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As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

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Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#21

Post by ForHackernews »

marcosdumay wrote: post #10
minimaxir wrote: post #6

At what price will the Bitcoin death spiral occur? (i.e. when it costs more to produce/handle Bitcoin than the revenue generated, so best move is to just exit the crypto industry).

Don't bitcoin costs adjust to a shrinking miner population as well as it adjusts for a growing one? If so, the answer is never. As people give-up, the costs for the remaining ones reduce so that at some point it's lucrative again. The interesting question is at what price people will stop speculating on its price and run to an exit? I don't think anybody can answer this one.

The difficulty adjustment only occurs after a certain number of blocks are mined. If the price drops rapidly enough that most miners shut down, it might never get to the difficulty adjustment.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#22

Post by ForHackernews »

sneak wrote: post #5
harryh wrote: post #4

Earlier quoted context omitted.

Of course if you are filthy stinking rich, it's because you participated in a distributed scam in order to defraud money from those "bandwagon shirt-losers."

What precisely was the scam? Who and how was I scamming by mining coins with my GPU and some open source software I saw on slashdot that are now worth several thousand dollars each?

You sold something of no value to Greater Fools.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#23

Post by hudon »

mikeyouse wrote: post #19
hudon wrote: post #16

Earlier quoted context omitted.

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on the bench, it’ll at one point becoming economically beneficial to turn them all on and attack the network rather than having them collect dust and depreciate.

If they’re dormant, by definition they’re already unprofitable to operate. If the price decreases further, only the most efficient miners will remain, not the least efficient of them.

Unprofitable to operate in friendly conditions*

If you can flip a switch and 10x the hashrate of a network, all under your control, and you don’t care about killing the chain in your attack, it may be a perfect exit for you if you no longer want to play the mining game.

There’s actually a mining pool doing something like this on smaller PoW bitcoins https://sharkpool.cash (not associated, just think it’s interesting)

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#24

Post by cjhanks »

sneak wrote: post #5
harryh wrote: post #4

Earlier quoted context omitted.

Of course if you are filthy stinking rich, it's because you participated in a distributed scam in order to defraud money from those "bandwagon shirt-losers."

What precisely was the scam? Who and how was I scamming by mining coins with my GPU and some open source software I saw on slashdot that are now worth several thousand dollars each?

The scam was not by all btc pioneers. In the last year, there were a lot of holders creating marketing networks filled with misinformation and half-truths. That convinced a lot of people with little financial education and little understanding of the technology, that growth was imminent.

All the while, the marketeers screaming "buy buy buy" were selling their btc on exchanges at insane rates.

If you're just some guy mining, nobody thinks you're the problem.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#25

Post by aphextron »

smacktoward wrote: post #3
aphextron wrote: post #2

BTC/USD is doing just fine. Nobody who knows anything about anything made any kinds of plans involving $20,000 Bitcoin. At ~$4k, it's still 10x where it was 2 years ago. Anybody remotely involved in BTC from it's actual inception (not the bandwagon shirt-losers of 2017) is filthy stinking rich now.

> Nobody who knows anything about anything made any kinds of plans involving $20,000 Bitcoin. Except for Goldman, Morgan Stanley, Citigroup and Barclays (see https://www.bloomberg.com/news/articles/2018-12-23/wall-stre... )...

>Except for Goldman, Morgan Stanley, Citigroup and Barclays (see https://www.bloomberg.com/news/articles/2018-12-23/wall-stre...)...

See: bandwagon shirt-losers of 2017

Bitcoin was the largest, fastest, most successful transfer of institutional wealth into private hands we've ever seen.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#27

Post by tinus_hn »

minimaxir wrote: post #13
marcell wrote: post #9

Earlier quoted context omitted.

Bitcoin was doing perfectly fine at $100, so I think these predictions are a bit premature and have some recency bias. The price drop does lower the amount of security in the network, so it becomes cheaper to attack it. However, it also means the payoff to attack is lower.

The cost of production (as a function of the hash rate) was much lower than $100/coin at that time.

The cost adjusts to the resources people want to expend, so a block always takes approximately the same amount of time.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#28

Post by duxup »

marcell wrote: post #9
minimaxir wrote: post #6

At what price will the Bitcoin death spiral occur? (i.e. when it costs more to produce/handle Bitcoin than the revenue generated, so best move is to just exit the crypto industry).

Bitcoin was doing perfectly fine at $100, so I think these predictions are a bit premature and have some recency bias. The price drop does lower the amount of security in the network, so it becomes cheaper to attack it. However, it also means the payoff to attack is lower.

Correct me if I'm wrong, but I thought mining coins took power as time went on. Thus what it took to do the job in the past isn't what it would take today and thus past mining really wouldn't be comparable.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#29

Post by wolco »

harryh wrote: post #4
aphextron wrote: post #2

BTC/USD is doing just fine. Nobody who knows anything about anything made any kinds of plans involving $20,000 Bitcoin. At ~$4k, it's still 10x where it was 2 years ago. Anybody remotely involved in BTC from it's actual inception (not the bandwagon shirt-losers of 2017) is filthy stinking rich now.

Of course if you are filthy stinking rich, it's because you participated in a distributed scam in order to defraud money from those "bandwagon shirt-losers."

It's not a scam just a bad investment.

Those using bitcoin for payments saw a utility not provided by other solutions.

Those investing are a different class of users. Most purchased after hearing get rich stories.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#30

Post by CydeWeys »

minimaxir wrote: post #6

At what price will the Bitcoin death spiral occur? (i.e. when it costs more to produce/handle Bitcoin than the revenue generated, so best move is to just exit the crypto industry).

As others have pointed out, the difficulty adjusts both up and down depending on the total work being done by the network, so no death cycle is possible.

Additionally, even when there are rapid drops in value (and thus mining), people still want to transact Bitcoin, so transaction fees go up and become a significant percentage of the overall value of a new block, thus compensating miners for the reduced value of the block reward.

There is no death spiral; there's just regular increase/decrease in value over time.

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