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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

#231

Post by vrighter »

AnthonyMouse wrote: post #167
kibwen wrote: post #133

Earlier quoted context omitted.

Except for the inevitable and obvious fact that proof-of-work creates a self-sustaining primary incentive for energy waste more pernicious than has ever been seen in any other financial or commercial enterprise, obliterating any hope of having energy that is too cheap to meter.

Isn't this kind of the opposite? Mining Bitcoin requires both hardware and electricity, and the cheapest electricity is solar. There isn't any severe scarcity of the raw materials to make solar panels, or of sunlight, so Bitcoin miners can buy as many solar panels as they want and it would only increase the economies of scale for producing them for other purposes too. Solar has inconsistent output. There is none at n…

The first argument really really does not make sense.

You can also increase economies of scale by building out solar farms, and using them for something useful, instead of wasting it on guessing random hashes.

Saying that wasting energy is fine as long as you get it cleanly doesn't change the fact that you're still wasting it.

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

#232

Post by oblio »

ptero wrote: post #228
oblio wrote: post #215

Earlier quoted context omitted.

This doesn't answer my main concern. How do most people use Lightning? Do they operate on their own or use a big hub?

Sorry, and no offense intended, but can you be clearer? What exactly is your main concern that you allude to above? And how, in your view, the Lightning compares with the alternatives in that specific regards? Most people who use Lightning do not operate their own nodes; same as with other payment methods -- credit card users do not operate their own payment networks, people writing checks do not operate their own ba…

My point is that for legitimate payment uses Lightning (and all current cryptocurrencies) are useless. They were sold as the "democratization of finance" that will "help the world's poorest" and they either:

1. can't allow an single village to operate purely on them, because they're too slow

2. or they're not decentralized, and the entire "democratic" angle dies with that

And then what's the point of cryptocurrencies for most people? Why not just use the "tradfi" and "fiat currencies" and use the money propping up cryptocurrencies to actually make the world a better place?

If we shut down all current cryptocurrencies and diverted resources used to actual productive uses, the world would probably end up with a net gain.

I'm just ranting. I would want cryptocurrencies to be amazing but right now they seem useful for people with cyberpunks fetishes, for criminals, and rarely, for actual regular people from fragile states (not rich people trying to exfiltrate wealth).

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

#234

Post by groundzeros2015 »

eru wrote: post #214
groundzeros2015 wrote: post #113

Earlier quoted context omitted.

Yes, but the coins with less participation require less power to compete. To make a market argument that there is an equilibrium of players across all coins, implies there are actual individuals finding opportunities and switching coins when they get out of sync.

Miners already switch between coins, yes.

And their reason for switching coins is?…

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

#235

Post by ptero »

oblio wrote: post #232
ptero wrote: post #228

Earlier quoted context omitted.

Sorry, and no offense intended, but can you be clearer? What exactly is your main concern that you allude to above? And how, in your view, the Lightning compares with the alternatives in that specific regards? Most people who use Lightning do not operate their own nodes; same as with other payment methods -- credit card users do not operate their own payment networks, people writing checks do not operate their own ba…

My point is that for legitimate payment uses Lightning (and all current cryptocurrencies) are useless. They were sold as the "democratization of finance" that will "help the world's poorest" and they either: 1. can't allow an single village to operate purely on them, because they're too slow 2. or they're not decentralized, and the entire "democratic" angle dies with that And then what's the point of cryptocurrencies…

> what's the point of cryptocurrencies for most people? Why not just use the "tradfi" and "fiat currencies"

Maybe because otherwise for a significant portion of the world population their own fiat is the only game in town. And it sucks so much that the regular people are willing to break laws and risk fines, confiscations and occasionally prison just for keeping their savings in anything else, like a neighbor country fiat. Their govvies use their fiat as a transfer mechanism (which makes saving impossible) and thus must discourage any other savings vehicle; otherwise no fool will use their fiat.

I saw fiat rug pull twice in my first 25 years: once as an instant nationalization (a friendly radio announcement one night that your money is ... well ... not a money anymore) and, later, a hyperinflation that over 2 years wiped out savings. And being found with a less sucky fiat at home meant jail.

I was just a kid, did not have any savings and thus did not care that much. But an older generation lost everything. So yes, a lot of people will gladly use anonymous, permissionless money, drawdowns and other warts included.

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

#236

Post by npoc »

hn_throwaway_99 wrote: post #164
dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

It is how bitcoin is designed to work, but it also shows very directly how proof-of-work systems can never scale to be the global monetary replacement its boosters push. If the opposite happened, and the price for some reason sky rocketed to, say, $1 million per bitcoin, it would necessarily mean that it would induce more miners until the difficulty and consequent electricity cost (regardless of the efficiency in ele…

You crucially missed the "halving" out of that model.

The block reward halving every 4 years means that in 3 halvings (8-12 years), miners will spend roughly the same on electricity at $1M/BTC as they do now at $125k/BTC.

Further, at historical rates of dollar devaluation, in a decade $1M will only be worth ~$500k today, and so really only roughly two halvings are required to even the electricity use between $125k/BTC and $1M/BTC

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

#237

Post by MrSkelter »

dmk wrote: post #7

The headline is dramatic but this is literally how bitcoin is designed to work. Miners leave, difficulty drops, costs go down, mining becomes profitable again. The interesting part isn’t the loss per coin, it’s how long the lag between unprofitable mining and difficulty adjustment keeps forced selling pressure on the market.

Bitcoin is arguably the worst designed technology product in history.

Burning $88k of carbon to run the world’s slowest payment network and produce a tiny corpus of data is stratospherically dumb.

The technological equivalent of raising a forest to produce a toothpick.

Just because “it works” (which is arguable in itself) doesn’t mean it isn’t stupid.

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

#238

Post by cykros »

paulddraper wrote: post #147
londons_explore wrote: post #81

Earlier quoted context omitted.

The damping effect is that part of your costs are the hardware, space, depreciation etc. leaving that stuff idle costs money - so it makes sense to mine in the less profitable periods too.

Yes though AFAIK electricity is a large %

The larger it is, the less likely your mining set up is actually all that solid.

The best miners are doing so with near free electricity, either with things like subsidized solar, or energy acquired from things like nat gas that'd otherwise get flared, or hydroelectric power that exists too far from civilization to have a demand otherwise.

If your miner is plugged into the grid, you're probably doing it wrong.

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