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What I would love to see is a breakdown of locations of miners over time. I wonder if the increase is in places where electricity is cheaper and/or subsidized.

by craigc 8y ago

What I would love to see is a breakdown of locations of miners over time. I wonder if the increase is in places where electricity is cheaper and/or subsidized. I do not believe the increase has anything to do with better mining hardware since the top mining hardware has not really changed much in over two years. My guess is either: 1. Most people have already invested in the hardware and are therefore okay mining at a loss with the hope that the Bitcoin price will rise again in the future. OR 2. A lot of miners are using renewable energy in which case it wouldn’t make sense to stop. For example, if you are using wind or solar or hydro energy, then the energy is still going to be available even if you turn off your mining hardware.

scotty79 8y ago
> For example, if you are using wind or solar or hydro energy, then the energy is still going to be available even if you turn off your mining hardware. That's only true if you can't sell the energy for more than bitcoins mined for that energy. And buy bitcoin for that money ... :)
- craigc 8y ago
  Good point. I was assuming that it would be a surplus of energy that you are not able to sell.
21 8y ago
Or: 3. VCs invest in miners, and the investment money is used to pay the costs until the price rebounds.
- garmaine 8y ago
  It would be cheaper and significantly easier to just buy coins though.
  - 21 8y ago
    It's not such a clear cut decision. You can only buy once, while the miner can produce for many years, especially now when the ASIC tech reached the state-of-the-art so progress is slower.
    - garmaine 8y ago
      No they really don’t. I have quite a bit of experience with modern mining hardware and they aren’t designed to last more than about 6 months or so. It’s about extracting the maximum hashes per watt for the early period of ownership when difficultly is low, damage to hardware be damned.
Symmetry 8y ago
I was interested to learn in the recent indictment that the Russians were using bitcoin as essentially a means of money laundering. The Russia government uses it's budget to mine some bitcoins and used those to buy the servers used to hack the DNC. I imagine criminals and people looking to evade currency controls have similar interests.
- robdachshund 8y ago
  If that's even what happened. The email server was not secured or encrypted in any way. It was probably hacked by everyone and their dog.
- craigc 8y ago
  I would be very surprised if mining was the sole source of the funding simply because mining hardware is so expensive, and it would take a long time to mine $90,000. The Bloomberg article says > the defendants conspired to launder the equivalent of more than $95,000 through a web of transactions So while they may have done some mining, I think the majority came via other sources. That is certainly an interesting perspective though – that the increase in hash rate is due to people wanting to evade traditional currency systems to fund their illicit activities. It would not surprise me at all if some governments were involved in this too.
  - lancewiggs 8y ago
    from the indictment [1], statement 62: The Conspirators funded the purchase of computer infrastructure for their hacking activity in part by “mining” bitcoin. Individuals and entities can mine bitcoin by allowing their computing power to be used to verify and record payments on the bitcoin public ledger, a service for which they are rewarded with freshly-minted bitcoin. The pool of bitcoin generated from the GRU’s mining activity was used, for example, to pay a Romanian company to register the domain dcleaks.com through a payment processing company located in the United States. 63. In addition to mining bitcoin, the Conspirators acquired bitcoin through a variety of means designed to obscure the origin of the funds. This included purchasing bitcoin through peer-to-peer exchanges, moving funds through other digital currencies, and using pre-paid cards. They also enlisted the assistance of one or more third-party exchangers who facilitated layered transactions through digital currency exchange platforms providing heightened anonymity. https://www.justice.gov/file/1080281/download https://www.justice.gov/file/1080281/download
nobrains 8y ago
>> 1. Most people have already invested in the hardware and are therefore okay mining at a loss with the hope that the Bitcoin price will rise again in the future. It doesn't make sense to mine at a loss, as in that case they can buy more bitcoins at market price, rather than mining them.

by craigc 8y ago

scotty79 8y ago

> For example, if you are using wind or solar or hydro energy, then the energy is still going to be available even if you turn off your mining hardware. That's only true if you can't sell the energy for more than bitcoins mined for that energy. And buy bitcoin for that money ... :)

craigc 8y ago
Good point. I was assuming that it would be a surplus of energy that you are not able to sell.

21 8y ago

Or: 3. VCs invest in miners, and the investment money is used to pay the costs until the price rebounds.

garmaine 8y ago
It would be cheaper and significantly easier to just buy coins though.
- 21 8y ago
  It's not such a clear cut decision. You can only buy once, while the miner can produce for many years, especially now when the ASIC tech reached the state-of-the-art so progress is slower.
  - garmaine 8y ago
    No they really don’t. I have quite a bit of experience with modern mining hardware and they aren’t designed to last more than about 6 months or so. It’s about extracting the maximum hashes per watt for the early period of ownership when difficultly is low, damage to hardware be damned.

Symmetry 8y ago

I was interested to learn in the recent indictment that the Russians were using bitcoin as essentially a means of money laundering. The Russia government uses it's budget to mine some bitcoins and used those to buy the servers used to hack the DNC. I imagine criminals and people looking to evade currency controls have similar interests.

robdachshund 8y ago
If that's even what happened. The email server was not secured or encrypted in any way. It was probably hacked by everyone and their dog.
craigc 8y ago
I would be very surprised if mining was the sole source of the funding simply because mining hardware is so expensive, and it would take a long time to mine $90,000. The Bloomberg article says > the defendants conspired to launder the equivalent of more than $95,000 through a web of transactions So while they may have done some mining, I think the majority came via other sources. That is certainly an interesting perspective though – that the increase in hash rate is due to people wanting to evade traditional currency systems to fund their illicit activities. It would not surprise me at all if some governments were involved in this too.
- lancewiggs 8y ago
  from the indictment [1], statement 62: The Conspirators funded the purchase of computer infrastructure for their hacking activity in part by “mining” bitcoin. Individuals and entities can mine bitcoin by allowing their computing power to be used to verify and record payments on the bitcoin public ledger, a service for which they are rewarded with freshly-minted bitcoin. The pool of bitcoin generated from the GRU’s mining activity was used, for example, to pay a Romanian company to register the domain dcleaks.com through a payment processing company located in the United States. 63. In addition to mining bitcoin, the Conspirators acquired bitcoin through a variety of means designed to obscure the origin of the funds. This included purchasing bitcoin through peer-to-peer exchanges, moving funds through other digital currencies, and using pre-paid cards. They also enlisted the assistance of one or more third-party exchangers who facilitated layered transactions through digital currency exchange platforms providing heightened anonymity. https://www.justice.gov/file/1080281/download https://www.justice.gov/file/1080281/download

nobrains 8y ago

>> 1. Most people have already invested in the hardware and are therefore okay mining at a loss with the hope that the Bitcoin price will rise again in the future. It doesn't make sense to mine at a loss, as in that case they can buy more bitcoins at market price, rather than mining them.