 BTC the value of that BTC will be worth between 3-8 times what it is today so it should temporarily be a more profitable year for miners. These deflationary bubbles will continue until 2140 and than miners will profit off of millions of transactions fees alone.

[minerpumpkin]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made? Sorry if these questions are already answered

Mining is self regulating. If electricity ever exceeds the cost of the reward than miners can simply take some of there older asics temporarily offline.
The laws of supply and demand will incentivize miners when the block reward drops. The market will likely anticipate the lack of supply and the price of BTC will bubble up before the next halfing in 2015, so even though miners will only be rewarded 12.5 instead of 25 BTC the value of that BTC will be worth between 3-8 times what it is today so it should temporarily be a more profitable year for miners. These deflationary bubbles will continue until 2140 and than miners will profit off of millions of transactions fees alone.

Exactly, it is a self-regulating thing. If the Bitcoin price goes up, it will still be profitable to mine for only 1 BTC block reward, a couple years later even for 0.001 BTC... If it becomes unprofitable at some point, people will stop mining, the difficulty will go down, and it will become profitable again for some. And even if there are just a few Satoshi to be mined with every block, a couple of people will just run their spare ASICs for the fun of protecting the network. It will actually be safer than today, since there's no incentive of running a gigantic operation.

[the joint]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made?

Your question as phrased has a simple answer -- when mining stops, no transactions can be confirmed.

For miners to stop mining, they need a good reason to.  Unprofitable mining may be one of those reasons. 

The posters before me are correct Bitcoin is self-regulating in this regard.  If mining is unprofitable, miners will drop out and difficulty will drop as well until mining once again provides an incentive to process transactions.

After all coins are mined, miners will be rewarded with the transaction fees contained in each solved block.  It is assumed that if Bitcoin still exists at this time, it will have a very large user base and therefore the sum of all transaction fees in each block will be significant .

[Jamie_Boulder]

The less miners there are the more profitable it is to mine, therefore someone will always be there to fill the demand.

[kokojie]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made? Sorry if these questions are already answered

Mining is self regulating. If electricity ever exceeds the cost of the reward than miners can simply take some of there older asics temporarily offline.
The laws of supply and demand will incentivize miners when the block reward drops. The market will likely anticipate the lack of supply and the price of BTC will bubble up before the next halfing in 2015, so even though miners will only be rewarded 12.5 instead of 25 BTC the value of that BTC will be worth between 3-8 times what it is today so it should temporarily be a more profitable year for miners. These deflationary bubbles will continue until 2140 and than miners will profit off of millions of transactions fees alone.

Exactly, it is a self-regulating thing. If the Bitcoin price goes up, it will still be profitable to mine for only 1 BTC block reward, a couple years later even for 0.001 BTC... If it becomes unprofitable at some point, people will stop mining, the difficulty will go down, and it will become profitable again for some. And even if there are just a few Satoshi to be mined with every block, a couple of people will just run their spare ASICs for the fun of protecting the network. It will actually be safer than today, since there's no incentive of running a gigantic operation.

That's ridiculous, what about 51% attack? if there's not enough miners mining, then it become extremely easy and cheap to 51% attack Bitcoin. Therefore the PoW mining cost must remain extremely expensive relative to the value of Bitcoin eco-system. PoW is a doomed concept.

[redsn0w]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made?

Your question as phrased has a simple answer -- when mining stops, no transactions can be confirmed.

For miners to stop mining, they need a good reason to.  Unprofitable mining may be one of those reasons. 

The posters before me are correct Bitcoin is self-regulating in this regard.  If mining is unprofitable, miners will drop out and difficulty will drop as well until mining once again provides an incentive to process transactions.

After all coins are mined, miners will be rewarded with the transaction fees contained in each solved block.  It is assumed that if Bitcoin still exists at this time, it will have a very large user base and therefore the sum of all transaction fees in each block will be significant .

I think is the unique reason to stop mining  .

[kokojie]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made?

Your question as phrased has a simple answer -- when mining stops, no transactions can be confirmed.

For miners to stop mining, they need a good reason to.  Unprofitable mining may be one of those reasons.  

The posters before me are correct Bitcoin is self-regulating in this regard.  If mining is unprofitable, miners will drop out and difficulty will drop as well until mining once again provides an incentive to process transactions.

After all coins are mined, miners will be rewarded with the transaction fees contained in each solved block.  It is assumed that if Bitcoin still exists at this time, it will have a very large user base and therefore the sum of all transaction fees in each block will be significant .

Transaction fee alone won't be enough to secure a PoW network, unless Bitcoin charge like $10 per transaction. You can't magically make transaction fee good enough for securing the network.

For example, if Bitcoin becomes HUGE and process 10M transactions per day, with a fee of $0.30 per transaction, it's only $3m in fees per day.

TODAY, the miners earn $3.6m PER DAY, with 0.06M transactions per day, see the problem?? the 10M transaction Bitcoin's marketcap should be nearly $1 trillion, but will be secured by LESS miner than TODAY.

[Serge]

^^  bitcoin network already does more in daily transactions, aprox. 200-300M dollars daily.

[Thekool1s]

I always get answers which satisfy me  , Bitcointalk is awesome! 

[inBitweTrust]

That's ridiculous, what about 51% attack? if there's not enough miners mining, then it become extremely easy and cheap to 51% attack Bitcoin. Therefore the PoW mining cost must remain extremely expensive relative to the value of Bitcoin eco-system. PoW is a doomed concept.

Bitcoin will remain secure: Asics and renewable energy used to power them are sunk costs so there will always be a baseline of mining.

You keep pumping this PoS or DPoS framework. The question I have for you are any of these PoS solutions profitable for the majority of users to "forge"? If not than I see a huge problem with PoS centralization as evidenced by a little research:

http://www.peerexplorer.com/
only 245 average nodes online.

Lets take one of the largest and healthiest PoS coins out there as a case an point example and do some quick math:

http://charts.nxtcrypto.org/cDistribution.aspx
90% of users fall between 1-1000 nxt ownership

So If the average user wanted to Forge (500 Nxt Average) he would make -
http://www.mynxt.info/forging_calculator.php

Nothing in 24 hours and 0.05Nxt in 1 month. 0.05 Nxt = 0.002 USD or 2 tenths of one penny in gross profit a month.... So a huge net loss for electricity and/or hosting/leasing fees

Lets say I want to dive ahead and become a Nxt "Whale"(top 3% of NxT holders) and invest 1 BTC in Nxt or 11389 in Nxt.
http://www.mynxt.info/forging_calculator.php

I would thus be able to forge 0.04Nxt per day or 0.0017 USD per day . This fraction of a penny wont cover the electric costs either.

No wonder their are so few nodes! Hmmm... that 245 node count is nicely correlated to the amount of extremely wealthy whales in the distribution graphs. The only ones profiting of of Nxt are huge whales!

Personally, I think a 7k+ avg active node distribution for BTC is very vulnerable. A 245 active node distribution average is a joke.... and that is with taking the healthiest PoS example as a test!

I look forward to you addressing this fundamental problem within PoS...... and if your answer is DPOS than cite a working coin example, and if none are to be cited than fork a PoS to create a test case example.

[hayabusa911]

"These deflationary bubbles will continue until 2140 and than miners will profit off of millions of transactions fees alone."
I can't stop laughing!!!

[kokojie]

Actually, get your facts right, peercoin has over 1000 nodes:
http://bitinfocharts.com/ppcoin/nodes/

Peercoin is 0.2% of Bitcoin marketcap, and has 15% of the number of nodes as Bitcoin. So if I assume nodes will grow linearly relative to marketcap, if when Peercoin reach Bitcoin marketcap, it should have 525000 nodes, 7500% more than Bitcoin. how is that unhealthy?

I don't consider NxT the largest, nor the healthiest PoS, actually I consider it a scam. So I do not wish to discuss NxT. You can refer to my old post regarding NxT to see why (https://bitcointalk.org/index.php?topic=325261.msg8559235#msg8559235)

But generally speaking, there is virtually no electric/hardware cost if you already use a computer. The PoS client will runs just like a Bitcoin client (actually peercoin client is much more efficient in terms of disk space, but that's another topic), does not require any GPU power, and tiny amount of CPU to keep running. So why wouldn't a small stake holder want to mine if he already owns a computer? The beauty of PoS is that you don't even have to keep your computer on all the time to mine, you can just turn it on every few days if you'd like, and you'd still be able to mine normally with PoS. (this depends on the specific PoS implementation of course). Heck, you can mine PoS easily on your cellphone if a client is built for it.

Sure big stakeholders will mine more blocks, how is this different from big miners will mine more blocks? you make the big investments, you reap the big rewards. No difference from PoW in this regard. Also in a specific PoS, it's possible to set the reward very low, so the incentive to amass a big stake, is not profitable (or barely profitable) in the short term. (ie Peercoin only 1% reward annually for mining PoS). It's one of those "nice to have" things when you have a big stake, but not going to be the sole reason to acquire a big stake.

In comparison, Bitcoin eco-systems transfer about 5% of the value of the eco-system, every year, into the pockets of hardware vendor and electric companies, just to secure the network (and the PoW security is very fragile compared to a PoS network). Proof: a ton of PoW altcoin has been 51% attacked to death, and zero successful 51% attack on any PoS network.

That's ridiculous, what about 51% attack? if there's not enough miners mining, then it become extremely easy and cheap to 51% attack Bitcoin. Therefore the PoW mining cost must remain extremely expensive relative to the value of Bitcoin eco-system. PoW is a doomed concept.

Bitcoin will remain secure: Asics and renewable energy used to power them are sunk costs so there will always be a baseline of mining.

You keep pumping this PoS or DPoS framework. The question I have for you are any of these PoS solutions profitable for the majority of users to "forge"? If not than I see a huge problem with PoS centralization as evidenced by a little research:

http://www.peerexplorer.com/
only 245 average nodes online.

Lets take one of the largest and healthiest PoS coins out there as a case an point example and do some quick math:

http://charts.nxtcrypto.org/cDistribution.aspx
90% of users fall between 1-1000 nxt ownership

So If the average user wanted to Forge (500 Nxt Average) he would make -
http://www.mynxt.info/forging_calculator.php

Nothing in 24 hours and 0.05Nxt in 1 month. 0.05 Nxt = 0.002 USD or 2 tenths of one penny in gross profit a month.... So a huge net loss for electricity and/or hosting/leasing fees

Lets say I want to dive ahead and become a Nxt "Whale"(top 3% of NxT holders) and invest 1 BTC in Nxt or 11389 in Nxt.
http://www.mynxt.info/forging_calculator.php

I would thus be able to forge 0.04Nxt per day or 0.0017 USD per day . This fraction of a penny wont cover the electric costs either.

No wonder their are so few nodes! Hmmm... that 245 node count is nicely correlated to the amount of extremely wealthy whales in the distribution graphs. The only ones profiting of of Nxt are huge whales!

Personally, I think a 7k+ avg active node distribution for BTC is very vulnerable. A 245 active node distribution average is a joke.... and that is with taking the healthiest PoS example as a test!

I look forward to you addressing this fundamental problem within PoS...... and if your answer is DPOS than cite a working coin example, and if none are to be cited than fork a PoS to create a test case example.

[inBitweTrust]

Actually, get your facts right, peercoin has over 1000 nodes:
http://bitinfocharts.com/ppcoin/nodes/

Peercoin is 0.2% of Bitcoin marketcap, and has 15% of the number of nodes as Bitcoin. So if I assume nodes will grow linearly relative to marketcap, if when Peercoin reach Bitcoin marketcap, it should have 525000 nodes, 7500% more than Bitcoin. how is that unhealthy?

Strawman.... please specify what facts I have stated are false. Nxt is technically healthier than Peercoin measured by market cap and better resiliency. Peercoin has been crashing in value compared to Nxt.

Yes, 1k nodes is unhealthy. I just finished suggesting 7k+ is unhealthy.
Your extrapolation is just that , an extrapolation without any expectation that Peercoin will grow with Bitcoin and an assumption that the amount of nodes will correspond as well:
http://coinmarketcap.com/currencies/peercoin/
Evidence suggests that Peercoin will continue its downward trend in value actually.

All of this is moot , because Peercoin depends upon ASIC's and specialized miners and is a PoS/PoW hybrid. Separating the value of PoW from Peercoin is difficult to do. This poisons your whole argument as we need examples that are 100% DPOS or POS.

But generally speaking, there is virtually no electric/hardware cost if you already use a computer. The PoS client will runs just like a Bitcoin client (actually peercoin client is much more efficient in terms of disk space, but that's another topic), does not require any GPU power, and tiny amount of CPU to keep running. So why wouldn't a small stake holder want to mine if he already owns a computer? The beauty of PoS is that you don't even have to keep your computer on all the time to mine, you can just turn it on every few days if you'd like, and you'd still be able to mine normally with PoS. (this depends on the specific PoS implementation of course).

Do you have any examples of a DPOS or POS coin that is more profitable to mint or forge for the average user than the electricity used by a cell phone , let alone a computer or server?

[kokojie]

Actually, get your facts right, peercoin has over 1000 nodes:
http://bitinfocharts.com/ppcoin/nodes/

Peercoin is 0.2% of Bitcoin marketcap, and has 15% of the number of nodes as Bitcoin. So if I assume nodes will grow linearly relative to marketcap, if when Peercoin reach Bitcoin marketcap, it should have 525000 nodes, 7500% more than Bitcoin. how is that unhealthy?

Yes, 1k nodes is unhealthy. I just finished suggesting 7k+ is unhealthy.
Your extrapolation is just that , an extrapolation without any expectation that Peercoin will grow with Bitcoin and an assumption that the amount of nodes will correspond as well:
http://coinmarketcap.com/currencies/peercoin/
Evidence suggests that Peercoin will continue its downward trend in value actually.

All of this is moot , because Peercoin depends upon ASIC's and specialized miners and is a PoS/PoW hybrid. This poisons your whole argument as we need examples that are 100% DPOS or POS.

But generally speaking, there is virtually no electric/hardware cost if you already use a computer. The PoS client will runs just like a Bitcoin client (actually peercoin client is much more efficient in terms of disk space, but that's another topic), does not require any GPU power, and tiny amount of CPU to keep running. So why wouldn't a small stake holder want to mine if he already owns a computer? The beauty of PoS is that you don't even have to keep your computer on all the time to mine, you can just turn it on every few days if you'd like, and you'd still be able to mine normally with PoS. (this depends on the specific PoS implementation of course).

Do you have any examples of a DPOS or POS coin that is more profitable to mine for the average user than the electricity used by a cell phone , let alone a computer or server?

Why does it need to be 100% DPoS or PoS, the reason why I used peercoin as example, is because the Bitcoin situation shares the most similarity, because Bitcoin will never be 100% PoS since it already has a long history of PoW distribution, it will be similar to peercoin, as peercoin will fade out PoW and into PoS.

I already told you, there is no electricity if you already use a cellphone or computer. You have to keep your cellphone on anyway, mining PoS is just like running another app on your cellphone, there's nearly no electricity cost, or if there is, it's negligible. If you need an example, you can just use any PoS system, and I'll show you how to mine PoS with no cost (assuming you already use a computer and turn it on daily).

I don't see any reason 1k nodes for a 16m marketcap eco-system is un-healthy. Nodes don't just fall out of the sky, it needs to be grown in relation to number of users and the value of the eco-system. 7k nodes may be unhealthy for Bitcoin, but for any other altcoin, it's more than good enough.

[inBitweTrust]

Why does it need to be 100% DPoS or PoS, the reason why I used peercoin as example, is because the Bitcoin situation shares the most similarity, because Bitcoin will never be 100% PoS since it already has a long history of PoW distribution, it will be similar to peercoin, as peercoin will fade out PoW and into PoS.

So what you are advocating is a hybrid DPoS/PoW framework? May I suggest you mention that in the future instead of making claims like "PoW is dead".

I already told you, there is no electricity if you already use a cellphone or computer. You have to keep your cellphone on anyway, mining PoS is just like running another app on your cellphone, there's nearly no electricity cost, or if there is, it's negligible. If you need an example, you can just use any PoS system, and I'll show you how to mine PoS with no cost (assuming you already use a computer and turn it on daily).

You are wrong for 2 reasons:
1) You are talking about hypotheticals as no one has a cell phone node now.... but lets assume that an app is developed....
2) Yes, there will be significant battery draw on a cell phone setup as an active node, so much so that few will do this(perhaps this is one reason there isn't a rush to develop such app ) Always on Wifi/Bluetooth and data do draw considerable more power and this is why cell phones with power saving features disable these services when not in use

Lets assume that people are comfortable charging their cellphone every few hours(unlikely)... with the numbers I cited above the profits for the average user don't even cover the hypothetical cell phone apps electrical usage either. This goes the same for Nxt or Peercoins 1% minting process as well. (the real profits with peercoin are made with ASIC's and PoW)

Sure cell phones don't use much power .... but we are talking about gross profits of 2 tenths of a penny a month here!

Can you show me some math showing where I am wrong?

[minerpumpkin]

My Question is simple as far as i know miners get reward for blocks and the blocks include the transactions what will happen when mining stops? How will then transactions made? Sorry if these questions are already answered

Mining is self regulating. If electricity ever exceeds the cost of the reward than miners can simply take some of there older asics temporarily offline.
The laws of supply and demand will incentivize miners when the block reward drops. The market will likely anticipate the lack of supply and the price of BTC will bubble up before the next halfing in 2015, so even though miners will only be rewarded 12.5 instead of 25 BTC the value of that BTC will be worth between 3-8 times what it is today so it should temporarily be a more profitable year for miners. These deflationary bubbles will continue until 2140 and than miners will profit off of millions of transactions fees alone.

Exactly, it is a self-regulating thing. If the Bitcoin price goes up, it will still be profitable to mine for only 1 BTC block reward, a couple years later even for 0.001 BTC... If it becomes unprofitable at some point, people will stop mining, the difficulty will go down, and it will become profitable again for some. And even if there are just a few Satoshi to be mined with every block, a couple of people will just run their spare ASICs for the fun of protecting the network. It will actually be safer than today, since there's no incentive of running a gigantic operation.

That's ridiculous, what about 51% attack? if there's not enough miners mining, then it become extremely easy and cheap to 51% attack Bitcoin. Therefore the PoW mining cost must remain extremely expensive relative to the value of Bitcoin eco-system. PoW is a doomed concept.

Okay, let's assume you're right... What do you propose we do? Do you really think PoS or something alike will solve the problem? Aren't there theoretical as well as practical problems with those methods, (too)? The problem of it all really is, that we don't see if it really drives us into a corner for at least many years, if not decades! Will we see a change of the block reward? Phew...

[kokojie]

Why does it need to be 100% DPoS or PoS, the reason why I used peercoin as example, is because the Bitcoin situation shares the most similarity, because Bitcoin will never be 100% PoS since it already has a long history of PoW distribution, it will be similar to peercoin, as peercoin will fade out PoW and into PoS.

So what you are advocating is a hybrid PoS/PoW framework? May I suggest you mention that in the future instead of making claims like "PoW is dead".

I already told you, there is no electricity if you already use a cellphone or computer. You have to keep your cellphone on anyway, mining PoS is just like running another app on your cellphone, there's nearly no electricity cost, or if there is, it's negligible. If you need an example, you can just use any PoS system, and I'll show you how to mine PoS with no cost (assuming you already use a computer and turn it on daily).

You are wrong for 2 reasons:
1) You are talking about hypotheticals as no one has a cell phone node now.... but lets assume that an app is developed....
2) Yes, there will be significant battery draw on a cell phone setup as an active node, so much so that few will do this(perhaps this is one reason there isn't a rush to develop such app ) Always on Wifi/Bluetooth and data do draw considerable more power and this is why cell phones with power saving features disable these services when not in use

Lets assume that people are comfortable charging their cellphone every few hours(unlikely)... with the numbers I cited above the profits for the average user don't even cover the hypothetical cell phone apps electrical usage either. This goes the same for Nxt or Peercoins 1% minting process as well. (the real profits with peercoin are made with ASIC's and PoW)


Can you show me some math showing where I am wrong?

These are technical limitation, which can be overcome, probably pretty soon too, don't be shortsighted. 10 years ago, you wouldn't imagine watching a 1080p movie on your cellphone, it was technically impossible. Yet nowadays every flagship cellphone can do this easily.

Also again, a PoS mining app does not needs to be run constantly, you can just run it every few days if you'd like. Also, with DPoS, there's no need to run your own PoS mining app at all, you delegate your stake to the delegates you vote in. So there are many ways to implement a PoS system to address the shortcomings.

[inBitweTrust]

Okay, let's assume you're right... What do you propose we do? Do you really think PoS or something alike will solve the problem? Aren't there theoretical as well as practical problems with those methods, (too)? The problem of it all really is, that we don't see if it really drives us into a corner for at least many years, if not decades! Will we see a change of the block reward? Phew...

The competition is already driving PoW miners to use free and renewable energy to power the ASIC's. This momentum will continue, with or without ASIC appliances and thus Bitcoin will remain secure with a very high hashrate baseline.

[kokojie]

Okay, let's assume you're right... What do you propose we do? Do you really think PoS or something alike will solve the problem? Aren't there theoretical as well as practical problems with those methods, (too)? The problem of it all really is, that we don't see if it really drives us into a corner for at least many years, if not decades! Will we see a change of the block reward? Phew...

The competition is already driving PoW miners to use free and renewable energy to power the ASIC's. This momentum will continue, with or without ASIC appliances and thus Bitcoin will remain secure with a very high hashrate baseline.

There's no such thing as free electricity, someone is paying for it.

Renewable energy currently probably cost more than traditional in most places, and can not be used economically, that's why governments provide large subsidies for these. Otherwise the whole world would have switched over already.