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Bitcoin miners are losing on every coin produced as difficulty drops

coindesk.com

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Re: Bitcoin miners are losing on every coin produced as difficulty drops

#41

Post by the_mitsuhiko »

samrus wrote: post #25
Aperocky wrote: post #14

Earlier quoted context omitted.

This only works when the difficult drop rates are below miner leaving rates. Which in normal times, are something taken for granted, but once it does happen, the edge case collapse the entire system. edit: the earlier language is not exact, the scenario is an exponential drop of value that results in exponential drop in miner willing to mine until this discrepancy can be resolved. i.e. the system is not protected aga…

No but if more miners leave then dofficulty with drop faster right? Its modelling supply and demand curves which are a stable equilibrium in these circumstances

Difficulty only adjusts every 2016 blocks. If the system gets out of whack enough it could slow down to a crawl for an extended period of time.

In practice it’s not much of an issue because bitcoin is not use for commerce but it’s a store of value and it some of the trades are not even on chain.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#43

Post by OJFord »

vscode-rest wrote: post #8
suryajena wrote: post #5

Isn't AI the new hot thing, why are the miners still going after Bitcoin, when they can probably just use the same infra for AI and make more money, stay profitable.

Hash mining asics don’t work well for AI

"don't work well for AI" is a hell of an understatement, the Application they are Specific to is literally just sha256(sha256(x)), what AI are you going to do with that?

GP probably didn't mean that hardware though, but rather the facility, electricity supply, cooling, etc.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#44

Post by acidphreak2k »

VladVladikoff wrote: post #24
acidphreak2k wrote: post #21

Earlier quoted context omitted.

When I was mining circa 2017 - 2021 (approx. 1 BTC/month and 25-30 ETH/month) and planning it all out, I prepared myself psychologically to operate for up to 2 years without any profits or selling. It was a hard pill to swallow and a huge risk; my costs were $8500/month in electrical and then another ~$2200 on a lease for the warehouse. When it dropped to $3,000/BTC a few months after I came online and stayed there f…

Seems like you could have made that same bet by just buying BTC with that money and doing twice as good.

Up to a point; once it was over $12k or so, it was cheaper to mine them than to buy them. But yeah, I guess in retrospect I could have just dumped ~$450k into buying BTC when it was at $3,000 and made 3x what I ended up making, but there were other considerations for why I did it at the time. The mining was co-located with my cannabis grow/operations, and in many ways the mining was started secondary to that, even though the mining ended up being a little more profitable over the life of the facility

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#45

Post by shlant »

metrix wrote: post #31
andai wrote: post #29

Earlier quoted context omitted.

What's a shovel?

They're using the analogy of mining for gold. the cost of a shovel/pitchfork goes up when the price of gold goes down - which is a double whammy

you didn't answer the question. A shovel in this case is the equipment + energy needed to mine (GPU's etc.)

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#46

Post by illiac786 »

ajross wrote: post #34
illiac786 wrote: post #30

Earlier quoted context omitted.

What does “leave” in this context mean?

"stop" (Obviously the equipment doesn't go away. You can start it again. But if you can't make a buck doing something, you won't do it.)

But I mean, their bitcoins are not going away, their wallets are still there, their bitcoins also right? I thought bitcoin mining was proportionally hard to the number of already mined bitcoins, not the number of people mining?

I probably should look this up in wikipedia first.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#47

Post by raverbashing »

shlant wrote: post #45
metrix wrote: post #31

Earlier quoted context omitted.

They're using the analogy of mining for gold. the cost of a shovel/pitchfork goes up when the price of gold goes down - which is a double whammy

you didn't answer the question. A shovel in this case is the equipment + energy needed to mine (GPU's etc.)

Which is pretty much obvious to anyone who has heard of bitcoin in the year of our lord 2026

Especially since the "sell shovels during a gold rush" has been used to apply to nVidia

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#48

Post by haakon »

illiac786 wrote: post #46
ajross wrote: post #34

Earlier quoted context omitted.

"stop" (Obviously the equipment doesn't go away. You can start it again. But if you can't make a buck doing something, you won't do it.)

But I mean, their bitcoins are not going away, their wallets are still there, their bitcoins also right? I thought bitcoin mining was proportionally hard to the number of already mined bitcoins, not the number of people mining? I probably should look this up in wikipedia first.

It's a common misunderstanding that mining just gets harder and harder as time goes by and more coins are minted. It's often misreported that way. But in fact, the difficulty is dynamic and adjusts itself to keep minting at the predetermined rate regardless of the number of participants. Mining has gotten harder on long timelines, but only because more computing power has been added.

Re: Bitcoin miners are losing on every coin produced as difficulty drops

#49

Post by littlecranky67 »

mathgeek wrote: post #12
kingleopold wrote: post #4

This is just a lie. Coindesk is the worst media in the world. They can't calculate correct price of mining because it's more complex and enerrgy costs are different in so many regions and inside the electiric producers etc. !

It’s not a lie, nor a damn lie. It’s statistics!

Exactly: "The average production cost was sitting at $88,000 per bitcoin in mid-March". Emphasis on average. Just as in a free market, those miners with higher mining costs are priced out of the market. Or are pressured to become more efficient. Those that are below-average probably already are efficient.
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