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Bitcoin Mining’s Three Body Problem

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Re: Bitcoin Mining’s Three Body Problem

#51

Post by gridlockd »

CalmStorm wrote: post #23
season2episode3 wrote: post #6

Earlier quoted context omitted.

> At the end of the day your computer is no different from an expensive space heater. Might as well mine some crypto with it. Or, you know, you could just turn the computer off while you're not actively using it. It saves you money and does a small little good thing for the environment too.

The other common misconception is that the price of bitcoin is determined by the hashrate. It is actually the other way around, a higher price drives up the hashrate, because a higher price means more demand for bitcoin. Some founders of altcoins apparently don't understand this and try to buy hashpower to artificially increase the hashrate, hoping to increase the price of their coins. If there is no demand for their…

The price is not determined by hashrate, but hashrate is nevertheless an important metric for the market to determine the price.

An altcoin that has insufficient hashrate is highly vulnerable to attacks and if its price were to rise, those attacks would become profitable.

Therefore, you need enough hashrate to make attacks unprofitable right away. A Raspberry Pi is not going to cut it.

Re: Bitcoin Mining’s Three Body Problem

#52

Post by uryga »

mindcandy wrote: post #32
uryga wrote: post #8

Earlier quoted context omitted.

> At the end of the day your computer is no different from an expensive space heater. Might as well mine some crypto with it. i mean... it wouldn't be a space heater if it wasn't crunching pointless numbers...

The point of the numbers is to prove that you heated space. Seriously. It proves that you burned value that you know you are not getting back if you are caught falsifying records for the system. And, everyone knows its extremely hard to not get caught if you try. Therefore you can be trusted to sign records for the system because you are risk:reward tremendously more financially motivated to be a good actor than a ba…

i understand the idea of proof-of-work. but idk, when i think about all that electricity and computing power wasted on guessing arbitrary numbers... just doesn't feel right

kind of reminds me of how FAANG job interviews require memorizing not-very-useful algo stuff to weed out people who "aren't motivated enough" to study that stuff for the interview¹... "proof-of-motivation" if you will. it serves a purpose, but requires "burning" a lot of ultimately pointless effort

---

1. at least that's what people say about them, never interviewed there myself

Re: Bitcoin Mining’s Three Body Problem

#53

Post by TylerE »

trixie_ wrote: post #49
srl wrote: post #41

Earlier quoted context omitted.

Wait... isn't it worse than that? If I buy enough hashpower to have a measurable effect on the price, shouldn't the price be driven down, by the increased supply? Thus an ASIC farm is worse than a raspberry pi, at least as far as the effect on price goes. (But, isn't there some majority attack? So maybe I want an ASIC farm as a way to protect my investment...)

Supply of what? The supply increase of coins is constant regardless of the hashrate. This is exactly why there was no effect on bitcoin price when the reward rate halved. The value of the coin drives mining behavior, not the other way around.

Actually, it doesn't. The difficulty adjusts every 2016 blocks, in theory every ~2 weeks, but if a large percentage of the hash power suddenly disappeared it could be much longer.

Re: Bitcoin Mining’s Three Body Problem

#54

Post by spir »

Mining revenue is the network cost of running the Bitcoin network.

What if you ran a business that spends billions per year on network cost, then somebody told you they could reduce it by 98% and make it a flat cost, forever. That's proof of stake.

Ethereum launches the first phase of proof of stake this year. When Ethereum v1.5 launches in ~18 to 24 months, Ethereum's network cost will undergo such a transformation. The millions per day paid to Ethereum miners will stop being paid, forever. It's a ~98% cost reduction in perpetuity.

Re: Bitcoin Mining’s Three Body Problem

#55

Post by lalaland1125 »

contravariant wrote: post #43
thebean11 wrote: post #34

Earlier quoted context omitted.

Right but if your goal is to heat your apartment (and your alternative heat source is also electric) running the computer is a pretty efficient heat source.

Well, efficient is hardly the right phrase. When it comes to heating using electricity then 100% efficiency is on the low side. A heat pump could be many times more efficient.

I just also want to add that gas heating is also effectively >100% efficient relative to electricity because there are no losses incurred on the power generation side.

Re: Bitcoin Mining’s Three Body Problem

#56

Post by gjs278 »

spir wrote: post #54

Mining revenue is the network cost of running the Bitcoin network. What if you ran a business that spends billions per year on network cost, then somebody told you they could reduce it by 98% and make it a flat cost, forever. That's proof of stake. Ethereum launches the first phase of proof of stake this year. When Ethereum v1.5 launches in ~18 to 24 months, Ethereum's network cost will undergo such a transformation.…

lol. people have been saying it’s 2 years away for 5 years now. don’t be surprised when ethereum is worth nothing after this. ARK tried to do this and is pennies now.

Re: Bitcoin Mining’s Three Body Problem

#57

Post by iancoleman »

spir wrote: post #54

Mining revenue is the network cost of running the Bitcoin network. What if you ran a business that spends billions per year on network cost, then somebody told you they could reduce it by 98% and make it a flat cost, forever. That's proof of stake. Ethereum launches the first phase of proof of stake this year. When Ethereum v1.5 launches in ~18 to 24 months, Ethereum's network cost will undergo such a transformation.…

> The millions per day paid to Ethereum miners will stop being paid, forever.

Do you mean paid _by_ Ethereum miners?

The network pays miners rewards (which will continue under proof of stake, ie the cost _to the network_). The miners pay the cost of running their mining (eg electricity and hardware costs), which is what will be reduced by proof of stake.

Am I understanding this correctly?

Re: Bitcoin Mining’s Three Body Problem

#58

Post by omarchowdhury »

iancoleman wrote: post #57
spir wrote: post #54

Mining revenue is the network cost of running the Bitcoin network. What if you ran a business that spends billions per year on network cost, then somebody told you they could reduce it by 98% and make it a flat cost, forever. That's proof of stake. Ethereum launches the first phase of proof of stake this year. When Ethereum v1.5 launches in ~18 to 24 months, Ethereum's network cost will undergo such a transformation.…

> The millions per day paid to Ethereum miners will stop being paid, forever. Do you mean paid _by_ Ethereum miners? The network pays miners rewards (which will continue under proof of stake, ie the cost _to the network_). The miners pay the cost of running their mining (eg electricity and hardware costs), which is what will be reduced by proof of stake. Am I understanding this correctly?

...it's both.

Re: Bitcoin Mining’s Three Body Problem

#59

Post by lalaland1125 »

spir wrote: post #54

Mining revenue is the network cost of running the Bitcoin network. What if you ran a business that spends billions per year on network cost, then somebody told you they could reduce it by 98% and make it a flat cost, forever. That's proof of stake. Ethereum launches the first phase of proof of stake this year. When Ethereum v1.5 launches in ~18 to 24 months, Ethereum's network cost will undergo such a transformation.…

Proof of stake is as equally expensive as proof of work. The trick is that both of based on burning money, proof of work burns by using CPU cycles while proof of stake burns through lost interest.

http://www.truthcoin.info/blog/pow-cheapest/ gives a nice discussion of how this works.

Re: Bitcoin Mining’s Three Body Problem

#60

Post by AgentME »

trixie_ wrote: post #18
brian_cloutier wrote: post #15

Earlier quoted context omitted.

It... has happened. Multiple times. Bitcoin Gold: https://cointelegraph.com/news/bitcoin-gold-blockchain-hit-b... Vertcoin: https://www.coindesk.com/the-vertcoin-cryptocurrency-just-go... Ethereum Classic: https://cointelegraph.com/news/ethereum-classic-51-attack-th... Google is happy to show you more.

Right, I guess I feel less at risk of being the victim of a double spend and more at risk with rewriting history. Are there any reports of that? Like coins I've held on the chain for some time being stolen?

A double spend is generally what people mean by "rewriting history".

A 51% attack only lets people steal money by taking back recent transactions and sending them elsewhere. Transactions that have been received a long time ago are generally safe. (An attacker can reach further back in time if they run the 51% attack longer or with even more hashpower.)

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