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Ask HN: What is the Bitcoin price level at which miners will leave?
Is there a price point at which mining is no longer financially viable. I'm guessing the point is higher for the smaller mining pools/miners and lower for the bigger mining pools. At what levels is the risk of a 51% mining power to one pool likely.
- RickS 9y agoI can't find the article right now, but there was one on HN recently were the number, at least for chinese miners, was in the high 6k range.
- vorticalbox 9y agoIt's already at the point where you have to spend lots on money on hardware and have cheap power to make it work.
- deleted 9y ago[deleted]
- vthallam 9y agoI have read an article that $6500 is the point where the chinese miners with custom ASIC's will not be able to mine anymore.
- 1001101 9y agoDoes that include plane fare to Québec? https://www.forbes.com/sites/sarahsu/2018/01/15/chinas-shutdown-of-bitcoin-miners-isnt-just-about-electricity/ https://www.forbes.com/sites/sarahsu/2018/01/15/chinas-shutd...
- pfarnsworth 9y agoWhen the price of producing bitcoin > the cost of bitcoin, it will stop. It's like all other forms of mining. For many miners, that's probably the cost of electricity, which could be free in some parts of the world, or very, very cheap.
- deleted 9y ago[deleted]
- mtmail 9y agoBitcoin Can Drop 50% and China Miners Will Still Make Money https://www.bloomberg.com/news/articles/2018-01-10/bitcoin-can-drop-50-and-china-s-miners-will-still-make-money https://www.bloomberg.com/news/articles/2018-01-10/bitcoin-c... discussed 6 days ago in https://news.ycombinator.com/item?id=16120062 https://news.ycombinator.com/item?id=16120062 Money quote from the top comment: "The break even is 1 BTC = $922". Personally I have my doubts, but even at the $6,925 the bloomberg article claims is still very profitable.
- semi-extrinsic 9y agoAs we've learned from oil production lately, quite a number of people/companies are willing to do things that are "globally unprofitable". E.g. if you adopt the mindset that your CAPEX is a sunk cost, which is reasonable if you already own something nobody wants to buy (unprofitable oil or mining rig), your break even becomes much lower (just has to beat cost of operations/electricity). With mining it's even more difficult, since mining at an "unprofitable" point in time could later actually become a very profitable venture if the price goes back up, assuming that the mining difficulty also goes down in unprofitable times.
- mkempe 9y agoMining at a loss is not a good idea. Say your [marginal] production cost is USD 100, but BTC market price is USD 50. You could spend USD 100 to make 1 BTC, or you could turn off your mining equipment and spend USD 100 to buy 2 BTC... Added: and when the market price goes back up to say USD 1000, would you rather have the 1 or 2 BTCs in hand?
- dx034 9y agoBut once you have the hardware, you only need to pay electricity. And that means that current capacity will stay online until ~$1,000 in regions with low energy prices.
- oreo81 9y agoBut then you no longer have your mining hardware to mine with when it does go back up...I don't think you understand any of this.
- dest 9y agoI don't think it's only a matter of Bitcoin price, rather a difficulty adjustment + bitcoin price. So the question is how many miners will leave at what price.
- matte_black 9y agoWhat happens when the Bitcoin mines close down?
- ecesena 9y agoThere can't be transactions, so nobody can move bitcoins around.
- dmerrick 9y agoNot exactly. If a large percentage of miners stop mining, the difficultly will be adjusted so it's easier to mine Bitcoin. The difficulty is tuned such that blocks are solved every 10 minutes, regardless of how many miners are working.
- dfox 9y agoOne problem is that the time required for the adjustment to happen is determined by how many miners are left and is unbounded.
- mschuster91 9y agoThere is an adjustment every 2016 blocks, roughly 14 days (under the assumption that a block is mined every 10 minutes). When too many miners drop out, the block time will increase until 2016 blocks are mined and the difficulty readjusted. So transactions can be made, they simply will take longer. In the possible but unrealistic scenario of all huge miners disappearing overnight right after an adjustment and thus making it impossible to reach 2016 blocks, the users will offer higher transaction fees and so make mining profitable again (or, at least, provide incentive to the miners to come back).
- wyldfire 9y agoWhat you describe as an equilibrium really involves lots of disappointed people whose transactions take far longer than expected. Some wallets probably don't support CPFP, lots of people don't have any idea where to look for features like this. While the system will ultimately reach stasis eventually, it will be seen as an "outage" that will end up playing to many altcoins' strengths (more frequent/softer difficulty adjustments, no-PoW coins, etc).
- panarky 9y agoMiners were mining when Bitcoin was at $10. Marginal capacity that's barely profitable at $19,000 will disappear at $18,000. As the hashrate decreases at same difficulty level and transaction volume, fees go up which attracts more capacity. The difficulty level adjusts approximately every two weeks, so if mining isn't profitable and blocks aren't created fast enough, difficulty will drop to make mining more profitable. In the last 30 days during the latest bloodbath du jour, hashrate is actually way up from 13 exahashes/second to 17 exahashes/second. https://blockchain.info/charts/hash-rate?timespan=30days https://blockchain.info/charts/hash-rate?timespan=30days
- mkempe 9y agoThe cost of production is simply the cost of the (produced) factors of production (see Böhm-Bawerk's "Value and Price", part of his "Capital and Interest" works). So the answer to your question is that miners ought to leave when the market value of their mined product is less than the marginal cost of production (assuming they keep track). If you have already recovered the cost of the mining tool, then the marginal cost is determined by power (electricity, cooling) and difficulty. At that point you'd be better off turning off the mining tools and using your money to buy BTC rather than power. On the one hand, BTC can go a long way down before that point, and difficulty would change; on the other hand, if the market price were to fall so much as to stop mining it would be tantamount to a complete destruction of the BTC system; I'm not sure how that would happen, it would surely not be simply a question of BTC pricing.
- cgb223 9y agoDepends on the cost of electricity, difficulty adjustment, etc So if you're running a miner right next to the hoover dam, with your basically free hydro-electricity, you can mine for a lot longer than someone in San Francisco where PG&E quadruple charges them for any use above a certain threshold at an already high electric bill rate
- supermdguy 9y agoDisclaimer: I'm not a bitcoin expert, so please correct me if I'm wrong. With that said, here's what I think would happen: 1. Bitcoin price goes down enough that a lot of miners leave 2. The difficulty decreases since blocks are taking more than 10 minutes to produce 3. It gets cheaper to mine bitcoins, since less hash calculations are necessary per block (on average) 4. Miners want to join the system again, since it's cheap, thus taking away the risk of a 51% miner So, bitcoin should self-correct
- tlrobinson 9y agoMostly correct, except the price dropping squeezes out some miners who have less efficient hardware or more expensive electricity. It’s possible those miners would find it more profitable to 51% attack, or sell their hardware to someone who wants to.
- obsidience 9y agoIf prices drop, miners may get priced out of mining if they don't have free electricity. Just like what happened when BTC was mined with CPUs and later GPUs and later ASICs people just stopped mining or using that method. Bitcoin is self adjusting, the only thing that doesn't adjust is the supply which is why some people found value in mining BTC when it was basically worthless. I don't see how a dropping price has any bearing on a 51% attack. All IMHO
- tlrobinson 9y ago> I don't see how a dropping price has any bearing on a 51% attack. Sure it does. Lower miner income = lower security.
- obsidience 9y agoThis is the correct answer...
- nartz 9y agoThis is a logical but too theoretical argument. Counter-arguments: 1. Mining equipment is a sunk cost usually, so many will keep mining. Inotherwords, its easy to continue operations as normal versus trying to sell off all the equipment (at a loss?) Also, cloud mining contracts are locked in for a year or two, most cannot be cancelled, so mining continues regardless. 2. The difficulty may not actually decrease that much to have a huge impact on the profitability. It really depends on the magnitude of the mining drop-off.
- Damogran6 9y agoI have an S1 I received for free. At this point I'm losing $7 a month on it...I'm using it to poorly launder money from my checking account to the power company to my bitcoin wallet. The GPU is doing a little better, but it's not even rent money, more like 'lunch once a week' money.
- nodja 9y agoYou could do some immersion cooling to reduce power usage. Not sure about the S1, but the S7 is still very profitable if you do immersion cooling on it. Although you're also risking damaging the miner (it might have components that dissolve in your coolant).
- trhway 9y agoIt isn't about BTC price anymore. It may go down or not - doesn't matter. The fees is much bigger game now, and given the hard limit on the tx slots number, the fees don't really have space to go down.
- wmf 9y agoFees are denominated in BTC, though.
- runeks 9y agoThe answer is that no one knows for sure, but you’ll be able to see when by looking at this graph, which is an estimate of the global Bitcoin hash rate: http://bitcoin.sipa.be/speed-lin-10k.png http://bitcoin.sipa.be/speed-lin-10k.png
- andrei_says_ 9y agoWhat is a more interesting question for me, is what will happen to bitcoin when mining (almost) stops.
- arisAlexis 9y agonever. if it's not profitable miner will leave diffoculty will drop and miners will make profit so the ones that left will come back etc.