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Inside One of the World's Largest Bitcoin Mines

thecoinsman.com

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Re: Inside One of the World's Largest Bitcoin Mines

#11

Post by UweSchmidt »

CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

Well, when "mining" happens at the break-even point, the value of Bitcoin represents the amount of money that was transfered from the real economy to ..this.

Since "waste" is a loaded term, let's call it "the cost of Bitcoin".

Current market cap is 6.7 billion $, with 13.2 million of a total of 21 million btc mined. Early "mining" was very cheap, but now costs are only going up (barring any surprising breakthroughs in computing).

Anyone care to speculate the total cost of Bitcoin?

Re: Inside One of the World's Largest Bitcoin Mines

#12

Post by pat2man »

CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

There are alt coins that try to address this. Prime coin is a good example, the algorithm used in mining is trying to find new prime numbers.

Re: Inside One of the World's Largest Bitcoin Mines

#13

Post by Sambdala »

UweSchmidt wrote: post #11
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

Well, when "mining" happens at the break-even point, the value of Bitcoin represents the amount of money that was transfered from the real economy to ..this. Since "waste" is a loaded term, let's call it "the cost of Bitcoin". Current market cap is 6.7 billion $, with 13.2 million of a total of 21 million btc mined. Early "mining" was very cheap, but now costs are only going up (barring any surprising breakthroughs i…

3,600 * is probably a pretty good approximation of the daily cost.

Since Bitcoin is currently ~$500, that's ~$1.8mm per day.

Re: Inside One of the World's Largest Bitcoin Mines

#14

Post by tveita »

maxmcd wrote: post #6
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

More inefficient than producing and maintaining paper currency? Than mining actual gold? They really are just throwing tons of electricity and hardware at "nothing", but if this kind of activity helps replace the current inefficient systems of currency, then I'm all for it.

Yes? Going either by volume or number of transaction, Bitcoin transactions are currently ludicrously expensive, though this is somewhat hidden by subsidizing the miners.

I don't know why you mention paper currencies and gold when most money today is transferred electronically, in a far more efficient way than Bitcoins.

Re: Inside One of the World's Largest Bitcoin Mines

#15

Post by billyhoffman »

pat2man wrote: post #12
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

There are alt coins that try to address this. Prime coin is a good example, the algorithm used in mining is trying to find new prime numbers.

This only holds true if you believe that finding new colossal prime numbers is a good use of time/power.

Given the application of new primes is far less than, say, sending humans to live on the mars, I imagine the vast majority of people would not.

Re: Inside One of the World's Largest Bitcoin Mines

#16

Post by joosters »

CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

I agree completely. It seems such a waste, especially given that mining bitcoin is deliberately made difficult. The main cost/waste of bitcoin mining is electricity, and yet we could reduce the cost to almost nothing.

In an ideal world, imagine instead a variant of bitcoin that works like this:

* All miners do their hashing & number crunching for a second or so, then report their peak hashing rates to each other.

* Instead of one of them randomly mining the next block of bitcoin, the next block gets divided out proportionately according to hash rate.

* All miners then agree not to do any more hashing for (say) a minute or so.

* Process repeats.

Ta-da! We have a bitcoin system which uses a fraction of the electricity. If we were back in the days of mining on general purpose computers, then we could even put them to some other use at the same time as mining bitcoins.

Obviously, this has massive flaws. How to trust that everyone doesn't lie about their hash rates? Perhaps this could be solved by keeping the mining but setting the difficulty so that a block would only take a couple of seconds to mine. That way, there's still a numeric problem that requires real CPU work to solve.

Secondly, how to ensure that the systems don't do any more hashing for a fixed time? Perhaps the system could be tied to an unguessable source of randomness that won't be known in advance of the next block mining time. (This is the really tricky bit; you need a source that is trusted by everyone and not predictable or alterable or knowable in advance).

Re: Inside One of the World's Largest Bitcoin Mines

#17

Post by UweSchmidt »

maxmcd wrote: post #6
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

More inefficient than producing and maintaining paper currency? Than mining actual gold? They really are just throwing tons of electricity and hardware at "nothing", but if this kind of activity helps replace the current inefficient systems of currency, then I'm all for it.

Bitcoin could become a means for payment and other things, but can not possibly replace the current systems of currency, since those are essential political instruments.

Consider the impact of minimal fluctuations of exchange and interest rates. No one could just say "fuck it" and buy into a completely unpredictable new system. Governments would give up control, and random people who happened to have mined Bitcoin until that point would hold the world's wealth? I don't think so.

Re: Inside One of the World's Largest Bitcoin Mines

#18

Post by jacquesm »

tveita wrote: post #14
maxmcd wrote: post #6

Earlier quoted context omitted.

More inefficient than producing and maintaining paper currency? Than mining actual gold? They really are just throwing tons of electricity and hardware at "nothing", but if this kind of activity helps replace the current inefficient systems of currency, then I'm all for it.

Yes? Going either by volume or number of transaction, Bitcoin transactions are currently ludicrously expensive, though this is somewhat hidden by subsidizing the miners. I don't know why you mention paper currencies and gold when most money today is transferred electronically, in a far more efficient way than Bitcoins.

I'm not sure if by the time you factor in all the costs of banking (including bail-outs) bitcoin is still ludicrously expensive.

And one block will include a whole slew of transactions, that's fixed overhead with economies of scale built in.

Re: Inside One of the World's Largest Bitcoin Mines

#19

Post by bunderbunder »

maxmcd wrote: post #6
CatsoCatsoCatso wrote: post #3

This just strikes me as a colossal waste of energy & time. I understand that there may be good profit in doing it, but that doesn't shirk off any of my feelings.

More inefficient than producing and maintaining paper currency? Than mining actual gold? They really are just throwing tons of electricity and hardware at "nothing", but if this kind of activity helps replace the current inefficient systems of currency, then I'm all for it.

The vast majority of fiat currency in circulation isn't in the form of banknotes or coins. (Gold isn't really a currency anymore, so let's ignore that one.) It exists electronically. In a fractional-reserve system, it's also mostly created by its users, but that happens as a by-product of normal economic activity. And it takes a lot less computer work per economic transaction for a fractional-reserve system to create money than it does in a cryptocurrency.

Re: Inside One of the World's Largest Bitcoin Mines

#20

Post by lutusp »

billyhoffman wrote: post #15
pat2man wrote: post #12

Earlier quoted context omitted.

There are alt coins that try to address this. Prime coin is a good example, the algorithm used in mining is trying to find new prime numbers.

This only holds true if you believe that finding new colossal prime numbers is a good use of time/power. Given the application of new primes is far less than, say, sending humans to live on the mars, I imagine the vast majority of people would not.

> Given the application of new primes is far less than, say, sending humans to live on the mars ...

Yes, but researching primes is way, way less expensive than sending humans to the Red Planet. It's all about cost versus benefit. As one example, some mathematicians think the Riemann Zeta function might reveal something basic about primes, and if so, it would be well worth our time spent studying it, and primes in general.

http://en.wikipedia.org/wiki/Riemann_zeta_function

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