4 ms·

If all of the ASIC mining dropped off Bitcoin would end up with a "frisbee on the roof" problem with its difficulty scaling, ie with the current difficulty ther

by pr0zac 9y ago

If all of the ASIC mining dropped off Bitcoin would end up with a "frisbee on the roof" problem with its difficulty scaling, ie with the current difficulty there wouldn't be enough mining power left to mine enough blocks (2016) to reach the next difficulty reset in any reasonable amount of time, effectively killing Bitcoin as its transaction throughput would grind to a halt. This is an unlikely death, but still a possible one.

CydeWeys 9y ago
Why would all the ASIC mining drop off? What mechanism could cause such a thing? More generally, a severe hashpower reduction could be problematic. An emergency hard fork to a better difficulty readjustment algorithm (like what other coins use) would solve that. Ideally that change would be made before it ended up being needed.
- mikeash 9y ago
  A huge drop in price could result in a death spiral. If the price drops such that the mining rewards no longer cover their electricity, they might shut down until the price goes back up. If enough of them do this, it could further collapse the price as the transaction rate drops. It wouldn't need to be all of the ASIC mining, of course, just a large enough portion of it to result in massively increased block times.
  - CydeWeys 9y ago
    Don't forget that transaction fees help to entice mining too, not just the block reward. The death spiral never happened during the frequent difficulty swaps with BCH because fees simply went up until it was profitable to mine a block -- to as much as 40% of the block reward. There's no reason in principle it couldn't go much higher if necessary.
    - mikeash 9y ago
      There's a limit to how high they can go (can't offer more in transaction fees than you actually have) and even before you hit that point you may encounter the back side of Bitcoin's Laffer Curve where the expense results in lower total transaction fees per block even as individual fees rise. It's possible that point would be far beyond any conceivable price crash, though, I don't know how to put it into anything resembling concrete numbers.

by pr0zac 9y ago

CydeWeys 9y ago

Why would all the ASIC mining drop off? What mechanism could cause such a thing? More generally, a severe hashpower reduction could be problematic. An emergency hard fork to a better difficulty readjustment algorithm (like what other coins use) would solve that. Ideally that change would be made before it ended up being needed.

mikeash 9y ago
A huge drop in price could result in a death spiral. If the price drops such that the mining rewards no longer cover their electricity, they might shut down until the price goes back up. If enough of them do this, it could further collapse the price as the transaction rate drops. It wouldn't need to be all of the ASIC mining, of course, just a large enough portion of it to result in massively increased block times.
- CydeWeys 9y ago
  Don't forget that transaction fees help to entice mining too, not just the block reward. The death spiral never happened during the frequent difficulty swaps with BCH because fees simply went up until it was profitable to mine a block -- to as much as 40% of the block reward. There's no reason in principle it couldn't go much higher if necessary.
  - mikeash 9y ago
    There's a limit to how high they can go (can't offer more in transaction fees than you actually have) and even before you hit that point you may encounter the back side of Bitcoin's Laffer Curve where the expense results in lower total transaction fees per block even as individual fees rise. It's possible that point would be far beyond any conceivable price crash, though, I don't know how to put it into anything resembling concrete numbers.