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Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

news.ycombinator.com

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Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#11

Post by projectsforlife »

ntoskrnl wrote: post #10
projectsforlife wrote: post #5

[resolved, and disappeared again]

Probably because this isn't a new take, we've all heard the same theory many times before. Right now transaction fees are in the pennies. If the price goes up, maybe they'll become tens of pennies or even dollars--I don't think that's a deal-breaker. You should also take into account the lightning network. Transaction fees will have to grow in the coming decades, but if most users stay on LN they won't be directly ex…

There's a contradiction in your reasoning.

Currently the money required to safeguard the bitcoin network is equal to the cost to electrify a small country like Argentina.

You say users can be shielded from the future transaction fees b/c of Lightning. Ok, well where does the money to safeguard come from if mining blocks produces less and less of it -- and users don't pay fees b/c of Lightning?

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#12

Post by gus_massa »

Now the miners get are approximately 6BTC as reward and approximately 1BTC as fees. Assuming the reward disappears instantly, the solution is easy. Just reduce the hash rate to 1/7 of the current hash rate.

One possibility is that 6/7 of the miners go away to other coins.

Another possibility is that each miner unplug 6/7 of the machines or use them for another coin.

And there are mixed scenarios.

If the rewards disappears instantly and surprisingly it would be a problem, because if the hash rate is reduced to 1/7 then each block will take like an hour and the confirmation time will be like 6 hours or more.

But if the reward goes down slowly, the reduction of the hash rate will be slow and the time of the blocks will not suffer too much. Also, there is time to increase the fees a little, and improve the ASICs

This will decrease the network security, because it will be cheaper to do a 51% attract, but 1/7 of the current price is still ver expensive. Also a 51% attract can only allow an attempt to double spend, and it must be a huge transaction and only a big exchange would accept it. So they will be more suspicious or try co coordinate a fork after they discover the scam.

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#13

Post by ntoskrnl »

projectsforlife wrote: post #11
ntoskrnl wrote: post #10

Earlier quoted context omitted.

Probably because this isn't a new take, we've all heard the same theory many times before. Right now transaction fees are in the pennies. If the price goes up, maybe they'll become tens of pennies or even dollars--I don't think that's a deal-breaker. You should also take into account the lightning network. Transaction fees will have to grow in the coming decades, but if most users stay on LN they won't be directly ex…

There's a contradiction in your reasoning. Currently the money required to safeguard the bitcoin network is equal to the cost to electrify a small country like Argentina. You say users can be shielded from the future transaction fees b/c of Lightning. Ok, well where does the money to safeguard come from if mining blocks produces less and less of it -- and users don't pay fees b/c of Lightning?

LN enables economy of scale. Imagine a future where the majority of txs use lightning (L2), and on-chain (L1) txs are much more rare. One L1 tx may cost 1mBTC. Or if you use L2, a node might charge you and 999 other people 0.001mBTC to route your payments (simplifying here). The amount of money hasn't changed, but it's spread out among more people.

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#14

Post by tromp »

gus_massa wrote: post #12

Now the miners get are approximately 6BTC as reward and approximately 1BTC as fees. Assuming the reward disappears instantly, the solution is easy. Just reduce the hash rate to 1/7 of the current hash rate. One possibility is that 6/7 of the miners go away to other coins. Another possibility is that each miner unplug 6/7 of the machines or use them for another coin. And there are mixed scenarios. If the rewards disap…

The average amount of total tx fees per block in the third week of April was about 0.06 BTC [1], 2 orders of magnitude lower than the 6.25BTC block subsidy. Note that a 51% attacker is free to time their attack to periods of low tx fees. Since then the average has climbed to about 0.15 BTC per block, but that is still a far cry from the 1BTC you claim.

> use them for another coin

There are no other coins that can absorb that much SHA256 hashing power. The best candidate is Bitcoin Cash, whose daily dollar issuance is about 170 times lower [2].

[1] https://www.blockchain.com/charts/transaction-fees

[2] https://www.f2pool.com/coins

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#15

Post by gus_massa »

tromp wrote: post #14
gus_massa wrote: post #12

Now the miners get are approximately 6BTC as reward and approximately 1BTC as fees. Assuming the reward disappears instantly, the solution is easy. Just reduce the hash rate to 1/7 of the current hash rate. One possibility is that 6/7 of the miners go away to other coins. Another possibility is that each miner unplug 6/7 of the machines or use them for another coin. And there are mixed scenarios. If the rewards disap…

The average amount of total tx fees per block in the third week of April was about 0.06 BTC [1], 2 orders of magnitude lower than the 6.25BTC block subsidy. Note that a 51% attacker is free to time their attack to periods of low tx fees. Since then the average has climbed to about 0.15 BTC per block, but that is still a far cry from the 1BTC you claim. > use them for another coin There are no other coins that can abs…

The last miner reward will be earned in 2140. It's a 110 year timeline. The miners will not transfers the ASICs to the other chains, the ASIC will be obsolete, broken or something.

But in 2139 the reward will be tiny, so it's better to worry sooner. A reduction from 6BTC to 0.06BTC is /100, that is like 8 halvings, that is like 32 year. Anyway, in 32 years the the current ASICs will be obsolete, broken or something.

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#16

Post by mromanuk »

> Today, the amount of electricity used to safeguard the bitcoin network is roughly equivalent to what a small country like Argentina consumes.

Argentina is #30 among 219 countries on energy consumption, BTC consuming that much energy is crazy. [0] There are 189 countries smaller than Argentina (which is not small at all)

0: https://en.wikipedia.org/wiki/List_of_countries_by_electrici...

Re: Bitcoin's miners face vanishing incentives; 19M+ of its 21M max supply are mined

#17

Post by tromp »

gus_massa wrote: post #15
tromp wrote: post #14

Earlier quoted context omitted.

The average amount of total tx fees per block in the third week of April was about 0.06 BTC [1], 2 orders of magnitude lower than the 6.25BTC block subsidy. Note that a 51% attacker is free to time their attack to periods of low tx fees. Since then the average has climbed to about 0.15 BTC per block, but that is still a far cry from the 1BTC you claim. > use them for another coin There are no other coins that can abs…

The last miner reward will be earned in 2140. It's a 110 year timeline. The miners will not transfers the ASICs to the other chains, the ASIC will be obsolete, broken or something. But in 2139 the reward will be tiny, so it's better to worry sooner. A reduction from 6BTC to 0.06BTC is /100, that is like 8 halvings, that is like 32 year. Anyway, in 32 years the the current ASICs will be obsolete, broken or something.

Yes, the question is if Bitcoin can survive in 26 years, when the block subsidy will be below 0.05 BTC and its security will be 2 orders of magnitude lower than today, whenever demand for blockspace falls below capacity.
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