59 ms·

Bitcoin's mining difficulty has increased by 41.9% over the last 30 days

226 points by arnauddri 11y ago

module17 11y ago
What broke?
- Kinnard 11y ago
  It doesn't mean anything is broken. The recent rise in price justifies bringing miners online or shifting them away from other cryptocoins. Halving day is coming soon too.
  - Mandatum 11y ago
    It's predicted to happen mid-2016, 70% of all coins to ever be mined have been so. This has been a really interesting tech to watch over the years.
    - austinjp 11y ago
      What happens when we reach 100%?
      - gnaritas 11y ago
        Then no new bitcoins will be created and all mining profits will come from fees. That won't happen until 2140.
        poizan42 11y ago
        There's some very big ifs in that. We really have no idea what sort of breakthroughs might happen the next 125 years
        gnaritas 11y ago
        That's always true of the future, but the difficulty is continually self adjusting and pluggable and quantum proof algos exist so that'll be about the timeline no matter the power of future CPU's.
      - jonknee 11y ago
        We re-learn why a deflationary currency is an awful idea.
        andys627 11y ago
        ELI5 por favor
        jonknee 11y ago
        http://www.economist.com/blogs/freeexchange/2014/04/money http://www.economist.com/blogs/freeexchange/2014/04/money Essentially, if you think that a currency will be worth more tomorrow than it is today there is little reason for investment (or even spending!). It quickly becomes a spiral where no one wants to spend. Inflation provides a nice kick in the pants for people to put their money to good use. This isn't a concern yet for Bitcoin because in the scheme of world economies BTC simply doesn't matter (it could go away tomorrow without any noticeable effects), but if in the future it becomes a critical thing it would be a major concern.
        kristianp 11y ago
        Aren't we learning in today's environment where prices of many things are going down (or with recent Japan as an example), that deflation isn't necessarily bad? In the past it is associated with recessions, but it may be a side effect of the recession or depression, or an over-adjustment by governments trying to reign in inflation. Economists agree: deflation is either good, or bad, or irrelevant: http://ftalphaville.ft.com/2015/03/23/2122452/economists-agree-deflation-is-either-good-or-bad-or-irrelevant/ http://ftalphaville.ft.com/2015/03/23/2122452/economists-agr...
        vezzy-fnord 11y ago
        Deflationary spirals are a hypothetical concern and mostly a fringe neo-Fisherian idea that has recently gained some mainstream nodding, but is otherwise difficult to verify in any way. For one thing it assumes a massive collective irrationality where people's expectations are all rendered berserk and plunged into a negative time preference. It's a very tough gambit to make that people can withdraw their propensity to consume to such a high extent. It's tough to presume that the heterogeneous stock of capital and the time structure of production will just stand still to a deflationary pressure and not readjust to add more stages or adjust the price spreads in between. [1] Of course, BTC being a global currency means it exists in competition and per Gresham's law can always be driven out. Not a catastrophe. [1] https://www.jstor.org/stable/2547921 https://www.jstor.org/stable/2547921
      - srdev 11y ago
        No more bitcoins, miners get funded by fees instead of the newly-minted coins.
      - everfree 11y ago
        Then blocks continue to be created, but no more coins are mined (in practice, we will be mining tiny little fractions of a coin for a very long time until it drops off to true zero).
        rinze 11y ago
        If no more coins are mined (or the mining rate drops to almost negligible levels), is there still any incentive for people to keep the blockchain alive by computing power? Aside from keeping the whole system alive, I mean.
        presty 11y ago
        yes, transaction fees
        rlpb 11y ago
        When you request a transaction you also offer a fee. You get to set the fee. If miners don't like it they don't have to include your transaction, and if that happens your transaction will not get confirmed. After no more coins are mined, miners will be relying entirely on transaction fees. At that point, competition will show us the real cost (and electricity used) for transactions. Right now transaction fees are low(er) because miners can offset their costs against the coins that they mine as well.
      - ori_b 11y ago
        Transaction fees.
aurizon 11y ago
More powerful miners beget higher work needed to mine. A small cadre of people with ultrpowerful mining gear have pushed a more difficult task on the rest of us.
- escherize 11y ago
  ... by simultaneously facilitating a large ratio of bitcoin's infrastructure.
  - woah 11y ago
    Not 100% sure, but from your tone it sounds like you think they are performing some kind of service. This is not true. Miners do not increase the number of transactions the network can handle. An infinitesimal amount of the electricity going into mining is actually goes to process transactions. A raspberry pi in a shoebox running mySql is capable of processing more transactions than the entire bitcoin network, liquid nitrogen and all. All that mining does is give the person with the most hashrate more voting power in which transactions will be accepted. Innovation in mining hardware and data centers does not in any way increase bitcoin's security.
    - feral 11y ago
      >Innovation in mining hardware and data centers does not in any way increase bitcoin's security. Not sure exactly what you mean here - mining, and mining faster, generally increases the computational resources another third party would need to 51% attack the network.
      - fosk 11y ago
        Is there any possibility that they could themselves attack the network?
        feral 11y ago
        Anyone with enough compute can attack the network in this way. There's various scenarios depending on how much compute the attacker has, but in general as they approach 51% of the network's compute, they can start to reliably do double-spending attacks. But, and this is arguably one of the cleverest parts of Bitcoin's design: Who is going to get all that compute setup to mine Bitcoin, and then break the very system that makes it worth having? Not saying there couldn't ever be scenarios where it happens, but its a pretty good first deterrent to bad behavior - and its clearly intentional, mentioned in the original Bitcoin paper: "If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth." In some ways, the existence of custom mining hardware is a bad thing, by reducing the spread of participants who can mine cost-effectively - essentially un-democratising the running of the system. But on the other hand, its meant that an attacker has to invest in a lot of special-purpose hardware to attack the system (rather than just being able to e.g. rent enough EC2 nodes, or turn their entire government's cluster against Bitcoin, or whatever); which probably increases the cost of (then) destroying the system, and makes Satoshi's original Incentive argument stronger, imo.
mwilcox 11y ago
https://www.businesswire.com/news/home/20151211005837/en/BitFury-Launch-Energy-Efficient-Immersion-Cooling-Data https://www.businesswire.com/news/home/20151211005837/en/Bit...
- twic 11y ago
  40MW! For bitcoin! This is nuts!
  - morsch 11y ago
    As a point of comparison, a typical commercial nuclear reactor produces around 1000 MW (give or take; most power stations have more than one reactor).
    - thaumasiotes 11y ago
      You know, I'd kind of like to see someone construct a nuclear plant just to self-source their bitcoin mining power needs.
  - urbanarson 11y ago
    For comparison, how much power does Visa, Mastercard, the Federal Reserve (and its printing presses), banks, and all of the buildings and employees that work in the traditional financial sector use? Now think about that in every single country on this planet. It's a lot more than 40MW. The Bitcoin network is a steal by comparison.
    - homogeneous 11y ago
      You're comparing the microscopic bitcoin economy to the financial infrastructure that services the entire planet; it's a ridiculous comparison. How would bitcoin's power consumption stack up if it were tasked with servicing tens of millions of transactions per second?
      - astrodust 11y ago
deleted 11y ago
[deleted]
web007 11y ago
Slightly-more-available link https://bitcoinwisdom.com/bitcoin/difficulty https://bitcoinwisdom.com/bitcoin/difficulty Hash rate has increased by 41.9% over the same period, so the difficulty has kept the time-to-generate relatively fixed - just the way it's supposed to work. The real news is that someone or someone(s) have added ~200PH/s worth of processing power to the network in the past 30 days. This is probably from some high-power ASIC miner being released, or from some consolidated mining concern going live.
Kinnard 11y ago
This is a strong indication that a light show is coming.
- johndevor 11y ago
  What?
- deleted 11y ago
  [deleted]
mrb 11y ago
Nobody on HN pointed out who is behind the increase... This is BitFury who just launched a 40 megawatt data center filled up with their new 16 nm chips which reportedly achieve approximately 0.06 joule per gigahash. They also use immersion cooling which gives them an insane PUE of 1.02. So the mining capacity of this DC alone is ~650 Phash/s! We saw an increase of ~200 Phash/s in the last 30 days, so presumably they are at only operating at 1/3rd of their capabilities so far: 40e6 (watt) / 0.06 (joule/gigahash) / 1e6 (petahash/gigahash) = ~650 petahash/second BitFury's immersion cooling tech: http://datacenterfrontier.com/immersion-cooling-bitcoin/ http://datacenterfrontier.com/immersion-cooling-bitcoin/ https://www.youtube.com/watch?v=uV7MDhqNyXE&t=0m42s https://www.youtube.com/watch?v=uV7MDhqNyXE&t=0m42s (shows the fluid boiling - starts at 0m42s) https://www.businesswire.com/news/home/20151211005837/en/BitFury-Launch-Energy-Efficient-Immersion-Cooling-Data https://www.businesswire.com/news/home/20151211005837/en/Bit... BitFury's 16nm chips: http://www.businesswire.com/news/home/20151216005453/en/BitFury-Announces-Mass-Production-Fastest-Effective-16nm http://www.businesswire.com/news/home/20151216005453/en/BitF...
- keyle 11y ago
  Are those crazy jargon words meant to translate to $ ? If so, is it profitable? Sounds like they've just cut their lunch by 40% too.
  - jacquesm 11y ago
    It's a race to the bottom. It will end with the party that manages to just win that race by making the smallest profit possible at the highest efficiency of Joules per hash computed. Bitcoin is interesting for many reasons, the real-world effects of a couple of configuration settings and some cleverly picked auto-scaling parameters are immense. The number of orders of magnitude that the protocol has survived with minor tweaks to date is very impressive.
    - feelix 11y ago
      Anywhere in the USA who has to pay USA power prices is going to be at a disadvantage by that alone then. It would seem that locating the hashing equipment to the place with the cheapest power possible would be a logical step when things start to get cut that fine. Unless that could be overcome with clever usage of naturally generated local power (such as solar power).
forrestthewoods 11y ago
Bitcoin feels a bit like the gold standard. Massive mining operations dumping huge volumes of resources and energy to acquire some thing that is only mildly useful. It seems quite wasteful.
- neilk 11y ago
  Stellar solves the same problem in a different way - nodes pick whom to trust in the network. So it doesn't burn vast quantities of energy just to stand still, and it's not vulnerable to someone with vast computing resources. I'm not an expert but it makes a lot of sense to me. Most real-world decentralized institutions work kind of like this. https://medium.com/a-stellar-journey/on-worldwide-consensus-359e9eb3e949#.9i42w641t https://medium.com/a-stellar-journey/on-worldwide-consensus-...
- nemild 11y ago
  There's a pretty good writeup about this issue in the Stanford/Princeton Cryptocurrency Class: https://drive.google.com/uc?id=0B4-bDFu_72Beelkxd3VlbXoyd0E&export=download https://drive.google.com/uc?id=0B4-bDFu_72Beelkxd3VlbXoyd0E&... Excerpt: According to our estimates then, the whole Bitcoin network is consuming maybe 10% of a large power plant’s worth of electricity. Although this is not an insignificant amount of power, it's not yet a large amount of electricity compared to all the other things that people are using electricity for on the planet. Any payment system requires energy and electricity. With traditional currency, lots of energy is consumed guarding and moving gold bullions around, running ATM machines, coin sorting machines, cash registers, and payment processing services, and transporting money in armored cars. Some people say Bitcoin wastes energy because the energy expended computing SHA-256 hashes doesn’t serve any apparent purpose. But you could make this same argument for traditional currency as well — there’s a lot of energy being wasted and it doesn't serve any purpose besides maintaining the currency system. So, if we value Bitcoin as a useful currency system, then the energy required to support it is not really being wasted. That said, we can ask if there’s a way to do better ...
  - guelo 11y ago
    That paper estimates the bitcoin network's total power consumption at around 117MW. This latest increase is estimated at 40MW. So it is a significant increase.
jegutman 11y ago
An interesting though exercise: Does the new capacity make a bitcoin more valuable or less valuable? Intuitively seems like more valuable, but the average cost in energy to mine the marginal block has gone down (otherwise the new miner wouldn't be mining) and that's often though of as the floor on BTC value. Seems like having a stronger network is a net plus, and since they're probably not near the 50%+1 threshold it probably is in fact a stronger network. Although maybe they will get close if marginal miners are forced to turn off if the price of XBT drops and BitFury is enough more efficient. Although BitFury is probably not a bad actor, technically a 50%+1 attack is not obviously illegal (IANAL), although a government might step in ironically enough. It seems to me these types of more centralized setups do introduce some tail risk to the system.
- brianpgordon 11y ago
  There's an interesting book on the economic underpinnings of Bitcoin- https://s3-us-west-2.amazonaws.com/chainbook/The+Anatomy+of+a+Money-like+Informational+Commodity.pdf https://s3-us-west-2.amazonaws.com/chainbook/The+Anatomy+of+... > we now know that there is a near precise model that describes the cost of running and maintaining the network. The way the cost estimate is determined is through how Bitcoin acts as a decentralized waste heat creator that activates and deactivates heat generation based on market participation and pricing signals. What do the randomizations necessary for cryptography and the waste heat produced by computing devices have in common? One word: “exergy,” a term of art describing the maximum useful work possible during a process that brings a system into equilibrium with a heat reservoir. Exergy is always destroyed in the seigniorage hashing process - for example - if a token's value increases to $1,000, this means that at most $1,000 worth of waste heat will be generated somewhere in its creation. From my reading of the text, it's not so much the additional hash power that's valuable, it's the additional money spent building and operating the ASICs. In theory, the market cap of a proof-of-work system should approach its total cumulative cost to secure. The more watts you see being dumped into the environment calculating hashes, the more you should value Bitcoin. If Bitcoin is worth less than its cost to mine, no rational miner will mine (if they want BTC they'll just use their electricity budget to buy it on the market), so the competition (and therefore the cost) to mine each block goes down. If Bitcoin is worth more than its cost to mine, mining becomes profitable to anyone willing to put up the capex, so the competition (and therefore the cost) to mine each block goes up. There's an equilibrium where the value of Bitcoin is equal to its cost to mine. The actual price of bitcoin as seen by the average consumer is insulated from the cost to mine because of effects like speculation, perceived future movement, and the value provided by ease of spending / anonymity, so the economic theory isn't really accurate, but that's why it's a theory!
LAMike 11y ago
Once the 16nm chips become a commodity, it will make sense that the hashing power would get more distributed. I hope figures out how to get a solar powered, interchangeable bitcoin miner in a box at a positive ROI. It may seem impossible now, but solar prices are falling faster than expected.
- maaku 11y ago
  Why would you expect hashing power to become more distributed? Mining is a race to the bottom/thin margins, and the differentials in power rates far exceed normal miner profit margins. It would still only be profitable to mine at scale in a few select locations in the world.
  - ZenoArrow 11y ago
    > "Why would you expect hashing power to become more distributed?" http://www.businesswire.com/news/home/20151216005453/en/BitFury-Announces-Mass-Production-Fastest-Effective-16nm http://www.businesswire.com/news/home/20151216005453/en/BitF... "Valery Vavilov, CEO of BitFury, said: “We are very excited to launch mass production of our super 16nm ASIC Chip. The final results of our hard work have fully met our expectations. We understand that it will be nearly impossible for any older technology to compete with the performance of our new 16nm technology. As a responsible player in the Bitcoin community, we will be working with integration partners and resellers to make our unique technology widely available ensuring that the network remains decentralized and we move into the exahash era together. BitFury warmly welcomes all companies interested in joining our integration and reseller program.”"
    - maaku 11y ago
      That doesn't address any of the concerns I raised.
      - ZenoArrow 11y ago
        Yes it does. If the article is correct, the 16nm BitFury chips will be sold to interested parties, so new mining capacity won't be dominated by a single company, thereby ensuring newly mined BitCoins can be distributed throughout the network. If your concerns were about something other than distribution, please clarify.
jgalt212 11y ago
What a colossal waste of electricity. Great, they've created a general ledger and currency formed by individual untrusted participants, but who in the aggregate are trusted. What about this: Why not just diversify your risk by doing transactions or investing in currencies/assets across a diversified set of untrusted counterparties? Same net effect, and a lot less electricity wasted.
- ikeboy 11y ago
  Huh? How does this "diversifying risk" idea let you do any of the major bitcoin applications? (For example, how would your idea that has the "same net effect" as bitcoin allow anonymous markets?)
  - jgalt212 11y ago
    Bitcoin is not anonymous. The entire ledger history is exposed. Through network analysis you can figure out who the original anonymous holder is. And as soon as that holder tries to convert to a fiat currency their identity will be exposed. It's precisely because Bitcoin is way more traceable than cash, the US government has not tried to shut it down despite a lot illegal activity being paid for via bitcoin. As soon as Satoshi tries to convert any of his coins into dollars or any other legacy currency everyone will know who he is.
    - ikeboy 11y ago
      This is wrong. Plenty of people have converted to fiat and not been caught, there are ways of mixing coins.
      - jgalt212 11y ago
        Actually, we're both wrong. Just because you have not been caught does not mean there hasn't been loss of anonymity. And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects.
rpwverheij 11y ago
looking at the chart there are plenty of places there was more increase in difficulty in 30 days. In the whole 2014 difficulty seemed to have multiplied 40 times! I understand the magnitude is a whole different story now though..
HappyTypist 11y ago
The billion dollar question is how we can have completely decentralised (and not merely distributed) consensus without proof of work. It's a difficult question, and various proposals like Proof of Stake (not secure) and Consensus Ledger (not secure, not decentralised) have all failed technically and on the market.
kushti 11y ago
Some alternatives. Permacoin(http://cs.umd.edu/~amiller/permacoin.pdf http://cs.umd.edu/~amiller/permacoin.pdf) has mostly the same security properties, but effectiveily non-outsorceable, and work done is useful. We made the first open-source implementation of that https://github.com/ScorexProject/Scorex-Lagonaki/tree/master/scorex-perma https://github.com/ScorexProject/Scorex-Lagonaki/tree/master... . I also have paper draft about better Proof-of-Stake protocol, and would like to share it with people from academias to get a feedback. Please write me ( kushti at protonmail dot ch ). I also have half-written paper draft about PoW+PoS hybrid chain.
blencdr 11y ago
No one is afraid of the ecological cost of crypto currencies ? We are in a world where the energy has a frightening ecologic cost and people to spend it in gigantic quantities just to create a virtual money...
- nanny 11y ago
  >No one is afraid of the ecological cost of crypto currencies ? I am. But this is a drop in the bucket compared to financial sectors that deal with "real" money. Really, isn't nearly all modern money "virtual"? Nevermind the fact that a lot of money only exists electronically, modern money doesn't actually physically represent anything. Therefore: virtual.
  - blencdr 11y ago
    The problem is not the virtual character of the money, but the energy involved to create it. The idea behind it is that you need energy to gather money (metalic money for example). but this is pointless for bitcoin, it's just wasted without any utility.

226 points by arnauddri 11y ago

module17 11y ago

What broke?

Kinnard 11y ago
It doesn't mean anything is broken. The recent rise in price justifies bringing miners online or shifting them away from other cryptocoins. Halving day is coming soon too.
- Mandatum 11y ago
  It's predicted to happen mid-2016, 70% of all coins to ever be mined have been so. This has been a really interesting tech to watch over the years.
  - austinjp 11y ago
    What happens when we reach 100%?
    - gnaritas 11y ago
      Then no new bitcoins will be created and all mining profits will come from fees. That won't happen until 2140.
      - poizan42 11y ago
        There's some very big ifs in that. We really have no idea what sort of breakthroughs might happen the next 125 years
        gnaritas 11y ago
        That's always true of the future, but the difficulty is continually self adjusting and pluggable and quantum proof algos exist so that'll be about the timeline no matter the power of future CPU's.
    - jonknee 11y ago
      We re-learn why a deflationary currency is an awful idea.
      - andys627 11y ago
        ELI5 por favor
        jonknee 11y ago
        http://www.economist.com/blogs/freeexchange/2014/04/money http://www.economist.com/blogs/freeexchange/2014/04/money Essentially, if you think that a currency will be worth more tomorrow than it is today there is little reason for investment (or even spending!). It quickly becomes a spiral where no one wants to spend. Inflation provides a nice kick in the pants for people to put their money to good use. This isn't a concern yet for Bitcoin because in the scheme of world economies BTC simply doesn't matter (it could go away tomorrow without any noticeable effects), but if in the future it becomes a critical thing it would be a major concern.
        kristianp 11y ago
        Aren't we learning in today's environment where prices of many things are going down (or with recent Japan as an example), that deflation isn't necessarily bad? In the past it is associated with recessions, but it may be a side effect of the recession or depression, or an over-adjustment by governments trying to reign in inflation. Economists agree: deflation is either good, or bad, or irrelevant: http://ftalphaville.ft.com/2015/03/23/2122452/economists-agree-deflation-is-either-good-or-bad-or-irrelevant/ http://ftalphaville.ft.com/2015/03/23/2122452/economists-agr...
        vezzy-fnord 11y ago
        Deflationary spirals are a hypothetical concern and mostly a fringe neo-Fisherian idea that has recently gained some mainstream nodding, but is otherwise difficult to verify in any way. For one thing it assumes a massive collective irrationality where people's expectations are all rendered berserk and plunged into a negative time preference. It's a very tough gambit to make that people can withdraw their propensity to consume to such a high extent. It's tough to presume that the heterogeneous stock of capital and the time structure of production will just stand still to a deflationary pressure and not readjust to add more stages or adjust the price spreads in between. [1] Of course, BTC being a global currency means it exists in competition and per Gresham's law can always be driven out. Not a catastrophe. [1] https://www.jstor.org/stable/2547921 https://www.jstor.org/stable/2547921
    - srdev 11y ago
      No more bitcoins, miners get funded by fees instead of the newly-minted coins.
    - everfree 11y ago
      Then blocks continue to be created, but no more coins are mined (in practice, we will be mining tiny little fractions of a coin for a very long time until it drops off to true zero).
      - rinze 11y ago
        If no more coins are mined (or the mining rate drops to almost negligible levels), is there still any incentive for people to keep the blockchain alive by computing power? Aside from keeping the whole system alive, I mean.
        presty 11y ago
        yes, transaction fees
        rlpb 11y ago
        When you request a transaction you also offer a fee. You get to set the fee. If miners don't like it they don't have to include your transaction, and if that happens your transaction will not get confirmed. After no more coins are mined, miners will be relying entirely on transaction fees. At that point, competition will show us the real cost (and electricity used) for transactions. Right now transaction fees are low(er) because miners can offset their costs against the coins that they mine as well.
    - ori_b 11y ago
      Transaction fees.

aurizon 11y ago

More powerful miners beget higher work needed to mine. A small cadre of people with ultrpowerful mining gear have pushed a more difficult task on the rest of us.

escherize 11y ago
... by simultaneously facilitating a large ratio of bitcoin's infrastructure.
- woah 11y ago
  Not 100% sure, but from your tone it sounds like you think they are performing some kind of service. This is not true. Miners do not increase the number of transactions the network can handle. An infinitesimal amount of the electricity going into mining is actually goes to process transactions. A raspberry pi in a shoebox running mySql is capable of processing more transactions than the entire bitcoin network, liquid nitrogen and all. All that mining does is give the person with the most hashrate more voting power in which transactions will be accepted. Innovation in mining hardware and data centers does not in any way increase bitcoin's security.
  - feral 11y ago
    >Innovation in mining hardware and data centers does not in any way increase bitcoin's security. Not sure exactly what you mean here - mining, and mining faster, generally increases the computational resources another third party would need to 51% attack the network.
    - fosk 11y ago
      Is there any possibility that they could themselves attack the network?
      - feral 11y ago
        Anyone with enough compute can attack the network in this way. There's various scenarios depending on how much compute the attacker has, but in general as they approach 51% of the network's compute, they can start to reliably do double-spending attacks. But, and this is arguably one of the cleverest parts of Bitcoin's design: Who is going to get all that compute setup to mine Bitcoin, and then break the very system that makes it worth having? Not saying there couldn't ever be scenarios where it happens, but its a pretty good first deterrent to bad behavior - and its clearly intentional, mentioned in the original Bitcoin paper: "If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth." In some ways, the existence of custom mining hardware is a bad thing, by reducing the spread of participants who can mine cost-effectively - essentially un-democratising the running of the system. But on the other hand, its meant that an attacker has to invest in a lot of special-purpose hardware to attack the system (rather than just being able to e.g. rent enough EC2 nodes, or turn their entire government's cluster against Bitcoin, or whatever); which probably increases the cost of (then) destroying the system, and makes Satoshi's original Incentive argument stronger, imo.

mwilcox 11y ago

https://www.businesswire.com/news/home/20151211005837/en/BitFury-Launch-Energy-Efficient-Immersion-Cooling-Data https://www.businesswire.com/news/home/20151211005837/en/Bit...

twic 11y ago
40MW! For bitcoin! This is nuts!
- morsch 11y ago
  As a point of comparison, a typical commercial nuclear reactor produces around 1000 MW (give or take; most power stations have more than one reactor).
  - thaumasiotes 11y ago
    You know, I'd kind of like to see someone construct a nuclear plant just to self-source their bitcoin mining power needs.
- urbanarson 11y ago
  For comparison, how much power does Visa, Mastercard, the Federal Reserve (and its printing presses), banks, and all of the buildings and employees that work in the traditional financial sector use? Now think about that in every single country on this planet. It's a lot more than 40MW. The Bitcoin network is a steal by comparison.
  - homogeneous 11y ago
    You're comparing the microscopic bitcoin economy to the financial infrastructure that services the entire planet; it's a ridiculous comparison. How would bitcoin's power consumption stack up if it were tasked with servicing tens of millions of transactions per second?
    - astrodust 11y ago

deleted 11y ago

[deleted]

web007 11y ago

Slightly-more-available link https://bitcoinwisdom.com/bitcoin/difficulty https://bitcoinwisdom.com/bitcoin/difficulty Hash rate has increased by 41.9% over the same period, so the difficulty has kept the time-to-generate relatively fixed - just the way it's supposed to work. The real news is that someone or someone(s) have added ~200PH/s worth of processing power to the network in the past 30 days. This is probably from some high-power ASIC miner being released, or from some consolidated mining concern going live.

Kinnard 11y ago

This is a strong indication that a light show is coming.

johndevor 11y ago
What?
deleted 11y ago
[deleted]

mrb 11y ago

Nobody on HN pointed out who is behind the increase... This is BitFury who just launched a 40 megawatt data center filled up with their new 16 nm chips which reportedly achieve approximately 0.06 joule per gigahash. They also use immersion cooling which gives them an insane PUE of 1.02. So the mining capacity of this DC alone is ~650 Phash/s! We saw an increase of ~200 Phash/s in the last 30 days, so presumably they are at only operating at 1/3rd of their capabilities so far: 40e6 (watt) / 0.06 (joule/gigahash) / 1e6 (petahash/gigahash) = ~650 petahash/second BitFury's immersion cooling tech: http://datacenterfrontier.com/immersion-cooling-bitcoin/ http://datacenterfrontier.com/immersion-cooling-bitcoin/ https://www.youtube.com/watch?v=uV7MDhqNyXE&t=0m42s https://www.youtube.com/watch?v=uV7MDhqNyXE&t=0m42s (shows the fluid boiling - starts at 0m42s) https://www.businesswire.com/news/home/20151211005837/en/BitFury-Launch-Energy-Efficient-Immersion-Cooling-Data https://www.businesswire.com/news/home/20151211005837/en/Bit... BitFury's 16nm chips: http://www.businesswire.com/news/home/20151216005453/en/BitFury-Announces-Mass-Production-Fastest-Effective-16nm http://www.businesswire.com/news/home/20151216005453/en/BitF...

keyle 11y ago
Are those crazy jargon words meant to translate to $ ? If so, is it profitable? Sounds like they've just cut their lunch by 40% too.
- jacquesm 11y ago
  It's a race to the bottom. It will end with the party that manages to just win that race by making the smallest profit possible at the highest efficiency of Joules per hash computed. Bitcoin is interesting for many reasons, the real-world effects of a couple of configuration settings and some cleverly picked auto-scaling parameters are immense. The number of orders of magnitude that the protocol has survived with minor tweaks to date is very impressive.
  - feelix 11y ago
    Anywhere in the USA who has to pay USA power prices is going to be at a disadvantage by that alone then. It would seem that locating the hashing equipment to the place with the cheapest power possible would be a logical step when things start to get cut that fine. Unless that could be overcome with clever usage of naturally generated local power (such as solar power).

forrestthewoods 11y ago

Bitcoin feels a bit like the gold standard. Massive mining operations dumping huge volumes of resources and energy to acquire some thing that is only mildly useful. It seems quite wasteful.

neilk 11y ago
Stellar solves the same problem in a different way - nodes pick whom to trust in the network. So it doesn't burn vast quantities of energy just to stand still, and it's not vulnerable to someone with vast computing resources. I'm not an expert but it makes a lot of sense to me. Most real-world decentralized institutions work kind of like this. https://medium.com/a-stellar-journey/on-worldwide-consensus-359e9eb3e949#.9i42w641t https://medium.com/a-stellar-journey/on-worldwide-consensus-...
nemild 11y ago
There's a pretty good writeup about this issue in the Stanford/Princeton Cryptocurrency Class: https://drive.google.com/uc?id=0B4-bDFu_72Beelkxd3VlbXoyd0E&export=download https://drive.google.com/uc?id=0B4-bDFu_72Beelkxd3VlbXoyd0E&... Excerpt: According to our estimates then, the whole Bitcoin network is consuming maybe 10% of a large power plant’s worth of electricity. Although this is not an insignificant amount of power, it's not yet a large amount of electricity compared to all the other things that people are using electricity for on the planet. Any payment system requires energy and electricity. With traditional currency, lots of energy is consumed guarding and moving gold bullions around, running ATM machines, coin sorting machines, cash registers, and payment processing services, and transporting money in armored cars. Some people say Bitcoin wastes energy because the energy expended computing SHA-256 hashes doesn’t serve any apparent purpose. But you could make this same argument for traditional currency as well — there’s a lot of energy being wasted and it doesn't serve any purpose besides maintaining the currency system. So, if we value Bitcoin as a useful currency system, then the energy required to support it is not really being wasted. That said, we can ask if there’s a way to do better ...
- guelo 11y ago
  That paper estimates the bitcoin network's total power consumption at around 117MW. This latest increase is estimated at 40MW. So it is a significant increase.

jegutman 11y ago

An interesting though exercise: Does the new capacity make a bitcoin more valuable or less valuable? Intuitively seems like more valuable, but the average cost in energy to mine the marginal block has gone down (otherwise the new miner wouldn't be mining) and that's often though of as the floor on BTC value. Seems like having a stronger network is a net plus, and since they're probably not near the 50%+1 threshold it probably is in fact a stronger network. Although maybe they will get close if marginal miners are forced to turn off if the price of XBT drops and BitFury is enough more efficient. Although BitFury is probably not a bad actor, technically a 50%+1 attack is not obviously illegal (IANAL), although a government might step in ironically enough. It seems to me these types of more centralized setups do introduce some tail risk to the system.

brianpgordon 11y ago
There's an interesting book on the economic underpinnings of Bitcoin- https://s3-us-west-2.amazonaws.com/chainbook/The+Anatomy+of+a+Money-like+Informational+Commodity.pdf https://s3-us-west-2.amazonaws.com/chainbook/The+Anatomy+of+... > we now know that there is a near precise model that describes the cost of running and maintaining the network. The way the cost estimate is determined is through how Bitcoin acts as a decentralized waste heat creator that activates and deactivates heat generation based on market participation and pricing signals. What do the randomizations necessary for cryptography and the waste heat produced by computing devices have in common? One word: “exergy,” a term of art describing the maximum useful work possible during a process that brings a system into equilibrium with a heat reservoir. Exergy is always destroyed in the seigniorage hashing process - for example - if a token's value increases to $1,000, this means that at most $1,000 worth of waste heat will be generated somewhere in its creation. From my reading of the text, it's not so much the additional hash power that's valuable, it's the additional money spent building and operating the ASICs. In theory, the market cap of a proof-of-work system should approach its total cumulative cost to secure. The more watts you see being dumped into the environment calculating hashes, the more you should value Bitcoin. If Bitcoin is worth less than its cost to mine, no rational miner will mine (if they want BTC they'll just use their electricity budget to buy it on the market), so the competition (and therefore the cost) to mine each block goes down. If Bitcoin is worth more than its cost to mine, mining becomes profitable to anyone willing to put up the capex, so the competition (and therefore the cost) to mine each block goes up. There's an equilibrium where the value of Bitcoin is equal to its cost to mine. The actual price of bitcoin as seen by the average consumer is insulated from the cost to mine because of effects like speculation, perceived future movement, and the value provided by ease of spending / anonymity, so the economic theory isn't really accurate, but that's why it's a theory!

LAMike 11y ago

Once the 16nm chips become a commodity, it will make sense that the hashing power would get more distributed. I hope figures out how to get a solar powered, interchangeable bitcoin miner in a box at a positive ROI. It may seem impossible now, but solar prices are falling faster than expected.

maaku 11y ago
Why would you expect hashing power to become more distributed? Mining is a race to the bottom/thin margins, and the differentials in power rates far exceed normal miner profit margins. It would still only be profitable to mine at scale in a few select locations in the world.
- ZenoArrow 11y ago
  > "Why would you expect hashing power to become more distributed?" http://www.businesswire.com/news/home/20151216005453/en/BitFury-Announces-Mass-Production-Fastest-Effective-16nm http://www.businesswire.com/news/home/20151216005453/en/BitF... "Valery Vavilov, CEO of BitFury, said: “We are very excited to launch mass production of our super 16nm ASIC Chip. The final results of our hard work have fully met our expectations. We understand that it will be nearly impossible for any older technology to compete with the performance of our new 16nm technology. As a responsible player in the Bitcoin community, we will be working with integration partners and resellers to make our unique technology widely available ensuring that the network remains decentralized and we move into the exahash era together. BitFury warmly welcomes all companies interested in joining our integration and reseller program.”"
  - maaku 11y ago
    That doesn't address any of the concerns I raised.
    - ZenoArrow 11y ago
      Yes it does. If the article is correct, the 16nm BitFury chips will be sold to interested parties, so new mining capacity won't be dominated by a single company, thereby ensuring newly mined BitCoins can be distributed throughout the network. If your concerns were about something other than distribution, please clarify.

jgalt212 11y ago

What a colossal waste of electricity. Great, they've created a general ledger and currency formed by individual untrusted participants, but who in the aggregate are trusted. What about this: Why not just diversify your risk by doing transactions or investing in currencies/assets across a diversified set of untrusted counterparties? Same net effect, and a lot less electricity wasted.

ikeboy 11y ago
Huh? How does this "diversifying risk" idea let you do any of the major bitcoin applications? (For example, how would your idea that has the "same net effect" as bitcoin allow anonymous markets?)
- jgalt212 11y ago
  Bitcoin is not anonymous. The entire ledger history is exposed. Through network analysis you can figure out who the original anonymous holder is. And as soon as that holder tries to convert to a fiat currency their identity will be exposed. It's precisely because Bitcoin is way more traceable than cash, the US government has not tried to shut it down despite a lot illegal activity being paid for via bitcoin. As soon as Satoshi tries to convert any of his coins into dollars or any other legacy currency everyone will know who he is.
  - ikeboy 11y ago
    This is wrong. Plenty of people have converted to fiat and not been caught, there are ways of mixing coins.
    - jgalt212 11y ago
      Actually, we're both wrong. Just because you have not been caught does not mean there hasn't been loss of anonymity. And if you mix enough coins you can decrease the chances of being pinpointed exactly as the source, but you cannot definitively remove yourself from the bucket of suspects.

rpwverheij 11y ago

looking at the chart there are plenty of places there was more increase in difficulty in 30 days. In the whole 2014 difficulty seemed to have multiplied 40 times! I understand the magnitude is a whole different story now though..

HappyTypist 11y ago

The billion dollar question is how we can have completely decentralised (and not merely distributed) consensus without proof of work. It's a difficult question, and various proposals like Proof of Stake (not secure) and Consensus Ledger (not secure, not decentralised) have all failed technically and on the market.

kushti 11y ago

Some alternatives. Permacoin(http://cs.umd.edu/~amiller/permacoin.pdf http://cs.umd.edu/~amiller/permacoin.pdf) has mostly the same security properties, but effectiveily non-outsorceable, and work done is useful. We made the first open-source implementation of that https://github.com/ScorexProject/Scorex-Lagonaki/tree/master/scorex-perma https://github.com/ScorexProject/Scorex-Lagonaki/tree/master... . I also have paper draft about better Proof-of-Stake protocol, and would like to share it with people from academias to get a feedback. Please write me ( kushti at protonmail dot ch ). I also have half-written paper draft about PoW+PoS hybrid chain.

blencdr 11y ago

No one is afraid of the ecological cost of crypto currencies ? We are in a world where the energy has a frightening ecologic cost and people to spend it in gigantic quantities just to create a virtual money...

nanny 11y ago
>No one is afraid of the ecological cost of crypto currencies ? I am. But this is a drop in the bucket compared to financial sectors that deal with "real" money. Really, isn't nearly all modern money "virtual"? Nevermind the fact that a lot of money only exists electronically, modern money doesn't actually physically represent anything. Therefore: virtual.
- blencdr 11y ago
  The problem is not the virtual character of the money, but the energy involved to create it. The idea behind it is that you need energy to gather money (metalic money for example). but this is pointless for bitcoin, it's just wasted without any utility.