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The thing is that the act of mining isn't actually providing any value, it just proves that you have wasted some amount of processing power. This is called proo
by Zalastax 8y ago
The thing is that the act of mining isn't actually providing any value, it just proves that you have wasted some amount of processing power. This is called proof of work and is a system set in place so that bad actors can't take control of the ledger without spending a large amount of money. The threshold for how much work you need to put in is adjusted automatically. If there was just a single machine in the system they could choose to mine very slowly and the system would eventually reach a very easy threshold.
What that means is that the threshold would be about ten times lower if electricity prices were ten times higher globally.
As you can understand, this is a big big waste - which is why alternatives to proof of work are researched heavily.
- deleted 8y ago[deleted]
- JumpCrisscross 8y ago> What that means is that the threshold would be about ten times lower if electricity prices were ten times higher globally This change in threshold would flow into pricing. Also, energy costs are a factor in equipment costs, network access costs and the cost to end users. One would be hard pressed to find a single priced good or service on this planet that doesn't respond to energy prices.
- Zalastax 8y ago> One would be hard pressed to find a single priced good or service on this planet that doesn't respond to energy prices. You don't have to look further than Bitcoin. The cost of producing Bitcoin is primarily the cost of wasted energy - how much energy should be wasted is determined algorithmically. Too low and you get arbitrage opportunities; too high and people stop mining. Bitcoin pricing is not at all related to energy prices in the middle-to-long-run.