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Bitcoin Mining’s Three Body Problem

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Re: Bitcoin Mining’s Three Body Problem

#41

Post by srl »

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…

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...)

Re: Bitcoin Mining’s Three Body Problem

#42

Post by TylerE »

trixie_ wrote: post #29
TylerE wrote: post #11

Earlier quoted context omitted.

> At the end of the day your computer is no different from an expensive space heater In most of the US, at least, you want AC and not heat at least 7-8 months out of the year, if not more.

It also works with solar and wind.

No it doesn’t. Because the computer is still exhausting heat that makes the AC work harder.

Re: Bitcoin Mining’s Three Body Problem

#43

Post by contravariant »

thebean11 wrote: post #34
Klinky wrote: post #12

Earlier quoted context omitted.

An idle computer clocks down and sips power. Going full bore mining coins results in significant power usage increases. We're talking 10 watts vs 100s of watts.

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.

Re: Bitcoin Mining’s Three Body Problem

#44

Post by vzzvzsz »

thebean11 wrote: post #34
Klinky wrote: post #12

Earlier quoted context omitted.

An idle computer clocks down and sips power. Going full bore mining coins results in significant power usage increases. We're talking 10 watts vs 100s of watts.

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.

efficient

Re: Bitcoin Mining’s Three Body Problem

#45

Post by jes5199 »

srl wrote: post #41
CalmStorm wrote: post #23

Earlier quoted context omitted.

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…

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...)

no, the mining difficulty self-adjusts, so the supply is only increased for a very brief time

Re: Bitcoin Mining’s Three Body Problem

#46

Post by kcolford »

srl wrote: post #41
CalmStorm wrote: post #23

Earlier quoted context omitted.

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…

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...)

No because the supply is fixed in time

Re: Bitcoin Mining’s Three Body Problem

#47

Post by gridlockd »

erik_seaberg wrote: post #39
gridlockd wrote: post #25

Earlier quoted context omitted.

If you're just holding coins you're "safe" in the sense that you will get to keep your account balance. However, if the network is unstable, then that balance will lose value in real terms or even become worthless.

If you sell something in return for coins, and the network could agree on a fork of history in which you never received those coins, not all your balance is safe. Either you trust the network operator(s) not to accept a fork, or you trust the implementation to make a winning fork infeasibly expensive (51% of all miners).

The question was "Can a bad actor steal the coins I am just holding, not spending or receiving?" and the answer is generally: No.

Re: Bitcoin Mining’s Three Body Problem

#48

Post by gridlockd »

wmf wrote: post #31
hn_acc_2 wrote: post #24

Earlier quoted context omitted.

The value of your long-held coins will be almost nothing if the network is vulnerable to double spend. The potential losses are huge (especially for exchanges etc.) from double spend attacks, and the value of a cryptocurrency is very much dependent on users' confidence in its resistance to attacks.

Weirdly, this doesn't seem to be the case. Coins with no hashrate like BCH are still trading at pretty high prices. https://cointelegraph.com/news/bitcoin-cash-could-face-51-at...

BCH does have a significant amount of hashrate. A 51% attack being possible is one thing, it being profitable is another.

If it's not profitable, it is unlikely to happen. If Hashrate was to drop significantly without commensurate price drops, attacks will happen and then the price will drop to compensate.

Re: Bitcoin Mining’s Three Body Problem

#49

Post by trixie_ »

srl wrote: post #41
CalmStorm wrote: post #23

Earlier quoted context omitted.

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…

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.

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