Bitcoin Miners on Track to Use More Electricity Than All of Argentina • Hacker News Board

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#61

Post by nonbel » Mon, Jan 15, 2018, 7:03 PM UTC

jstanley wrote: post #36

nonbel wrote: post #4

Earlier quoted context omitted.

The miners must set a rough minimum fee though. If energy costs rise enough at some point the miners will need to slow/shut down unless the sum value of the fees (in whatever currency is used to pay for the energy) rise above some threshold.

They're not setting a minimum fee, they're either mining or not mining based on profitability. There is never any financial reason to mine blocks that have empty space if there are fee-paying transactions available to put in that space.

I'm not even considering the block reward, consider when there are only fees (or block reward is negligible). In that case profitability is determined by energy/hardware costs vs fees.

If costs go up (eg energy becomes scarce) the minimum fee also need to rise. Each "unit" of economic activity using the currency will be more expensive when energy is scarce than when it is abundant. This is a natural feedback loop.

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#62

Post by jstanley » Mon, Jan 15, 2018, 8:47 PM UTC

nonbel wrote: post #61

jstanley wrote: post #36

Earlier quoted context omitted.

They're not setting a minimum fee, they're either mining or not mining based on profitability. There is never any financial reason to mine blocks that have empty space if there are fee-paying transactions available to put in that space.

I'm not even considering the block reward, consider when there are only fees (or block reward is negligible). In that case profitability is determined by energy/hardware costs vs fees. If costs go up (eg energy becomes scarce) the minimum fee also need to rise. Each "unit" of economic activity using the currency will be more expensive when energy is scarce than when it is abundant. This is a natural feedback loop.

That's not how it works.

If costs go up, mining activity drops. Miners can not increase transaction fees. All they can do is accept the fee they're offered or not.

If they're mining blocks at all, they want to accept the maximum fee that is offered. If they say "you guys aren't paying enough, I'm going to stop mining", then other miners will just get the fees that people are offering instead, and when the difficulty adjusts downwards, the miners that stopped mining might start mining again.

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#63

Post by jstanley » Mon, Jan 15, 2018, 8:50 PM UTC

BearGoesChirp wrote: post #53

jstanley wrote: post #34

Earlier quoted context omitted.

> a miner would lower their fee They're not "lowering their fee". That's not how it works. They might stop mining altogether, but it can never cost more to include a transaction than not to include it, unless including it pushes out another transaction that pays a higher fee.

>They're not "lowering their fee". So a miner will never reduce the cost to include a transaction into their block, even when they aren't getting enough to fill up the block? >They might stop mining altogether Maybe, but any market can experience short term irrationality. Maybe it takes them a few hours to stop mining in which they lose money. Or maybe stopping operations costs enough money that the miner won't stop…

> So a miner will never reduce the cost to include a transaction into their block, even when they aren't getting enough to fill up the block?

Sure, if you want to twist the wording like that, they "lower the fee" to the point where they can fill the blocks. But they're not really "lowering their fees". They don't even have a concept of the fee level they're "charging". They can either accept the fees that are available or not.

If they are mining at all then they want to accept the best fees that are available. There is literally no rationale for them to be mining non-full blocks when fee-paying transactions are available to put in the blocks. It's not like it costs more to mine a larger block. The cost to mine a block is fixed, so you may as well get as much fees as you can find.

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#64

Post by Para2016 » Mon, Jan 15, 2018, 11:00 PM UTC

ggg9990 wrote: post #50

mylons wrote: post #49

does anyone else think that articles like this are fueled self interested parties who don't have a stake in crypto? if crypto is here to stay, wont more efficient mining hardware, potentially more efficient software, and things like recent advances in solar relax these fears in reality?

> does anyone else think that articles like this are fueled self interested parties who don't have a stake in crypto? Journalists aren’t supposed to have a stake in the subject they cover. That’s the point. Not having a stake in cryptocurrency is “disinterested,” not “self-interested.”

There are plenty of journalists with conflicts of interest. It's not ethical, but they do. Financial columnists sometimes don't even admit their conflicts, it's crazy.

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#65

Post by nonbel » Tue, Jan 16, 2018, 11:19 AM UTC

jstanley wrote: post #62

nonbel wrote: post #61

Earlier quoted context omitted.

I'm not even considering the block reward, consider when there are only fees (or block reward is negligible). In that case profitability is determined by energy/hardware costs vs fees. If costs go up (eg energy becomes scarce) the minimum fee also need to rise. Each "unit" of economic activity using the currency will be more expensive when energy is scarce than when it is abundant. This is a natural feedback loop.

That's not how it works. If costs go up, mining activity drops. Miners can not increase transaction fees. All they can do is accept the fee they're offered or not. If they're mining blocks at all, they want to accept the maximum fee that is offered. If they say "you guys aren't paying enough, I'm going to stop mining", then other miners will just get the fees that people are offering instead, and when the difficulty…

You seem hung up on the fact that miners do not broadcast a fee as part of the protocol. Ok, nobody is arguing with that in this thread...

It is just like I will not pay $2000 for a cheeseburger. I am not going to advertise that, I simply will not buy it. There is some maximum price that I set for myself.

However, the role of difficulty adjustments is a better point. As energy costs rise there could be two (non mutually exclusive) effects:

1) Fewer transactions are made with higher fees

2) Mining slows down, leading to a difficulty decrease, leading to less secure transactions

Less secure transactions means waiting for more confirmations to get the same level of confidence there will be no double spend. Is this not another, less extreme, way to slow economic activity in the face of increasing energy costs?

Re: Bitcoin Miners on Track to Use More Electricity Than All of Argentina

#66

Post by BearGoesChirp » Tue, Jan 16, 2018, 2:21 PM UTC

jstanley wrote: post #63

BearGoesChirp wrote: post #53

Earlier quoted context omitted.

>They're not "lowering their fee". So a miner will never reduce the cost to include a transaction into their block, even when they aren't getting enough to fill up the block? >They might stop mining altogether Maybe, but any market can experience short term irrationality. Maybe it takes them a few hours to stop mining in which they lose money. Or maybe stopping operations costs enough money that the miner won't stop…

> So a miner will never reduce the cost to include a transaction into their block, even when they aren't getting enough to fill up the block? Sure, if you want to twist the wording like that, they "lower the fee" to the point where they can fill the blocks. But they're not really "lowering their fees". They don't even have a concept of the fee level they're "charging". They can either accept the fees that are availab…

>They can either accept the fees that are available or not.

Couldn't the same be said of a brick and mortar store? They either accept the offers they are given or they don't. That for some item they only accept offers of exactly 9.99 (plus tax), rejecting not only lower offers but higher offers, doesn't change that the interaction can be described in the same fashion.

All the rest also applies to normal supply and demand. When you do a production run of some item, the cost tends to be fixed per item. Doing another run at a different time may cost different, and it is possible for something extreme to happen (factory accident), but in general the cost of production of a single run is the same.

I see nothing about this that would void basic economic reasoning, where things like 'reducing fees' happens in certain conditions.