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Mining does not need to be profitable. People always make the mistake in thinking that if mining ceases to be profitable that mining would suddenly stop. That i

Mining does not need to be profitable. People always make the mistake in thinking that if mining ceases to be profitable that mining would suddenly stop. That is simply not how it works. It is more economical to buy tomatoes at the grocery store, but that doesn't stop people from growing tomatoes in their backyard.

maaku 11y ago
Mining costs millions of dollars per day in electricity costs. I guess we can just expect a few people to burn a hole in their pocket for the good of the network?
- Taek 11y ago
  Sorry to be pedantic, but I do believe the daily cost of mining is closer to $250,000 - $750,000. Not a small number, but also not millions per day.
  - maaku 11y ago
    I'm a physicist so naturally I do all back-of-the-envelope calculations to one-significant figure with rounding at each step. :) My own estimation is between $400k per day (hard lower bound) and $800k per day depending on assumptions about hardware efficiency, although around $100k / day was added in the last week in a trend that is continuing, so $1MM/day will very quickly be accurate.
- deleted 11y ago
  [deleted]
- aback 11y ago
  This reflects a misunderstanding of the drivers of mining costs. Mining only costs a lot because coin value is high and the block reward is high. This means miners are willing to spend more to win the reward. As the block reward lowers then mining becomes funded entirely by equilibrium-priced fees.
  - maaku 11y ago
    Oh I understand mining economics quite well. The comment I was responding to however claims that some people will continue to mine at a loss after the subsidy is negligible. However that assumes that people would be willing lose hundreds of millions of dollars per year on power costs just to meet current security levels, let alone whatever level of higher security might be required in a moonshot scenario.
    - tmornini_ey 11y ago
      Millions of people collectively losing hundreds of millions of dollars a year is less than $1/month individually.

maaku 11y ago

Mining costs millions of dollars per day in electricity costs. I guess we can just expect a few people to burn a hole in their pocket for the good of the network?

Taek 11y ago
Sorry to be pedantic, but I do believe the daily cost of mining is closer to $250,000 - $750,000. Not a small number, but also not millions per day.
- maaku 11y ago
  I'm a physicist so naturally I do all back-of-the-envelope calculations to one-significant figure with rounding at each step. :) My own estimation is between $400k per day (hard lower bound) and $800k per day depending on assumptions about hardware efficiency, although around $100k / day was added in the last week in a trend that is continuing, so $1MM/day will very quickly be accurate.
deleted 11y ago
[deleted]
aback 11y ago
This reflects a misunderstanding of the drivers of mining costs. Mining only costs a lot because coin value is high and the block reward is high. This means miners are willing to spend more to win the reward. As the block reward lowers then mining becomes funded entirely by equilibrium-priced fees.
- maaku 11y ago
  Oh I understand mining economics quite well. The comment I was responding to however claims that some people will continue to mine at a loss after the subsidy is negligible. However that assumes that people would be willing lose hundreds of millions of dollars per year on power costs just to meet current security levels, let alone whatever level of higher security might be required in a moonshot scenario.
  - tmornini_ey 11y ago
    Millions of people collectively losing hundreds of millions of dollars a year is less than $1/month individually.