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If actual, real consumers and professionals can't buy gear because it's being hoarded by miners, yeah, that's pretty wasteful (as in, a thing that consumes vast

If actual, real consumers and professionals can't buy gear because it's being hoarded by miners, yeah, that's pretty wasteful (as in, a thing that consumes vast resources without benefiting very many people).

parliament32 6y ago
Heaven forbid the manufacturers actually, you know, increase production to meet the demand for their hardware.
- Jtsummers 6y ago
  Haha. That doesn't always work. The present demand is spurred by the boom phase of a potential boom-bust cycle (similar to oil). You have two (actually more) sources of demand: crypto, conventional buyers (retail and industry customers). If they adjust production upward (which requires an investment of capital) to meet the present demand then they reduce their profit, prices will go up (at least a bit) to compensate. But they also face another risk: what if there's a bust? If the crypto demand for hardware bottoms out (whether because of a change in crypto or having satisfied the demand) they will be left with excess capacity and potentially excess inventory. The increased production capacity may be able to be redirected to other productive endeavors, or it may just end up idle. And the excess inventory has to be sold off at a potential loss as the hardware becomes worth less and less as each day passes (plus holding inventory costs money). Instead, if they leave production as is (or only increase it slightly) they can virtually guarantee their products will sell out and increase the prices because they know people will continue to buy it. Obviously, the retail and industry customers get screwed because they have less profit to make (if any) directly off the hardware purchase, but the miners will continue to buy almost without regard to the price because their profits (presently) justify the investment.
als0 6y ago
Agreed. ASICs have really destroyed the spirit of mining, and may hint that the Bitcoin style PoW algorithms are in fact not a senible type of proof. Memory-hard PoW algorithms, rather than computational ones, might be one way to reduce the amount of energy. Memory is expensive regardless of whether you make ASICs or use regular PCs.

parliament32 6y ago

Heaven forbid the manufacturers actually, you know, increase production to meet the demand for their hardware.

Jtsummers 6y ago
Haha. That doesn't always work. The present demand is spurred by the boom phase of a potential boom-bust cycle (similar to oil). You have two (actually more) sources of demand: crypto, conventional buyers (retail and industry customers). If they adjust production upward (which requires an investment of capital) to meet the present demand then they reduce their profit, prices will go up (at least a bit) to compensate. But they also face another risk: what if there's a bust? If the crypto demand for hardware bottoms out (whether because of a change in crypto or having satisfied the demand) they will be left with excess capacity and potentially excess inventory. The increased production capacity may be able to be redirected to other productive endeavors, or it may just end up idle. And the excess inventory has to be sold off at a potential loss as the hardware becomes worth less and less as each day passes (plus holding inventory costs money). Instead, if they leave production as is (or only increase it slightly) they can virtually guarantee their products will sell out and increase the prices because they know people will continue to buy it. Obviously, the retail and industry customers get screwed because they have less profit to make (if any) directly off the hardware purchase, but the miners will continue to buy almost without regard to the price because their profits (presently) justify the investment.

als0 6y ago

Agreed. ASICs have really destroyed the spirit of mining, and may hint that the Bitcoin style PoW algorithms are in fact not a senible type of proof. Memory-hard PoW algorithms, rather than computational ones, might be one way to reduce the amount of energy. Memory is expensive regardless of whether you make ASICs or use regular PCs.