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Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

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Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#71

Post by dnautics »

jonknee wrote: post #11
austinjp wrote: post #6

Earlier quoted context omitted.

What happens when we reach 100%?

We re-learn why a deflationary currency is an awful idea.

So let's see... We have an inflationary currency which is behind an increasing divide between the rich and the poor[0], and keeps people hooked on unsustainable growth to just survive, leading to intensifying environmental destruction and wanton consumption of limited resources... It's not like an inflationary currency is necessarily a good idea, either.

[0] before you say that inflation hurts the rich, among other reasons the if inflation didn't hurt the poor, we would never feel the political pressure to increase the minimum wage.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#72

Post by narrator »

danieltillett wrote: post #69
narrator wrote: post #53

Earlier quoted context omitted.

As a counterpoint, you should consider Hayek's critique of the Paradox of Savings: https://mises.org/library/hayek-paradox-saving The "deflation makes people not spend" is a hand-wavy argument. There is zero empirical evidence for it.

It is not so much that it stops people from spending - it is that it makes the real interest rate high relative to the nominal and so discourages borrowing. Actually with negative interest rates proving possible (almost nobody thought they were a few years ago) if you had a deflationary currency you could always use negative interest rates to control demand. I am sure some smart economist has looked into this.

When the real interest rate is high, business retained earnings are more valuable. Thus, economic power is transferred from lending institutions to profitable corporations. Who do you think does a better job investing?

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#73

Post by burger_moon »

elorant wrote: post #58
mrb wrote: post #26

Nobody on HN pointed out who is behind the increase... This is BitFury who just launched a 40 megawatt data center filled up with their new 16 nm chips which reportedly achieve approximately 0.06 joule per gigahash. They also use immersion cooling which gives them an insane PUE of 1.02. So the mining capacity of this DC alone is ~650 Phash/s! We saw an increase of ~200 Phash/s in the last 30 days, so presumably they…

How those 40 megawatts of energy consumption compare to known companies? How much energy for example consumes an average cloud storage company? Or a corporation? 40 megawatts sound a lot but it would be nice to have a reference.

After searching around, it looks about average for a large data center. This link[1] estimates Google's data centers require between 50-100MW.

50MW is enough power to supply ~14k homes from different references I've seen.

I'm curious about what normal data centers use for backup power since natural gas and diesel generators don't get much bigger than 2MW. Or maybe they just don't have backup generators.

[1] http://www.datacenterknowledge.com/google-data-center-faq-pa...

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#74

Post by dnautics »

crdoconnor wrote: post #50
vezzy-fnord wrote: post #36

Earlier quoted context omitted.

Deflationary spirals are a hypothetical concern and mostly a fringe neo-Fisherian idea that has recently gained some mainstream nodding, but is otherwise difficult to verify in any way. For one thing it assumes a massive collective irrationality where people's expectations are all rendered berserk and plunged into a negative time preference. It's a very tough gambit to make that people can withdraw their propensity t…

>For one thing it assumes a massive collective irrationality where people's expectations are all rendered berserk and plunged into a negative time preference. One of the more idiotic ideas to come out of neoclassical economics is the assumption that a negative time preference is irrational or impossible, when most of us have one (pension, passing wealth on to one's kids, saving up to buy big ticket items, etc.). Inde…

the irony is that in order to satisfy these 'negative time preferences', inflation forces people into risky investment behavior, which is basically regressive wealth redistribution. And then we complain how the rich get richer and the poor get poorer, and blame it on capitalism.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#75

Post by tveita »

feral wrote: post #37
woah wrote: post #33

Earlier quoted context omitted.

Not 100% sure, but from your tone it sounds like you think they are performing some kind of service. This is not true. Miners do not increase the number of transactions the network can handle. An infinitesimal amount of the electricity going into mining is actually goes to process transactions. A raspberry pi in a shoebox running mySql is capable of processing more transactions than the entire bitcoin network, liquid…

>Innovation in mining hardware and data centers does not in any way increase bitcoin's security. Not sure exactly what you mean here - mining, and mining faster, generally increases the computational resources another third party would need to 51% attack the network.

Only by as much as the miners themselves spend. And it's a running cost, you have to spend it every day, while an attacker would spend it only during their attack.

The only way to make a 51% attack impractically expensive is to make the network impractically expensive to run.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#76

Post by vezzy-fnord »

jonknee wrote: post #67
baddox wrote: post #52

Earlier quoted context omitted.

I'm no economist, but it seems like a lot of things (most, by dollar amount) I buy are simply not things I could feasibly defer for long. Food and rent (shelter) are the obvious examples by necessity, but also plenty of discretionary spending is obviously time-sensitive. I want to see a movie now, go skiing now, fly home for the holidays now, etc. It's unlikely that deflation stop me from making these purchases, unle…

It doesn't take a big change of behavior if there are a lot of people doing it. If everyone reduced spending by just a couple of percent it would radically change the economy and growth forecasts (we'd be in a recession). Lowered growth forecasts would then incentivize savings, further pushing down future growth. There is no Bitcoin Fed that could cut rates and incentivize investment, a Bitcoin dominated world in rec…

Cutting rates would not necessarily stimulate investment: http://www.themoneyillusion.com/?p=31372

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#77

Post by narrator »

sanswork wrote: post #61
narrator wrote: post #53

Earlier quoted context omitted.

As a counterpoint, you should consider Hayek's critique of the Paradox of Savings: https://mises.org/library/hayek-paradox-saving The "deflation makes people not spend" is a hand-wavy argument. There is zero empirical evidence for it.

You could just read any Bitcoin forum where everyone is 'hodling' because they expect their coins to be worth $100000 each soon.

This is more an example of Gresham's law than anything else.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#78

Post by phoogathrw »

mjevans wrote: post #65
jnbiche wrote: post #45

Earlier quoted context omitted.

Proof of work is the most secure way we have by far of running a decentralized currency. I am hopeful that a better, more energy-efficient method will be developed, but until then, I think advancing the state of the art is worth the energy cost. It's not obscene to me that a truly global currency, that is decentralized and not controlled by any government, would cost a tenth of the energy output of a modest-sized pow…

That's my main issue with bitcoins (aside from how they're marketed to anyone; it is most definitely NOT anonymous!). Instead of 'proof of work' it should require actual, /useful/ work. I think it should be a mix of work /types/ to promote general purpose computing, instead of ASICs. Imagine if a comity decided, and the owners of existing coins voted on, what work was worthy of being included. Folding proteins for me…

Ok, yeah that would be nice. But no one has figured out how to securely do productive work for proof of work. In fact, there are pretty good reasons to believe that it may even be impossible to create a secure yet productive proof of work algorithm.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#79

Post by danieltillett »

narrator wrote: post #72
danieltillett wrote: post #69

Earlier quoted context omitted.

It is not so much that it stops people from spending - it is that it makes the real interest rate high relative to the nominal and so discourages borrowing. Actually with negative interest rates proving possible (almost nobody thought they were a few years ago) if you had a deflationary currency you could always use negative interest rates to control demand. I am sure some smart economist has looked into this.

When the real interest rate is high, business retained earnings are more valuable. Thus, economic power is transferred from lending institutions to profitable corporations. Who do you think does a better job investing?

Well the theory of a bank is to act as an efficient mechanism to transfer capital from businesses and consumers with excess capital to those with a need for more capital. Of course in practice banks have got pretty good at capturing almost all the value out of this process.

Business should not really be in the business of retaining earnings. If it was not for tax reasons it would be best to return any excess funds to the shareholders and raise new capital when needed.

Re: Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

#80

Post by astrodust »

homogeneous wrote: post #64
urbanarson wrote: post #59

Earlier quoted context omitted.

For comparison, how much power does Visa, Mastercard, the Federal Reserve (and its printing presses), banks, and all of the buildings and employees that work in the traditional financial sector use? Now think about that in every single country on this planet. It's a lot more than 40MW. The Bitcoin network is a steal by comparison.

You're comparing the microscopic bitcoin economy to the financial infrastructure that services the entire planet; it's a ridiculous comparison. How would bitcoin's power consumption stack up if it were tasked with servicing tens of millions of transactions per second?

Given how people use tap-to-pay type services for vending machines and bus fare, that might be a low estimate on volume.
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