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It's serious for miners, if I remember correctly - bitcoin is only profitable at ~7000$. But it's quite a bit below that now.

neilwilson 8y ago
As miners withdraw and go bust the effort declines and the fees adjust until it becomes profitable again. It's a clever aggregate system. Bitcoin is always worth what it costs to get it, which at root is relative to the aggregate effort deployed in the bitcoin system in 10 minutes. 10 minutes is a 'turn' in Bitcoin. Everything is relative to what can be done in that amount of time. Perhaps the inventor was an old school D&D player.
lhl 8y ago
The profitability for Bitcoin production largely depends on power pricing. Here's one country-average based breakdown (from Feb 2018) - you can look at the $6000 down level to see where it's still profitable: https://cointelegraph.com/news/mining-margins-and-where-to-make-the-most-money https://cointelegraph.com/news/mining-margins-and-where-to-m... You can also use a mining calculator to do a real time spot-check of whether Bitcoin is profitable to mine or not as well (even if you have pretty average electricity prices, very much so): http://whattomine.com/asic?utf8=%E2%9C%93&sha256f=true http://whattomine.com/asic?utf8=%E2%9C%93&sha256f=true For those interested in the most accurate and in-depth analysis on the economics, power consumption, and other aspects of Bitcoin mining, I can highly recommend @mrb's writeups like http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/ and http://blog.zorinaq.com/morgan-stanley-bitcoin-research-reports/ http://blog.zorinaq.com/morgan-stanley-bitcoin-research-repo... Note that the original article/title is pretty flawed to begin with since there are no tokens that depend on Bitcoin mining to begin with! (90% of tokens by market-cap are based on Ethereum, mining which is even more profitable than Bitcoin, and the economics of which will be changing drastically w/ Casper V2 soon).
- tmikaeld 8y ago
  Wow, thanks for the information! With that in mind, it seems that it will be a looong time until the bitcoin craze is over.
  - lhl 8y ago
    Well, it'll probably be a long time before the "bitcoin craze" is over since cryptocurrencies as a technology and an asset class are still in their infancy, but it's hard to say how long proof-of-work mining will last. Personally, I'm most closely following what the Ethereum guys are doing with proof-of-work (see: https://ethresear.ch/ https://ethresear.ch/) but I'm also quite keen to see Chia's proof-of-space-time (an iteration of proof-of-capacity) or if something like proof-of-useful-work is possible. I think everyone's in agreement that PoW is expensive and wasteful, it's just a matter of developing//proving something that works better/cheaper...
    - tekproxy 8y ago
      Bitcoin pow is intentionally useless. The reasoning is that if there were alternative uses, the value of those alternatives could fluctuate and negatively impact hash rate.

neilwilson 8y ago

As miners withdraw and go bust the effort declines and the fees adjust until it becomes profitable again. It's a clever aggregate system. Bitcoin is always worth what it costs to get it, which at root is relative to the aggregate effort deployed in the bitcoin system in 10 minutes. 10 minutes is a 'turn' in Bitcoin. Everything is relative to what can be done in that amount of time. Perhaps the inventor was an old school D&D player.

lhl 8y ago

The profitability for Bitcoin production largely depends on power pricing. Here's one country-average based breakdown (from Feb 2018) - you can look at the $6000 down level to see where it's still profitable: https://cointelegraph.com/news/mining-margins-and-where-to-make-the-most-money https://cointelegraph.com/news/mining-margins-and-where-to-m... You can also use a mining calculator to do a real time spot-check of whether Bitcoin is profitable to mine or not as well (even if you have pretty average electricity prices, very much so): http://whattomine.com/asic?utf8=%E2%9C%93&sha256f=true http://whattomine.com/asic?utf8=%E2%9C%93&sha256f=true For those interested in the most accurate and in-depth analysis on the economics, power consumption, and other aspects of Bitcoin mining, I can highly recommend @mrb's writeups like http://blog.zorinaq.com/bitcoin-electricity-consumption/ http://blog.zorinaq.com/bitcoin-electricity-consumption/ and http://blog.zorinaq.com/morgan-stanley-bitcoin-research-reports/ http://blog.zorinaq.com/morgan-stanley-bitcoin-research-repo... Note that the original article/title is pretty flawed to begin with since there are no tokens that depend on Bitcoin mining to begin with! (90% of tokens by market-cap are based on Ethereum, mining which is even more profitable than Bitcoin, and the economics of which will be changing drastically w/ Casper V2 soon).

tmikaeld 8y ago
Wow, thanks for the information! With that in mind, it seems that it will be a looong time until the bitcoin craze is over.
- lhl 8y ago
  Well, it'll probably be a long time before the "bitcoin craze" is over since cryptocurrencies as a technology and an asset class are still in their infancy, but it's hard to say how long proof-of-work mining will last. Personally, I'm most closely following what the Ethereum guys are doing with proof-of-work (see: https://ethresear.ch/ https://ethresear.ch/) but I'm also quite keen to see Chia's proof-of-space-time (an iteration of proof-of-capacity) or if something like proof-of-useful-work is possible. I think everyone's in agreement that PoW is expensive and wasteful, it's just a matter of developing//proving something that works better/cheaper...
  - tekproxy 8y ago
    Bitcoin pow is intentionally useless. The reasoning is that if there were alternative uses, the value of those alternatives could fluctuate and negatively impact hash rate.