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Miners tend to increase their hashrate because that's how they compete for block rewards. However, the electrical energy a miner spends on finding blocks should
by wcoenen 5y ago
Miners tend to increase their hashrate because that's how they compete for block rewards. However, the electrical energy a miner spends on finding blocks should not be more than the value of the block rewards, otherwise they would operate at a loss. This provides a ceiling for the energy expenditure.
Therefore, if the price of Bitcoin doubles, miners can afford to burn twice as much electricity. (Roughly. This is a simplification of course.)
- lottin 5y agoWhy is proof of waste needed at all? What do you achieve by proving that you have wasted a certain amount of electricity?
- BenjiWiebe 5y agoIf one didn't need to prove they'd done something difficult, then cryptocurrency didn't be a workable idea.
- lottin 5y agoWhy do they have to prove that they'd done something difficult? That's what I'm trying to understand.
- DennisP 5y agoBecause the chain of transactions with the most accumulated waste is chosen as the "correct" chain. In order to double-spend, you have to cause a different chain to be the "correct" chain, so you'll have to waste even more energy than has been wasted by everybody else, over whatever span of time you're trying to roll back. Thus the more waste, the more secure the chain. Proof of stake is a newer way of coming to consensus on one correct chain. It took people a while to figure out how to do it securely and efficiently.
- lottin 5y agoOkay, so the chain of transactions that is regarded as correct is the one that has been more expensive to create. Instead of wasting energy, the same result could be achieved by wasting other stuff, such as bitcoins themselves, for instance?
- DennisP 5y agoSure. In fact, that's almost how Ethereum's proof-of-stake works, except it has a protocol that comes to consensus without wasting anything as long as people follow the rules, and only destroys stake when someone provably breaks the rules.
- lottin 5y agoIf this is true, PoW is simply a stupid version of PoS and should be abandoned immediately.